SINGAPORE (Nov 11): United Engineers reported a 10% on-year rise in 3Q16 earnings to $11.6 million from continuing operations after the disposal of Multi-Fineline Electronix and its subsidiaries, driven by the surge in other income.

Revenue for the quarter dropped 43% on-year to $101.7 million, driven by lower revenue from property development after the completion of Eight Riversuites in Jan, driving 3Q16 gross profit down 12% to $45 million as a result.

The 89% surge in other income to $11 million was driven mainly by $5 million of fidelity insurance compensation in relation to irregularities uncovered in other subsidiaries and $5 million reduction in the provision for development charge for the divestment of the automotive business being no longer required. 

Share of profits from associates and joint ventures swung into the black with a $700,000 profit for 3Q16, from a loss of $1.7 million in 3Q15.

UE notes that the global economic slowdown and weaker economic outlook in Singapore coupled with property cooling measures will continue to weigh down the sentiments in the property market.

In China, the company continues to face challenging market conditions in light of the slower economic growth and patchy recovery of the Chinese property market.

The company warns that accounting treatment on revenue recognition for projects using the completion-of-construction model will result in fluctuations in revenue recognition and earnings.

Rental income will help mitigate the volatility, but UE cautions that there is downward pressure in Singapore with the growing office, industrial and retail space supply amidst soft demand.

Shares of UE closed down 2 cents at $2.64 on Friday.