SINGAPORE (Nov 7): OKP Holdings, the infrastructure and civil engineering company, announced that 3Q17 earnings dropped 62.4% to $742,000 compared to $1.98 million in 3Q16.
The group’s revenue declined 3.6% to $27.1 million from $28.1 million a year ago, due to a decrease in revenue from the group’s construction segment, but was partially offset by an increase in revenue from the maintenance segment.
The group’s construction segment posted revenue of $17.6 million, 24% less than $23.2 million last year.
This was largely attributable to a lower percentage of revenue recognised from a few construction projects which were reaching completion, coupled with no revenue generated from a construction project at the Pan-Island Expressway (PIE) exit to Tampines Expressway (TPE) during 3Q17.
Meanwhile, revenue from the maintenance segment increased 94.1% to $9.43 million from $4.86 million a year ago, mainly due to the higher percentage of revenue recognised from a number of both existing and newly awarded maintenance projects as they progressed to a more active phase during the quarter.
However, cost of sales increased 1.8% to $24.4 million compared to $24.0 million last year.
This was mainly due to additional costs of $3.1 million from a construction project at the PIE to TPE; a penalty of $0.3 million paid for a worksite incident in Sept 2015; an increase in cost of construction materials due to higher utilisation of materials as some of the projects progressed to a more active phase; and an increase in labour costs due to salary adjustment during 3Q17.
See: OKP calls for trading halt as share price retreats after PIE collapse
However the increase in cost of sales was offset by a decrease in sub-contracting costs which were mainly costs incurred for specialised works such as bored piling, asphalt works, mechanical and electrical works, soil-testing, landscaping and metalworks which are usually subcontracted to external parties.
This brought gross profit for the third quarter ended September to $2.64 million, 35.5% less than $4.08 million posted in 3Q17.
Administrative expenses decreased by 10.7% to $2.06 million from $2.31 million last year, largely attributable to the lower directors’ remuneration (including profit sharing) as a result of the lower profit generated by the group.
On the outlook, the group will work closely with the authorities on the on-going investigations relating to the worksite incident at the PIE exit to TPE, as well as provide all necessary assistance and support to ensure that the needs of the affected workers are fully taken care of.
Or Toh Wat, group managing director of OKP says, “The operating environment remains challenging due to keen competition. However, the group stays optimistic on the back of healthy demand from the public sector, given that the government is bringing forward projects worth a total of $1.4 billion to this year and next.
Shares in OKP closed 38 cents on Tuesday.
