Lian Beng Group reported on Friday its fiscal third quarter net profit dropped 55.3 percent on-year to S$3.63 million on higher construction costs and accounting changes to borrowing costs.
Revenue for the quarter ended 28 February rose 0.4 percent on-year to S$90.98 million, the company said in a filing to SGX after the market close on Friday.
The costs of sales rose 6.5 percent on-year to S$70.09 million in the quarter on higher construction costs, the filing said.
In addition, the share of results of associates and joint ventures for the fiscal third quarter was a loss of S$3.08 million, compared with a year earlier profit of S$2.49 million, Lian Beng said.
“This was mainly due to losses recorded by associates in the property development segment as a result of adjustments in borrowing costs made to Affinity @ Serangoon and Riverfront Residences,” Lian Beng said.
That was on accounting changes that required borrowing costs related to development properties ready for intended sale to be expenses when occurred, rather than capitalized as they were previously, the filing said.
In its outlook, Lian Beng pointed to the Building and Construction Authority of Sinapore’s January report estimating 2019 construction demand at S$27 billion to S$32 billion, compared with S$30.5 billion awarded in 2018.
“The demand for construction services is expected to be reasonably healthy and backed by a decent pipeline of major public infrastructure and industrial projects. Private sector demand is expected to be supported by the redevelopment of en-bloc sales sites concluded in the second half of 2018, as well as new industrial projects,” the statement said.
“This bodes well for the group’s construction business as it leverages its track record and expertise to build up its order book,” Lian Beng said.
It noted its construction order book was at S$1.26 billion as of end-February, providing a steady flow of activity through fiscal 2022.
But Lian Beng added that it remained cautious on the Singapore residential property market outlook amid cooling measures from the government.