CSC earnings jump five times
Strong demand for specialist foundation work, efficiency gain boost margin
By LYNETTE KHOO
RIDING the upswing in the Singapore construction sector, CSC Holdings saw its net profit soar to $43.21 million for the full year ended March 31 - five times the preceding year's $8.6 million.
Revenue almost quadrupled to $483.7 million from $126.7 million, driven by strong organic growth and contributions from three newly acquired subsidiaries. This far outpaced the 46 per cent growth reported in the Building and Construction Authority's report on the value of construction contracts awarded in 2007. Earnings per share rose to 3.85 cents from 0.87.
CSC's gross profit margin improved to 20.2 per cent from 15.4 per cent, thanks to the strong demand for specialist foundation work and improved operational efficiency.
Activity increased across all of CSC's business segments. The company attributed the quantum leap in revenue to strong organic growth and timely acquisitions. It invested $50.8 million in plant and equipment to expand its capacity and capability.
The directors have recommended a tax-exempt final cash dividend of half a cent and a tax-exempt special dividend of 0.4 cent per share. These dividends are on top of a special dividend paid out in December 2007 of 0.282 cent.
CSC is optimistic about prospects for the current financial year despite the sub-prime crisis in the US, rising building material costs, fluctuating oil prices and a general shortage of resources.
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It managed these issues by procuring key materials at fixed prices upon securing contracts. Given that the average duration of a contract is about three to six months, the group's exposure to fluctuating prices is relatively manageable, said CSC.
CSC has also made inroads into Malaysia through a joint venture with IJM Construction Sdn Bhd and is looking to boost its revenue stream by diversifying into the Middle East and other Asian markets.
'We are committed to building our presence in the overseas markets where investment in real estate and infrastructure are rapidly growing,' said CSC chief executive See Yen Tarn.
At May 23, the group's outstanding order book was about $400 million.
CSC shares ended trading yesterday at 27.5 cents, down half a cent.
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