Here Are 2 Companies That Recently Reported Weaker Business Results
We’re nearing the end of the earnings season!
As is common with every earnings season, there will be some companies posting growth, some companies posting flat numbers, and some companies experiencing declines. So, which are the companies that have recently reported a decline in their latest results? Let’s look at two of them:
1. Frasers Centrepoint Ltd (SGX: TQ5) reported its results for its fiscal second quarter (the three months ended 31 March 2017) last week.
As a quick background, Frasers Centrepoint is a real-estate owner and developer. There are also a number of REITs in Singapore’s market that fall under its umbrella and they are: Frasers Centrepoint Trust (SGX: J69U), Frasers Commercial Trust (SGX: ND8U), Frasers Logistics and Industrial Trust (SGX: BUOU), and Frasers Hospitality Trust (SGX: ACV).
During the quarter, Frasers Centrepoint experienced a 21.4% year-on-year decline in revenue. The bottom-line performance was worse, as the company’s profit fell by 42.2%. But, Frasers Centrepoint managed to grow its book value per share by 5.4% to S$2.34.
Frasers Centrepoint had suffered from the lack of contribution from itsTwin Fountains executive condominium and North Park Residences private condominium projects.
Looking ahead, the company intends to continue making “selective investments in overseas and recurring income assets.” Frasers Centrepoint has a strategic objective of “achieving earnings sustainability.”
2. QAF Limited (SGX: Q01) is another company that released weaker results two weeks ago. During the first quarter of 2017, the company saw its revenue and profit fall by 15% and 13%, respectively, when compared to the same quarter a year ago.
As a quick introduction, QAF is a food production company. Its business can be divided into three major segments, namely, Bakery, Primary Production, and Trading & Logistics. An example of a well-known consumer food brand from QAF would be Gardenia, a packaged bread brand that is a staple in Singapore’s grocery stores.
QAF’s lower revenue in the first quarter of 2017 was mainly driven by the deconsolidation of the results from the company’s previous Malaysian subsidiary, Gardenia Bakeries (KL). QAF had to reduce its stake in Gardenia Bakeries (KL) to 50% to comply with regulations in Malaysia.
If the effects of the deconsolidation were adjusted for, QAF’s revenue in the reporting quarter would have been higher when compared to the first quarter of 2016.
In its earnings release, QAF commented that its business performance “is expected to be affected by a number of factors, including competition, currency volatility and increasing costs arising from higher flour prices and energy costs in certain markets.”