OKP's profit falls 2.4% to S$281,000 in Q3 even as revenue rises 0.8%
Singapore
INFRASTRUCTURE and civil engineering company OKP Holdings on Monday reported a 2.4 per cent drop in net profit to S$281,000, while revenue rose a marginal 0.8 per cent to S$26.2 million for its third quarter ended Sept 30, 2014.
Earnings per share was flat at 0.09 Singapore cent for the quarter.
The latest results bring its nine-month net profit to S$1.69 million, a 49.9 per cent drop year-on- year, despite a 8.3 per cent increase in revenue to S$83.8 million.
This was due to higher administrative costs amid a competitive pricing environment, it said. The higher cost of works it incurred was a result of higher labour, sub-contracting and construction material costs. The group also incurred higher professional fees from some legal services that it engaged for an ongoing suit against a subcontractor, as well as higher tender charges from taking part in more tenders.
"The business operating conditions for the construction industry are expected to remain challenging due to increasing business costs and the prevailing labour crunch situation in Singapore.
"With the implementation of government policies and legislation involving foreign worker hires, the industry also faces the issue of experienced and skilled manpower shortage," the company said in its financial statement.
In particular, it is referring to a shortage of engineers and project managers to run its projects, a problem also faced by other building firms in Singapore, an OKP spokeswoman said.
"Manpower costs and competitive tender bidding for land are both set to continue, so we will buffer all these additional costs into future tenders," the spokeswoman said. As a result of such pressures, earnings are also expected to remain at the level of Q3's, she added.
But the group remains optimistic as it is supported by a pipeline of projects, with a net construction order book of S$186.8 million extending to 2017.
OKP, which is also diversifying into property development, last month launched Amber Skye, a freehold residential development at Marine Parade, marking its maiden foray into property development via a 10-per-cent minority stake investment in CS Amber Development Pte Ltd. Six units have been sold so far, which is slower-than-expected progress.
In addition, OKP has a 10-per-cent stake in executive condo project Lake Life, by a consortium led by Evia Real Estate. That project has garnered about 1,800 e-applications since it opened on Oct 4.
"We are selectively carefully looking for land parcels to tender for in a joint venture. We tendered for a few in September and October but did not win any as land parcel prices are still quite high," the spokeswoman said.
OKP's counter last closed at 25.5 Singapore cents on Oct 23. Its share price has been on a downward trend for almost a year now.
