Rotary Engineering posts S$3.2m profits

And only 34% of the S$133.4m revenue was derived from Singapore.

In a release, Rotary Engineering Limited announced it has posted profit after tax attributable to parent of S$3.2 million, on the back of revenue totaling S$133.4 million.

The Group’s gross profit margin at 14% was within its guidance range of between 12 and 18%. Earnings per share stood at 0.56 cents for the three months to March 31.

With a few key projects in the Middle East, it is no surprise that 60% of its revenue was derived from Saudi Arabia while Singapore contributed 34% with the rest from ASEAN and others.

Rotary is currently working on two major EPC contracts in the Middle East: a US$745.0 million EPC contract from Saudi Aramco Total Refining and Petrochemical Company in Saudi Arabia, and a US$250.0 million contract for Fujairah Oil Terminal in the United Arab Emirates. Another notable project is the US$34.0 million deal to build 17 field storage tanks in Saudi Arabia relating to the US$1.2 billion Shoaiba II Combined Cycle Power Plant Project in Shoaiba, some 120 km south of the Red Sea city of Jeddah.

Rotary’s Chairman and Managing Director Mr Chia Kim Piow said the quarter had closed before the Group was able to get started on some projects which had been delayed, accounting for the fairly flat topline. The slight dip in gross profit margin was attributed to thinner margins for a few projects secured at exceedingly competitive prices in recent times due to keen competition. He shared that in addition to delayed commencement, some projects have also seen delays in award of contracts. One of the reasons is attributed to the global economic uncertainty exacerbated by the Eurozone debt crisis that has led to a tighter global credit situation.

Still, he remains optimistic citing numerous upcoming opportunities that hold serious promise. “My team is extremely busy. The activity level in the market is very high. Our aim now is to stay focused, mining every opportunity that comes along and doing our utmost to secure contracts,” he said.

The Group continues to develop the business through direct negotiations and bidding for projects in ASEAN, South Asia and Gulf Cooperation Council countries.

He said the SATORP experience has been invaluable and will certainly play a part in their ability to secure future projects in that market that continues to hold potential.

“The Middle East will remain a key market. Rotary has been there since 2006 and we plan to be there for the long term,” Mr Chia added. Apart from the Middle East, Rotary is also firmly ensconced in Asian markets, namely, Singapore, Indonesia, Malaysia, Thailand, China and India.

“We are continually seeking and evaluating business opportunities that can complement our existing activities,” Mr Chia said. The Group has said that it was exploring opportunities to take small equity stakes in some projects.