Steel reinforcement solutions provider BRC Asia’s earnings came in at $10.2 million in its 3QFY21 ended June, a reversal from the $2.5 million in losses it reported a year ago.
On a fully diluted basis, this translates to earnings per share of 4.19 cents for the quarter compared to losses per share of 1.08 cents in the previous year.
Revenue for the three month period surged by 830% to $340.2 million thanks to a recovery in construction works from the low base in FY2020 when construction works were suspended during the circuit breaker measures between Apr 7 to June 1 2020.
Cost of sales saw a corresponding 693% jump to $322.4 million, in line with the higher revenue.
Gross profit for the quarter increased to $17.8 million, reversing from the $4.1 million loss seen in the previous year.
Other income – which captures government grants received – was down 66% to $1.2 million, following a sharp dip in government support which came in the form of wage credit and special employment schemes which were doled out to help companies tide through the economic downturn brought on by the pandemic in 2020.
Meanwhile, operating expenses – which include expenses from distribution, administration, finance and impairment losses on trade receivables – surged by 482% to $6.4 million.
For the nine-month period ended June, BRC Asia’s earnings was up 46% to $29.3 million, from $20.1 million in the preceding year. A key contributor was a 7% increase in the group’s share of profit from its joint venture, to $0.7 million.
Its share of profit from the joint venture was conversely down by 38% to $0.3 million in 3QFY21, as the previus year benefitted from a momentary surge in demand after the Covid-19 lockdowns in China eased.
On a fully diluted basis, earnings per share was up 42% to 12.27 cents, from 8.63 cents in the 9-month period in FY2020.
As at end June, BRC Asia's cash and cash equivalents stood at $67.5 million, down from $72.1 million in the previous year.
Group CEO Seah Kiin Peng says the group is feeling the heat of the Covid-19-induced “resource and labour crunch”.
Singapore’s construction sector has been affected by a crunch in foreign labour with a greater number of workers returning to their home countries. A possible re-tightening of foreign labour supply will cause deep wounds to the sector.
Across the border, the imposition of the Movement Control Order 3.0 (MCO) has disrupted the production of various building materials such as precast concrete components, which are needed for construction works.
Seah is not expecting a recovery in the construction sector in the short-term given the continued volatility. He adds that the sector will see substantial structural changes in its operations in the longer term, due to the impact of the pandemic.
“We strive to stay at the very forefront of these changes, constantly innovating to stay ahead of the game, to deliver better, faster, cheaper reinforcing steel solutions for the market and our customers,” he adds.
Seah also points out that the group has a strong order book of around $1.1 billion as at end June, which will last for up to five years, subject to further changes.
Shares in BRC Asia closed down a cent or 0.69% at $1.45, before its results update.