Hefty impairments eroded listed firms’ profits in Q4

Yards and developers were the hardest hit.

As the fourth-quarter results season draws to a close, it has become apparent that “impairment” is the official catchphrase of the season. A report by CIMB highlighted that many listed firms suffered a reduction their stated capital in the fourth quarter, which in turn shaved a sizeable chunk off corporate profits.

In particular, property developers and offshore-related names took a big hit during the quarter. Most developers had year-on-year earnings declines in Q4 due to the lack of development profits to book, while impairments popped up for both yards in during the quarter as they took hits for Sete Brasil and other rigs.

As for banks, asset quality concerns dominated the 4Q discussions, as oil & gas names faced greater cash flow strain. 

Across the REITs, the healthcare and overseas office/retail segments did better in 4Q, while hospitality and industrial showed increasing signs of a slowdown. 

“4Q catchphrase is “impairment”, appearing repeatedly in industrials and property. Environment is still tough but the recent selldown has thrown up bargains. We like banks, property and REITs,” said CIMB.