BRC Asia's full-year earnings swell on Lee Metal acquisition

Singapore

MAINBOARD-LISTED steel dealer BRC Asia saw its full-year net profit more than double to S$31.6 million, lifted by the completed acquisition of Lee Metal in July last year.

Revenue for the 12 months ended Sept 30, 2019 surged 61 per cent to S$913.3 million, from S$567 million a year ago. The higher revenue was also due to increased steel trading and distribution activities, said the group in a filing on Wednesday.

Earnings per share from its continuing operations stood at 13.53 Singapore cents, up from 5.57 Singapore cents a year ago.

BRC Asia proposed dividends of eight Singapore cents a share, representing a payout of 59 per cent.

Year on year, gross profit climbed 70 per cent to S$76.6 million. Gross profit margin was also higher at 8.4 per cent - compared with 7.9 per cent a year ago - on the back of "higher volume of value-added sales tonnage delivered and costs synergies from bulk raw material purchases", said the group.

Operating profit margin increased to 4.2 per cent from 2.8 per cent previously, as the group continues to improve operational efficiencies resulting from the integration of Lee Metal, another fabricator and distributor of steel products in Singapore.

The group's operating expenses were up 29 per cent to S$40.1 million, primarily due to higher finance costs to fund the acquisition of Lee Metal and the increase in raw mate-rial purchases to meet higher sales volume for the enlarged group.

BRC Asia said that the increase in expenses is in line with the inclusion of full-year expenses from Lee Metal for its 2019 fiscal year.

As at Sept 30, 2019, the group's balance sheet remained healthy with net assets of S$262.9 million. Net asset value per ordinary share stood at 112.68 Singapore cents, compared with 101.59 Singapore cents in the same period a year ago.

BRC Asia is expecting a brighter outlook and performance in the next 12 months. Amid the US-China trade spat and a weak economic outlook globally, Singapore's domestic construction sector "remains on a recovery path", said the group's chief executive Seah Kiin Peng.

He noted that contracts awarded - a leading indicator of construction activity - continues to trend up since late 2018, supporting the sector's growth for three consecutive quarters so far this year. As at Sept 30, 2019, the group's order book stood at around S$950 million.

"The sustained recovery in local construction demand and tightening resources in the construction supply chain suggest a more promising outlook for (the group's) business," said Mr Seah.

Shares of BRC Asia closed up one Singapore cent at S$1.53 on Wednesday before the results were announced.