Hong Leong Asia H2 profit rises 185% on powertrain solutions, building materials growth

HONG Leong Asia, the trade and industry arm of the Hong Leong Group, on Wednesday (Feb 28) posted a net profit of S$34.1 million for the second half of the year, up 185 per cent from earnings of S$12 million in the year-ago period.

Earnings per share stood at 4.56 Singapore cents for the half year, up from 1.6 cents in the previous year.

The mainboard-listed company’s H2 growth came as its powertrain solutions unit, Yuchai, and its building materials unit recorded an increase in gross profits. 

Revenue for the period jumped 12.4 per cent to S$2 billion, as Yuchai’s revenue surged 12.5 per cent or by S$182.7 million.

The group said this came as the total number of engines sold by Yuchai rose 5.2 per cent to 147,700 units, compared to 140,345 units sold in the year-ago period.

The company attributed this to higher heavy-duty and medium-duty engine sales in the truck and bus markets, as well as increased sales in the marine and power generation and industrial markets.

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Also contributing to the income growth was its building materials unit, which saw revenue grow 13.5 per cent, or by S$40.9 million in the half year, on the recovery of sales volumes and improved average selling prices in Malaysia.

The board has proposed a first and final cash dividend of two cents per ordinary share, to be paid on May 15 after attaining shareholders’ approval. The same amount of dividend was declared in FY22 as well.

For the full year, the group’s net profit rose 19 per cent to S$64.9 million, from S$54.5 million in FY22, while revenue grew 5.2 per cent or S$200.4 million, to S$4.1 billion.

As for the group’s outlook, it said Yuchai is working to improve its portfolio of engines, in compliance with China’s National VI emission standards for on-road markets and Tier-4 compliant engines for the off-road markets. 

Yuchai also seeks to improve on its overall volume and working capital efficiency, as well as continue to improve its powertrains and further develop its new energy solutions, including integrated electric drive axles, hydrogen fuel cell systems and hydrogen engines, it added.

In Singapore, the building materials unit’s order books in the precast and ready mix concrete segments continue to benefit from public and private sector project launches, it pointed out.

The Building and Construction Authority had updated its projection for the total value of local construction contracts awarded in 2024 to be between S$32 billion and S$38 billion, it noted. 

That said, the industry will have to tackle challenges including rising labour and energy costs, and higher rental costs of premises, it said.

“Despite a challenging macro-environment, the group is cautiously optimistic that its businesses should perform satisfactorily in 2024,” it added.

Shares of Hong Leong Asia closed flat at S$0.60 on Wednesday prior to the results announcement.