Published October 27, 2008

Q3 earnings hit, with net profits down 6.3%

Out of 25 firms, only OSIM is in the red; 16 ramp up profits, 2 reverse losses

By CHEW XIANG

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THE recession is already biting. One week into the third quarter earnings season, the 25 listed companies that have posted results collectively made $617.2 million in net profit, down 6.3 per cent over the same period last year.

All but one recorded profits, although six had lower net income this quarter, compared to a year ago. Two reversed losses, while 16 announced higher profits.

The sole company in the red, healthy lifestyle product maker OSIM, saw its loss for the period widen to almost $7 million after its revenue fell 16 per cent. This was due to a $12.4 million loss from associates and joint ventures.

Four of the six companies which saw their profits going south were Keppel-linked entities. Singapore Petroleum Co said that profit plunged 99.4 per cent to $619,000, with lower refining margins, inventory writedown and the weak US dollar resulting in lower gross earnings. The company is about 45 per cent owned by Keppel Corp.

Keppel Land too saw profits dropping 43.6 per cent to $46.2 million, as revenue too more than halved from $382 million to $186 million. The company attributed this to completion of several trading projects in Singapore and overseas in previous quarters and lower revenues reported by property services and the group's hotels.

Keppel Telecommunications and Transportation posted profits of $11.8 million, down 5.9 per cent, on revenues of $32.3 million. This was due to lower contributions from listed 20 per cent associate Mobile- One, which saw profits slump 21.1 per cent to $34.4 million.

The advent of full mobile number portability caused higher customer acquisition and retention costs, the company said, hurting profitability for the quarter. It is expecting a single-digit decline in full year earnings.

Blue chip Keppel Corp, the first of the conglomerates to report earnings, managed to maintain its growth momentum in Q3 with a 10.2 per cent rise in profit to $272.9 million on the back of a 24.1 per cent increase in revenue to $3.2 billion.

Meanwhile, trusts and Reits reported largely positive results, reinforcing their reputation as defensive plays despite concerns over debt refinancing and falling rentals and charter rates.

Keppel Land's office trust K-Reit saw distributable income jump 180 per cent to $15.2 million from $5.4 million on the back of contributions from new acquisition One Raffles Quay. Allaying some market worry, K-Reit said it had no need to refinance any debt until 2011.

CapitaLand's trusts that reported results showed strong growth. CapitaMall Trust posted distributable income for the quarter of $62.4 million, up 14 per cent, but said it will put back upgrading work at a number of its malls due to higher construction costs.

CapitaCommercial Trust meanwhile saw distributable income almost doubling to $43.2 million from 29.6 million a year ago. Ascott Residence Trust achieved unitholders' distribution of $15.9 million, up 31.8 per cent, with good growth in daily rates from its Beijing properties during the Olympic Games.

Mapletree Logistics Trust also reported a more than 30 per cent increase in distributable income to $25.4 million. First Reit, Singapore's first healthcare real estate investment trust comprising eight properties in Singapore and Indonesia, reported distributable income of $5.3 million, up 12.4 per cent from a year ago.

The two shipping trusts, First Ship Lease Trust and Pacific Shipping Trust saw double digit increases in distributable income. Both said they had committed to lock in customers to long term leases. They said credit lines were intact and there was no uncommitted capital expenditure.