Hong Leong Asia H1 profit falls 28% to S$30.9 million on absence of one-off gain

HONG Leong Asia : H22 0% on Friday (Aug 11) posted a net profit of S$30.9 million for the first half of the year, down 27.6 per cent from earnings of S$42.7 million in the year-ago period.

Earnings per share stood at S$0.0412 for the half year, down from S$0.0569 the previous year.

The group attributed the decline to the absence of a one-off gain from disposal of assets held for sale. 

Adjusting for the S$10.6 million one-off gain on disposal of assets held-for-sale in H1 last year, net profit would have declined 3.7 per cent, the group said.

Revenue for the period inched down 1 per cent to S$2.1 billion, due primarily to conversion effects of a weaker renminbi against the Singapore dollar. The group said about 85 per cent of its total revenue is generated from its businesses in China. This was, however, partially mitigated by revenue growth from the building materials unit in Malaysia. 

Cost of sales fell 2 per cent to S$1.7 billion, which pushed up the group’s gross profit by 3.6 per cent to S$372.9 million. 

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No dividend was declared for the period under review, unchanged from the previous year. 

Segmentally, revenue contributions from Hong Leong Asia’s China powertrain solutions unit fell 2.4 per cent to S$1.8 billion. However, higher operating margins on a better sales mix towards bus, agricultural and industrial markets, as well as better performance from associates and joint ventures boosted the unit’s net profit.

Hong Leong Asia’s building materials unit’s revenue grew 8.6 per cent to S$306.3 million. The group said that while demand for building materials remained strong in Singapore, the industry is tackling challenges in health and safety issues, a shortage of dormitories, and higher costs in labour and energy. 

Hong Leong Asia said it is focused on strengthening its capabilities to execute new growth strategies, improving supply chain resilience and strengthening market position. 

The group said it is cautiously optimistic that its businesses will “perform satisfactorily” for the rest of the year. 

Shares of Hong Leong Asia rose 4 per cent or S$0.025 to close at S$0.655 on Friday prior to the results announcement.