SINGAPORE (Feb 26): United Engineers, the property, engineering and manufacturing group, reported a 36% fall in FY18 earnings to $55.8 million, 8.7 cents per share, from restated FY17 earnings of $87.18 million.
Revenue fell 29% to $374.9 million, due to lower revenue from property development and the absence of contribution from the divested liquefied petroleum gas business.
In the Property Development segment, FY18 revenue came mainly from the sales of other completed commercial units at Shenyang Orchard Summer Palace. Revenue declined by 81% to $25.8 million in the absence of contribution from Chengdu Orchard Villa Phase 4 and Eight Riversuites in FY18 as well as lower sales of units at Shenyang Orchard Summer Palace.
Operating loss before interest decreased to $2.8 million in FY18 from $9.1 million in FY17 mainly due to the absence of impairment losses on certain overseas development project.
The Property Rental & Hospitality segment recorded a 5% decrease in revenue to $125.2 million in FY18. Operating profit before interest decreased 31% to $86.8 million in the previous year mainly due to lower revaluation gains from investment properties and lower provision for rental support written-back.
Engineering & Distribution revenue decreased 20% to $108.1 million in FY18 mainly due to lower revenue contribution from distribution businesses and the absence of revenue contribution from the divested LPG business. Operating profit before interest decreased 88% to $0.9 million.
In the Manufacturing segment, revenue fell 17% to $71.3 million in FY18 mainly due to slower demand arising from US-China trade tensions and suffered an operating loss before interest was $2.2 million in FY18 compared with operating profit before interest of $5.4 million in the previous year. The decline in operating results in 2018 was as a result of lower turnover, unfavourable product mix, write down of inventories and impairment loss on property, plant and equipment.
The group has proposed a dividend per ordinary share of three cents, which is lower than the dividend per ordinary share of four cents that it declared a year ago. IIt has also proposed a dividend per preference share of 7.5 cents, unchanged from a year ago.
In its outlook, UE says the US-China trade tension may affect global economic growth prospects and adversely impact the manufacturing services sector in China.
In Singapore, the latest round of property cooling measures announced in July 2018 is expected to weigh on the private residential property market in the short term but may help to maintain a stable and sustainable market in the longer run. The group is focusing on the sales launch of the Dairy Farm project which is anticipated in the second half of 2019.
The office occupancy and rental in Singapore may continue to see steady recovery. The group is embarking on asset enhancement initiatives for its investment properties in Singapore and may make selective acquisitions if and when such opportunities arise.
In China, the property cooling measures have brought about a relative slowdown in activity in certain cities but the demand for good quality housing remains and the property market may continue to see sustainable growth in the longer term.
Shares in United Engineers closed three cents higher on Monday at $2.44.
