Hiap Seng net profit down 53.5% to S$2.6m

Despite gross profit rising to S$8.5m.

Specialist integrated engineering group Hiap Seng Engineering Ltd (Hiap Seng) reported a 53.5% decrease in net profit attributable to shareholders to S$2.6 million on a 11.6% slide in revenue to S$54.6 million for the three months ended June 30, 2013 (1QFY2014), a decline that was mainly attributed to a lack of a write-back present in the same period last year.

The Group’s net profit in 1QFY2013 included an “other gain” of S$6.8 million which was not repeated for 1QFY2014. This was for the write-back of provision for losses of S$1.7 million and one-time gain of equity interest of S$5.0 million arising from the step acquisition of an additional 37% in a 48% associated company in Thailand, resulting in it becoming a 85% subsidiary as announced on August 13, 2012. In 4QFY2013, the Group finalised its purchase price allocation and the resultant gain is S$3.8 million. Correspondingly, net profit declined to S$2.6 million in 1QFY2014 from S$5.7 million in 1QFY2013.

Revenue decreased mainly due to lower shut-down maintenance revenue in 1QFY2014. Gross profit, on the other hand, rose to S$8.5 million in 1QFY2014 from S$4.6 million in 1QFY2013 with better cost control, while gross profit margin improved to 15.4% from 7.5% over the same period.

As at June 30, 2013, the Group’s balance sheet remains healthy. As at August 13, 2013, the Group’s order book stands at S$235 million.

Mr. Frankie Tan, Chairman and CEO of Hiap Seng said, “Market uncertainties have had an impact on our financial performance. However, we are pleased to see continued contributions from the Group’s subsidiaries in Thailand and Malaysia. The Group’s order book remains robust and moving forward, we will continue to tap on our strategic alliances to further enhance our business in Singapore and the region.”

For its outlook, the company said that the oil-and-gas and petrochemical industries which the Group serves still remains positive. However, in view of keen competition and rising labour costs, the Directors of the Company are cautiously optimistic about the Group’s performance for the current financial year ending March 31, 2014. The Group will continue to control costs and improve productivity. With a strong financial position and established track record, it will continue to explore new business opportunities in Singapore and beyond to enhance shareholder value.