Hong Leong Asia H2 net profit falls 26% to S$19.4 million

HONG Leong Asia's H22 : H22 0%net profit fell 26 per cent year on year to S$19.4 million for the half year ended Dec 31, 2021, as its engine-making unit Yuchai faced a 21 per cent drop in sales volumes to 171,449 units due to lower truck engine sales.

The industrial conglomerate's revenue was down as well, by 11.2 per cent to S$2.1 billion. Earnings per share stood at 2.58 Singapore cents, against H2 FY2020's 3.3 cents.

In its bourse filing on Friday, Hong Leong Asia highlighted that in spite of that Yuchai's full-year revenue was up 7.9 per cent to S$4.4 billion.

This was as the number of engines sold through the unit still grew 6.2 per cent to 456,791 units in FY2021, compared with 430,320 units in FY2020.

Hong Leong Asia noted that much of the growth was weighted towards the first half of the financial year as the period was just ahead of China's transition to National VI-compliant engines in July last year.

Meanwhile, revenue for its building materials unit grew 29.8 per cent on the year to S$471.1 million, with a reportable segment profit of S$28.2 million.

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This was supported by rising demand for concrete and related products in Singapore as construction activities recovered from FY2020's low base, Hong Leong Asia noted.

The group's full-year net profit therefore grew 28.6 per cent to S$60.1 million in FY2021, as revenue rose 9.7 per cent to S$4.9 billion.

The board has proposed a first and final dividend of S$0.02 per share, subject to shareholders' approval.

For its outlook, Hong Leong Asia is optimistic that its end markets will further recover in 2022, although cost pressures are expected to remain as issues with global supply chains linger and remain vulnerable to higher energy costs.

Nevertheless, the group said its push towards innovation and productivity improvements with automation and digitalisation will help to mitigate some of the pressures.

Noting that the construction of its integrated construction and prefabrication hub manufacturing facility remains on track for completion in the second half of the year, the group said the facility will lift productivity for its precast business.

It added that new solutions are being developed to address climate change within its industry segments. Yuchai's hydrogen fuel-cell powertrain and electric bus ventures are recent examples of such solutions, it pointed out.

Hong Leong Asia's shares closed down 1.9 per cent or S$0.015 to S$0.76 before the announcement on Friday.