SINGAPORE (Aug 11): Sapphire Corporation posted earnings of RMB 10.5 million ($2.2 million) for the 2Q ended June, falling 23.2% from earnings of RMB 13.7 million a year ago.

Gross profit fell 15.0% to RMB 32.6 million in 2Q17, on the back of a 6 percentage point decrease in gross profit margin to 11.0%.

This was mainly due to the replacement of part-time workers with full-time hires for the planned capacity expansion at Ranken, as well as certain recently-secured major infrastructure projects that remained in the early stages of construction works.

Ranken Infrastructure is Sapphire’s rail engineering subsidiary.

Revenue grew 30.8% to RMB 296.0 million in 2Q17, from RMB 226.3 million a year ago.

This was largely due to the recognition of revenue from an overseas consultancy project in South Asia, and a higher number of ongoing projects in China.

As at end June, cash and cash equivalents stood at RMB 109.0 million.

Looking ahead, the group says it will bid for projects in regions where it has a track record, such as the northern and northwest regions of China, as well as evaluate opportunities in Bangladesh and Southeast Asia.

“Ranken remains confident in its overall project execution capabilities and of meeting the targeted delivery schedules for its key projects, despite stringent technical compliance requirements,” says Sapphire group CEO and managing director Teh Wing Kwan.

“Meanwhile, we are scaling up our production capacity with more full-time hires to keep up with the pace of project bidding in China,” he adds.

As at end June, Ranken’s order book stood at RMB 2.6 billion.

The group says it expects to remain profitable for the financial year ending Dec 31, 2017.

Shares of Sapphire Corp closed flat at 29 cents on Friday.