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Federal International posts 68.9% drop in Q4 earnings

MAINBOARD-LISTED oil and gas procurement specialist Federal International (2000) on Sunday posted a 68.9 per cent drop in fourth-quarter earnings despite a higher revenue.

Net profit for the three months ended Dec 31 came in at S$1.1 million, down from S$3.7 million in the same period a year earlier.

Earnings per share was 0.81 Singapore cents, less than a third of the 2.62 Singapore cents previously.

Federal International has proposed a first and final dividend of 1.5 Singapore cents per share along with a special cash dividend of half a Singapore cent per share - the same as the year before.

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Revenue during the quarter climbed 4.4 per cent to S$22.4 million, and gross profit rose 54 per cent to S$5.3 million.

Gross profit margin improved to 23.7 per cent, compared with 16.1 per cent previously, thanks to higher margins on the sales for certain projects under the trading business segment, Federal International told the Singapore Exchange.

But other income, which related mainly to late payment interest charged to customers and sundry income (property rental and other miscellaneous income), sank 81.1 per cent to S$1.2 million.

The S$6.2 million in other income that was recorded in the fourth quarter of 2016 had related mainly to a foreign exchange gain of S$1.6 million, a disposal gain of an available-for-sale financial asset of S$1.3 million, and service fees of S$2.9 million charged to a former associate for services rendered in relation to a project.

The group also recorded a reversal of accruals and provisions for vessel disposed amounting to S$3.8 million which was no longer required, and a higher impairment loss on doubtful debts totalling S$1.7 million.

For the full year to Dec 31, net profit fell 41.7 per cent to S$4.2 million, even as revenue rose 45.2 per cent to S$130 million.

Federal International said that the outlook for the group's business continues to be challenging as it is affected by the uncertainty of oil prices.

The group said that it will remain focused in forming strategic partnerships in order to strengthen its competitiveness in the trading business. It will also continue its efforts in streamlining internal processes.

Shares of Federal International closed flat at 39 Singapore cents last Friday, before the results were announced.