SINGAPORE (Feb 12): Boustead Projects announced 3Q18 earnings dropped 5% to $8.01 million, compared to $8.48 million in 3Q17.

This was mainly due to higher overhead expenses (selling and distribution expenses, and administrative expenses), partially offset by higher gross profit achieved through productivity improvements and the unlocking of project cost savings.

Revenue declined by 28% to $47.9 million from $66.6 million a year ago, due to lower revenue contributions from both the design-and-build and leasing businesses.

The group’s design-and-build segment was 32% lower y-o-y at $40 million, as a major project with significant contract value was completed in 3Q17, which resulted in higher revenue during that period. The group also recorded lower total value of contracts secured during FY17 for revenue conversion during 3Q18.

Leasing revenue was 4% lower at $7.9 million, mainly due to the lack of contribution from 36 Tuas Road due to AusGroup’s early lease termination in 4Q17, partially offset by contributions from new leases and development management fees from the Boustead Development Partnership.

Cost of sales also dropped by 38% to $30.5 million from $49.5 million last year.

Hence, gross profit for the quarter came in at $17.4 million, 2% higher than $17.1 million in 3Q17.

Other income was 9% lower at $0.86 million, while other gains were 66% higher at $0.22 million.

Selling and distribution expenses for the quarter increased by 23% to $1.20 million compared to $0.97 million a year ago.

Administrative expenses were 11% higher at $5.98 million from $5.38 million a year ago.

Thomas Chi, managing director of Boustead says, “Although we have seen an improvement in construction activities in the industrial real estate sector in Singapore, competition is expected to remain intense and margins challenging. Nonetheless, our financially-sound position allows us to continue making further investments in smart and eco-sustainable building capabilities, cost and productivity improvements, as well as strategic partnerships and platforms in Singapore and regionally.”

Shares in Boustead Projects closed 2 cents lower at 86 cents on Monday.