CWT FY14 net profit up 5% as weak commodities offset revenue jump

Logistics, commodity and engineering group CWT posted a 5 per cent gain in 2014 net profit as a margin squeeze in commodity marketing offset a jump in revenue.

CWT said net profit for the year to end-December 2014 increased to S$113.9 million, or 18.73 Singapore cents per share, from S$108.1 million, or 17.65 Singapore cents per share, a year earlier.

The board is proposing to pay 4 Singapore cents per share as a final one-tier dividend, up 14 per cent from its payout for the previous year.

CWT shares closed at S$1.68 on Monday, lower by 0.6 per cent or one Singapore cent, before the results were announced.

The topline saw a solid 67 per cent increase to S$15.2 billion, the highest revenue in the company's history.

Logistics services saw total reportable revenue increase by 14 per cent to S$920.6 million mainly from added logistics capacities, freight services, commodity logistics and integrated logistics services.

Engineering revenue also grew 24 per cent to S$161.3 million, while profit before tax increased by 7 per cent to S$21.5 million for the year.

Commodity marketing, the largest revenue contributor to CWT, also reported a significant 72 per cent increase in revenue, to S$13.9 billion, for the year.

But commodity marketing profit before tax actually fell 38.6 per cent year-on-year, to S$11.8 million.

"Profit declined due to margin squeeze as a result of weaker demand, liquidity and less favourable trading conditions," CWT stated. "Profit was also hit by mark-to-market losses recognised and exchange losses on trade receivables in Mongolia."

Looking ahead, the company has been investing in its logistics business. The Singapore Wine Vault, which received occupation approval in July, is now about fully utilised. The CWT Pandan Logistics Centre, which was opened for occupation in end-January, is expected to be fully utilised from April 2015. CWT also expects to begin construction on its integrated logistics hub around mid-2015.