Impairments drag Boustead into the red

PETALING JAYA: Boustead Holdings Bhd fell into the red in the third quarter due to huge impairments from its heavy industry and property divisions, as well as weaker results in other units.

In a filing with Bursa Malaysia yesterday, the conglomerate posted a loss of Rm155mil for the third quarter ended Sept 30 compared to Rm7.3mil net profit a year earlier.

“The group’s bottom line was impacted mainly by impairments in the heavy industry and property divisions of Rm161.3mil,” it said.

Nonetheless, its revenue for the period was 5% higher to Rm2.73bil compared with Rm2.60bil previously. No dividend was announced during the quarter.

Boustead said it remains cautious of the long term prospects in delivering sustainable earnings to increase shareholders’ value.

Cumulatively, for the first ninemonth ended Sept 30, Boustead saw its losses widened to Rm153.1mil compared with Rm14.2mil it recorded a year ago, despite a 6.2% jump in revenue to Rm7.79bil from Rm7.33bil previously.

The group said excluding the said one-off items and impairments, the group reported a profit before tax of Rm56mil. “Despite headwinds, the group recorded solid revenue growth for the nine-month period.

“However, due to the one-off impairments in the property and heavy industry divisions, our bottom line was impacted,” said Boustead Holdings managing director Datuk Seri Amrin Awaluddin in a statement yesterday.

“As we strive to achieve a turnaround for the group, we are cognisant of the challenges we face in the current operating environment.

“We remain focused on enhancing efficiencies and extracting further value within the respective operating units, with a view to deliver sustainable earnings over the long term,” he added.

Shares of Boustead closed slightly higher yesterday at 96.5 sen, giving it a market capitalisation of Rm1.96bil. Boustead said its property division incurred a deficit of Rm68mil, mainly due to an impairment of hotel properties amounting to Rm43mil.

Meanwhile, its heavy industries division recorded higher deficit of Rm192.6mil from Rm30.1mil previously due to impairment of aircraft and goodwill for MHS Aviation totalling Rm118.5mil.

The group’s pharmaceutical division also reported a lower pre-tax profit of Rm33.5mil, compared with Rm45mil a year ago, on lower margins and higher finance costs, despite recording higher revenue.

Boustead Plantations Bhd (BPB) in a statement said it has appointed Ibrahim Abdul Majid as its new CEO effective Dec 1. He assumes the position from Mohamad Azlan Jaafar, who was the acting CEO, and the latter will resume his responsibilities as the company’s deputy CEO.

BPB also announced the promotion of Mohamad Mahazir Mustaffa as its new chief financial officer and the appointment of Noral Afida Alwi as its new financial controller.

The company noted that their appointments would certainly help to strengthen the group’s transformation programme given the current challenges impacting the industry.