2 Singapore Blue-Chip Companies That Announced Weaker Results Recently

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We are now at the busiest part of earnings season. Some companies have had good news to share, and others, not so good. Today, I’m looking at two companies that have recently reported negative results.

Let’s start with Singapore Telecommunications Limited (SGX: Z74), a company that needs little introduction as it’s the major local telecom player in Singapore. The other two are StarHub Ltd and M1 Ltd.

Singtel (SGX: Z74)

In the latest quarter ended 31 December 2018, SingTel reported that revenue was up 0.9% year on year at S$4.6 billion.

However, EBITDA (earnings before interest, tax, depreciation, and amortisation) for the quarter declined 10.6% year on year to S$1.2 billion. Also, the group share of associates’ pre-tax earnings was down 32.9% year on year to S$371 million.

Consequently, net profit declined 14.2% year on year to S$823 million. Excluding exceptional items, underlying net profit declined 28.4% year on year to S$680 million.

The lower underlying net profit was due to weaker performance in the group’s own business and a lower share of associates’ earnings.

Chua Sock Koong, Singtel’s group CEO, commented:

“We have stayed the course despite heightened competition and challenging market and economic conditions.

We’ve continued to add postpaid mobile customers across our core business in both Singapore and Australia while making positive strides in the ICT and digital space.

We remain focused on investing in networks and building our digital capabilities — areas that are important to our customers and our future success.

We will also step up on managing costs, growing revenues and driving efficiencies through increased digitalisation efforts.”

Wilmar International (SGX: F34)

Next, let’s look at Wilmar International Limited (SGX: F34), an agricultural company that operates through four main segments: tropical oils, oilseeds and grains, sugar, and others.

In the latest quarter ended 31 December 2018, Wilmar reported that revenue fell by 3.0% to US$11.1 billion.

Similarly, EBITDA declined by 8.0% to US$774.1 million. Consequently, net profit for the quarter plunged 52.9% to US$200.9 million. Core net profit fared better, down by “only” 10.3% year on year to S$334.7 million.

The weaker net profit was driven by the African swine fever outbreak in China affecting the group’s oilseeds and grains segment, weaker commodity prices for sugar and palm oil, as well as the impairment of sugar assets in Australia.

Wilmar proposed a final dividend of S$0.07 per share. Together with the interim dividend of S$0.035, the total dividend for 2018 was S$0.105. In 2017, the conglomerate’s dividend was S$0.10 per share.

Kuok Khoon Hong, the chairman and CEO of the conglomerate, commented:

“The Group performed well in 2018 even though we were affected by low palm oil and sugar prices in our upstream operations and volatile soybeans market created by the US/China trade tensions.

The Group’s success in its strategy to develop more stable downstream processing and branded consumer products enabled us to achieve growth and maintain profit in this challenging operating environment.

With the recent recovery of crude palm oil prices and satisfactory margins in downstream processing, Tropical Oils should continue to do well in 2019. Crush margins for 1Q2019 will be adversely impacted by the sharp decline in meal demand from the outbreak of African swine fever in China and the sharp drop in Brazilian soybean basis, but this is expected to improve in 2Q2019.

We also expect our other businesses to perform favourably in the coming year. Looking ahead, we are reasonably optimistic that performance for FY2019 will be satisfactory.”

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