SINGAPORE (Nov 14): Hong Leong Asia reported a 35.7% drop in 3Q18 earnings to $2.8 million from a restated $4.4 million a year ago after the de-consolidation of the group’s consumer products unit Xinfei.
3Q18 revenue fell 14.8% to $756 million mainly due to lower revenue recorded by diesel engines unit Yuchai, partially offset by higher revenue recorded by the building materials unit (BMU).
The other business units in Hong Leong Asia are the industrial packaging unit (Rex) and the air-conditioning systems unit (Airwell).
Gross profit came in at $139.3 million, a decrease of 16.2% while gross profit margin was 18.4% as compared to 18.7%.
Other income came in at $12.4 million, an increase of $1.0 million from $11.4 million in 3Q17 mainly due to higher interest income.
Selling and distribution (S&D) expenses $60.9 million in 3Q18, an increase of 40.7% compared to $43.3 million mainly due to higher warranty expenses, partially offset by lower staff costs.
About $13.1 million was spent on R&D.
In its outlook, Hong Leong Asia says the decline in the construction industry had an adverse impact on the operating performance of BMU.
In Singapore, the decline in the construction industry led to fewer projects and keen price competition.
In Malaysia, the group’s subsidiary, Tasek Corporation, is also facing intense price competition due to excess cement capacity and reduced number of private property projects.
Year to date, shares in Hong Leong Asia are down 47% at 56 cents.
