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Boustead Q2 profit drops 41% on oil and gas weakness

BOUSTEAD net profit fell 41 per cent in its second fiscal quarter as demand from the oil and gas segment weakened, the infrastructure engineering company said.

Earnings fell to S$10.3 million, or 2 Singapore cents per share, for the three months ended September. For its fiscal first-half, profit halved to S$16.6 million, or 3.2 Singapore cents per share.

Boustead is declaring an interim dividend of one Singapore cent in cash or scrip.

Boustead shares closed at 87.5 Singapore cents on Friday, lower by 4.9 per cent or 4.5 Singapore cents.

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Revenue decreased by 11 per cent to S$115.1 million during the quarter as sales in the energy-related engineering business shrank by 33 per cent to S$35.2 million. That was a result of lower crude oil prices, which have dampened appetite for large capital expenditures and investments, Boustead said.

Sales from the real estate solutions business, however, improved by 6 per cent to S$53.8 million.

Boustead said it had an order book backlog of S$353 million as at the end of the quarter, of which S$120 million is in the energy-related engineering division and the remaining S$233 is under real estate solutions. The company believes that it will remain profitable in fiscal 2016, but "considerably" less so than in fiscal 2015.