Procurri returns to profitability in Q3 with S$14,000 net earnings

PROCURRI Corp just managed to return to profitability in the third quarter of 2017, posting net earnings of S$14,000, or about 0.01 Singapore cent per share, from a year-ago S$178,000 loss.

For the nine months to Sept 30, 2017, however, the data-centre maintenance and equipment provider continues to face a net loss of S$1.5 million, or 0.53 Singapore cent per share, largely due to a S$1.7 million net loss recorded in the second quarter of the year.

Revenue for the third quarter rose 60.9 per cent to S$51.3 million with higher contributions from both key business segments. Revenue from IT distribution rose 52.7 per cent to S$40.0 million, largely on the back of higher sales volumes in Europe, the Middle East and Africa (EMEA) and the Americas as the group took part in resale programmes of two original equipment manufacturers.

Life-cycle services revenue almost doubled to S$11.2 million from S$5.6 million amid better performance in EMEA, Singapore and from new maintenance and IT support services joint venture company Rockland Congruity.

Profit margins, however, shrank during the quarter. Cost of sales rose 72.4 per cent to S$35.2 million on the lack of higher-margin IT distribution deals, dragging gross profit margin down by 4.6 percentage points to 31.4 per cent.

Administrative expenses also jumped 83.9 per cent to S$12.7 million as a result of higher staff costs, depreciation and other operating expenses. A good S$4.9 million of the S$5.8 million increase came from maiden expenses related to new subsidiaries EAF, an IT spare parts provider, and Rockland Congruity.

Procurri's order book stood at S$21.9 million as at end-September. Looking ahead, the group expects gross profit margin to remain under pressure as it seeks to capture higher market share. That pressure should ease, however, as the group gains economies of scale, Procurri said.