Posted on June 16, 2009 - by musicwhiz

Boustead – FY 2009 Financial Analysis and Review Part 1

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Boustead released their full-year 2009 results on May 28, 2009 and the Group had achieved a seventh record year of revenues and profits. All divisions except water and wastewater showed growth and the Balance Sheet was further bolstered by a net cash balance of about S$150 million. In addition, for FY 2009, Boustead had also released the net profits for each division, which enables me to compute the net margin for each division. This information will be shown in Part 2 of the analysis. This analysis will be similar to the one I did for Tat Hong – Part 1 tackles the Profit & Loss, Balance Sheet and Cash Flow Statement; Part 2 discusses the divisions and how they performed while Part 3 shall cover future plans and prospects for the Company. There will be a separate post on the audiocast provided by Boustead for their FY 2009 results, which I will transcribe as I did for FY 2008.

Profit and Loss Analysis

Cost pressures can clearly be seen nibbling on Boustead’s performance, with 4Q 2009 COGS increasing 77% against a 53% increase in revenue year-on-year. For FY 2009, the effect was more muted, with an 18% increase in revenues to S$516.6 million offset by a higher increase in COGS of 24% to S$373.6 million. As a result, gross profit only increased 5.4% for FY 2009 to S$143 million. Note that part of the COGS included an S$8.7 million provision for foreseeable losses, or else the gross profit would have improved to S$151.7 million. For 4Q 2009, gross margin was 24.8% against 4Q 2008’s 35%, due to higher cost of materials. For FY 2009, gross margin hovered at 27.7%, lower than FY 2008’s gross margin of 31.0%. If we remove the one-time provision for foreseeable losses for FY 2009, gross margin would improve to 29.4%, which is just marginally lower than FY 2008.

For FY 2009, admin and selling and distribution expenses increased at a higher rate than revenues, up 36.6% and 34% respectively. This shows that Boustead still has some way to go to streamline their cost structure to ensure their operations remain lean and mean. On the other hand, “other operating expenses” only increased 7.2% which shows good cost control. If not for the S$24.2 million gain on sale of leasehold property completed by 40% owned BGI Realty during 4Q 2009, Boustead’s results would have been much poorer due to a combination of higher COGS, unfavourable forex movements, higher staff costs due to expansion of roles to handle a wider variety of projects and higher selling expenses. Read more…

Related posts:

1. Boustead – 1H FY 2010 Financial Analysis and Review Part 1
2. Boustead – FY 2009 Financial Analysis and Review Part 2
3. Boustead – FY 2009 Financial Analysis and Review Part 3