23/08/2012 (The Star) - Boustead Holdings Bhd posted a steep 76.4% year-on-year drop in net profit to RM43.7mil for its second quarter ended June 30, 2012 due to lower crude palm oil prices and a slowdown in the maritime sector which impacted its heavy industries division.

Revenue for the quarter under review increased 14.5% year-on-year to RM2.55bil.

The conglomerate said in a statement that the earnings decline was strongly influenced by lower crude palm oil prices and lower contribution from the heavy industries division as a result of a slowdown in the maritime industry.

Boustead Holdings also pointed out that there was a gain of RM95mil in the previous year, as a result of the disposal of plantation assets.

For the six months ended June 30, 2012, Boustead Holdings posted a 36.7% year-on-year drop in net profit to RM188.3mil although revenue increased 29.9% to RM4.95bil.

In a statement, it also said it remained dedicated to its dividend policy and delivering value to shareholders.

It declared a dividend of 7.5 sen, which brought the total dividends for the year-to-date to 15 sen.

This year, the group is targeting a return on equity of 10%, return on assets of 7.5% and a dividend per share of 30 sen.

In its annual report 2011, the group noted that its dividend payout net of tax was 39 sen per share for last year.

It also aims to pay a minimum of 70% of its audited annual net profit, effective from the 2011 financial year.

Boustead Holdings deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said: “For the six month period, the group was weighed down by commodity prices and the tough conditions of the maritime sector which impacted our heavy industries division. “Fortunately, the remaining four divisions have performed significantly well for the six month period on a comparative year-on-year basis.”

He said the group's focus was to ensure improvements in productivity and efficiencies.

“Business is prone to cyclical conditions and given our success as a conglomerate we are able to deliver profit as a result of multiple revenue streams, hence we should not be severely affected by dips in any one business stream given that the other streams should assist the Group in delivering profits.”

For the half year, the plantation division delivered a lower pre-tax operating profit of RM112.4mil, compared with RM172.8mil a year earlier, as it was impacted by commodity prices and a decline in crop production.

For the six months under review, the pharmaceutical division's pre-tax profit grew 52% year-on-year to RM55mil, and this was driven by Pharmaniaga Bhd's higher sales volume to the Government sector, as well as the improvement in operational efficiencies.

Meanwhile, the heavy industries division posted a deficit of RM31.2mil mainly due to losses from the commercial shipbuilding operations brought on by cost escalations.

Boustead Holdings said the maintenance, repair and overhaul business also saw depressed business conditions and the slowdown of the chartering business had also affected the division's bottom line.

As for the finance and investment division, it posted a cumulative six month pre-tax profit of RM49.5mil, compared with RM25.4mil a year earlier, driven largely by the strong contributions from the Affin Group and improved results generated by Cadbury Confectionery and the University of Nottingham in Malaysia.

Its property division posted a stronger pre-tax profit of RM55.6mil for the six-month period, compared with RM36.2mil a year earlier, and this was attributed to the disposal of vacant land during the first quarter of the year.

Boustead Holdings' trading and manufacturing division also posted a higher six-month pre-tax profit of RM63.2mil, compared with RM55.5mil a year earlier, mainly on improved earnings delivered by Boustead Petroleum Marketing which had achieved higher sales volume and a RM13.6mil gain on sale of property which had helped to offset against the stockholding loss of RM8mil.