These 2 Companies Reporter Lower Net Profit Recently
We’re in the tail end of the current earnings season.
As is common with every earnings season, there will be some companies posting growth, some companies posting mixed numbers, and some companies experiencing declines. So, which are the companies that have recently lower numbers? Let’s look at two of them:
1. QAF Limited (SGX: Q01) reported its 2017 third quarter earnings last week.
As a quick introduction, QAF is a food production company. Its business activities include bakery operations, pork production, food processing and distribution, feed milling, food trading and distribution, food manufacturing, wine distribution, and the ownership and leasing of warehouses.
Some of the more prominent consumer food brands the company has in its portfolio are Gardenia, Cowhead, and Farmland.
During the reporting quarter, the company’s revenue fell slightly by 0.4% to S$211.6 million. But, profit attributable to shareholders plunged 61.5% to S$7.45 million. QAF’s two main business segments, namely, Bakery, and Primary Production, both suffered from lower profitability. The former incurred higher operating costs, while the latter faced increased competition from an oversupply in its industry which led to lower revenue and hence, profit.
One positive takeaway from QAF’s latest results is that it still has a strong balance sheet. As of 30 September 2017, it had S$130.8 million in cash and equivalents, and S$105.0 million in debt.
In its earnings release, QAF commented that it would continue facing intense competition and cost pressures in its business. The company also announced on 7 November that a proposed listing of its Australia-based Primary Production business on the Australian stock market has been put on hold “given current market conditions.”
2. Vicom Limited (SGX: V01) also released its latest results last week.
In the third quarter of 2017, Vicom experienced a 3.4% year-on-year decline in revenue to S$24.55 million, and a 5.9% dip in profit attributable to shareholders to S$6.39 million. It’s worth noting that Vicom’s latest quarterly revenue was higher than in the first and second quarters of 2017, in which revenue came in at S$24.1 million each. This may be a relief for some investors.
As a quick introduction, Vicom is a leading provider of technical testing and inspection services with operations primarily in Singapore.
Here are Vicom’s comments on its future given in the latest earnings release:
“The vehicle testing business is expected to remain stable. The recent announcement by the Land Transport Authority that the growth rate for cars and motor cycles will be cut from 0.25% to 0% for the next 3 years from February 2018 has no immediate impact on the vehicle testing business. The non-vehicle testing business is expected to remain weak in tandem with the industries that we serve.”
Vicom’s current outlook is a little brighter compared to the past few quarters, so that’s a good thing. The company’s balance sheet is also really strong right now, with S$99.43 million in cash and equivalents, and zero debt.