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PEC clinches S$130m in new contracts; Q4 profit slides 50% to S$3.5m

MAINBOARD-LISTED PEC has secured S$130 million worth of new contracts with existing clients, it said on Thursday in a regulatory update.

One of the projects will see PEC providing mechanical works for a multinational corporation client’s expansion of an integrated manufacturing complex in Singapore. Other contracts are for the group’s clients in Myanmar and Vietnam, also for mechanical works.

PEC also posted a net profit of S$3.5 million for the fourth quarter, down 50 per cent from S$6.9 million a year ago, on the back of revenue contribution from project works and maintenance services from the higher volume of activities for fiscal 2019.

Earnings (EPS) per share stood at 1.4 Singapore cents, down from 2.7 cents a year ago. A final dividend of two cents per share has been declared for the year, unchanged from a year ago. The payout date for the dividend will be announced at a later time, the group added.

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PEC shares were trading flat at S$0.585 at 2.27pm on Thursday.

Revenue for the fourth quarter was up 23 per cent to S$104.9 million, from S$85.2 million the year before. The group’s cost of sales widened to S$81.5 million from S$59.4 million a year ago, due to an increase in manpower, materials and equipment rental cost resulting from the higher volume of activities for fiscal 2019.

For the full year, net profit dropped 13 per cent to S$8.3 million, from S$9.5 million a year ago. EPS stood at 3.2 Singapore cents, down from 3.7 cents the year prior.

Revenue, meanwhile, was up 19 per cent to S$392.7 million, from S$330.8 million the year before. This was due to contributions from both project work and maintenance services.

On outlook, PEC group chief executive Robert Dompeling said recent awards of significant projects in the refining and petrochemical industries are a positive indication of brighter prospects for the process industry over the near to medium term.

"These developments, along with the rising global demand for petrochemicals and 'cleaner' fuels, augur well for the industry," he said.

Despite the brighter outlook, Mr Dompeling said that the operating environment "remains challenging" with intense competition and a protracted US-China trade war.

"Nevertheless, we are confident that the group’s ongoing digitalisation efforts and the building of deep engineering capabilities have placed PEC well for the rising opportunities in both maintenance and project works in key Asian and Middle East markets," Mr Dompeling added.