CSE Global H1 net profit falls 55% to S$4.5 million amid supply chain disruptions, higher costs
Uma Devi
TECHNOLOGY solutions provider CSE Global reported a net profit of S$4.5 million for the first half of the year on Friday (Aug 12), down 55 per cent from earnings of S$10.1 million in the corresponding year-ago period.
The bleaker bottomline figures came despite an 11.8 per cent year-on-year increase in revenue to S$262.2 million from S$234.5 million, which the group attributed primarily to the growth in infrastructure project revenues in 2 regions — Australia and the Americas.
Lim Boon Kheng, CSE Global’s managing director, said supply chain disruptions had affected the group’s operations. These disruptions resulted in longer delivery time, delayed revenue recognition and increased project execution costs.
He said the group also faced higher sales and quoting costs, as well as unabsorbed labour costs, as it opted to keep and grow its technical workforce to secure and cater to the new orders that it received.
The board of directors have recommended an interim dividend of S$0.0125 per ordinary share, unchanged from the year ago period. The dividend will be paid out to shareholders on Sep 2.
CSE Global’s cost of sales for H1 was up 15.2 per cent to S$189.4 million, while gross profit inched up 4 per cent to S$72.8 million.
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The group said gross profit margin fell 2.1 percentage points to 27.8 per cent in H1, due to the unfavourable sales mix of higher project revenues in the energy sector. These projects had lower gross margins particularly in the Americas region.
Geographically, the Americas region registered an 8.5 per cent year-on-year increase in revenue for H1 to S$149 million. Revenue for the Asia-Pacific region rose 14.6 per cent to S$104.5 million on higher project revenues for mining and mineral and infrastructure sectors in Australia, while the Europe, Middle East and Africa (EMEA) region booked a 46.6 per cent increase in topline to S$8.7 million due primarily to contributions from new acquisitions in the UK.
As at June, the group’s order book stood at S$388.9 million.
Order intake in H1 rose to S$421.7 million from S$210.6 million in the year-ago period with broad-based growth registered in all industry sectors, CSE Global said.
On the order intake for H1, Lim said: “This signals an extremely healthy pipeline in the coming quarters and meanwhile, we will continue to build our businesses through a combination of acquisitions and invest organically through sales, marketing, engineering support and capacity enhancements.”
“As demand for projects in the alternative energy space grows, we will actively pursue opportunities and acquisitions in the renewables space including solar and wind energy projects. In addition, we will continue our focus on automation and data-centre projects, supported by requirements in digitalisation, communications and enhancements in physical and cyber security globally.”
Shares of CSE Global ended Friday at S$0.48, down 1 per cent or S$0.005.
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