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BRC Asia sees 1H21 earnings fall 15% to $19.2 mil due to provisions for onerous contracts

Felicia Tan
Felicia Tan • 4 min read
BRC Asia sees 1H21 earnings fall 15% to $19.2 mil due to provisions for onerous contracts
The group has declared an interim dividend of 4 cents per share for the 1HFY2021.
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BRC Asia has reported earnings of $9.5 million for the 2QFY2021 ended March, 4% lower than earnings of $10.0 million in the corresponding period the year before.

This brings earnings for the 1HFY2021 to $19.2 million, 15% lower than earnings of $22.7 million in the 1HFY2020.

Earnings per share (EPS) for the 2QFY2021 and 1HFY2021 stood at 3.97 cents and 8.08 cents respectively on a diluted basis.

The decline in 1HFY2021 net profits have taken in account provisions for onerous contracts of $28.9 million due to higher steel prices.

2QFY2021 revenue increased 21% y-o-y to $279.3 million, while 1HFY2021 revenue improved 7% y-o-y to $492.7 million.


SEE:Building and Construction Authority slashes forecast for Singapore's 2020 construction demand by $10 billion

The increment was due to the revenue of $38.4 million from the sale of a development property at Nassim Road, as well as higher selling prices brought about by the increase of steel prices.

Revenue for the 1HFY2020 would have been comparable to the 1HFY2020 excluding the sale of the property.

2QFY2021 gross profit stood 36% lower y-o-y at $16.2 million due a provision for onerous contracts of $20.1 million, compared to a reversal of $0.1 million in 2QFY020. The quarter’s gross profit margin (GPM) for the quarter fell 5.1 percentage points to 5.8%.

1HFY2021 gross profit fell 28% y-o-y to $39.6 million due to provision for onerous contracts of $28.9 million, compared to a reversal of $6.4 million in the year before.

1HFY2021’s GPM stood 4 percentage points lower at 8.0%.

Other income for the 1HFY2021 increased 493% y-o-y to $5.6 million due mainly to fair value changes on derivatives and government grants.

Other operating expenses decreased by 44% y-o-y to $4.6 million in 1HFY2021, while other operating expenses fell by 16% y-o-y to $2.6 million in the 2QFY2021.

This was mainly due to a $4.1 million decrease in period-on-period fair value changes on trade receivables subject to provisioning pricing from $4.7 million in 1H2020 to $0.6 million in 1HFY2021. This decrease was partially offset by an increase in net foreign exchange losses.

Share of profit from its joint venture increased by 92% y-o-y to $0.4 million in the 1HFY2021 due to better local market conditions.

The group recorded share of losses of associates for the 1HFY2021 and 2QFY2021 of $1.6 million and $0.1 million, 23% and 88% lower y-o-y, respectively.

The losses are attributable to the group's 17% equity interest in Pristine Islands investment Pte Ltd, an investment holding company with a 100% interest in a subsidiary that operates and manages an airport, hotel and resort in the Maldives.

As at March 31, cash and cash equivalents stood at $73.7 million. Its order book stood at around $1.10 billion as at end-March.

The group has declared an interim dividend of 4 cents per share for the 1HFY2021.

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In its outlook statement, the Building and Construction Authority (BCA) forecasts that the average construction demand for 2022 to 2025 would range from $25 billion and $32 billion per year.

However, the group expects that some of its customers would be more adversely impacted by the current lower efficiency and work productivity as well as heightened costs due to the Covid-19 measures.

"The Covid-19 pandemic continues to be fluid but we remain cautiously optimistic about our business prospects. As general economic activity begins to recover from the severe disruptions seen in 2020, we expect to see broad base improvements to Singapore's construction demand and output in 2021 and beyond,” says Seah Kiin Peng, CEO of the group.

“As one of the market leaders of the reinforcing steel industry, BRC is well-positioned to capitalise on the recovery of the construction sector. We remain in good financial shape, backed by a strong order book and, on this note, we are pleased to declare an interim dividend of 4 Singapore cents per share,” he adds.

Shares in BRC Asia closed flat at $1.54 on May 5.

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