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PoorQ4resultssparkcautiousoutlook

1stMarch2012

ByKennethLim

TheBusinessTimes

©2012SingaporePressHoldingsLimited

Totalprofitsof301firmsdownmorethan20%forOct-Decquarter

ANOTHERtoughquarter,andmoretocome,analystssay.

Corporate profits generally

disappointed in the fourth quarter of

2011, and companies are painting a

cautious outlook for the months

ahead,analystssaid.

'I see more disappointments than

upside surprises,' said Maybank Kim

EngheadofresearchStephanieWong.

'Actually it's quite a lot of

disappointment.Generallyitreflectsa

verytoughfourthquarterlastyearas

someoftherealitystartedtokickin.'

Atotalof303companiespostedtheir

2011fourth-quarterresultsasat5.30

pmyesterday.Ofthis,301companies

whose fourth quarter 2010 results

wereavailableforcomparisonshowed

a 23.7 per cent year-on-year fall in

totalprofitsto$10.3billion,according

todatacompiledbyBT.

Totalfourth-quarterprofitforthe303

companieswas$10.4billion,with242

companies in the black and 61

reportinglosses.Companiesthatdidworseoutnumberedthosethatdidbetter186to

115.

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Forthefullyear,totalprofitin2011was$34.7billionfrom393companies.Ofthe387

with comparable results, earnings fell 4.5 per cent to $34.25 billion from 2010,

reflecting a much weaker second half of the year.Worse performers outnumbered

betterperformers216to171.

UOB-KayHianresearchheadAndrewChowsaidperformancewasuneven,withcertain

sectorsdoingbetterthanothers.

'Ithinkit'sbeenquitesectorspecific,'MrChowsaid.

Headdedthat fourth-quarter resultswere actuallymostly in line,but thatwas only

afteraggressivedowngradesovertheyear,especiallyinthesecondhalfof2011.

DMG&PartnersanalystLengSengChoonsaidthebankingsectorwasamixedbag.DBS

GroupHoldings,whichbenefitedfromlower-than-expectedtaxes,andOversea-Chinese

Banking Corp, which saw better trading income, beat consensus estimates, while

UnitedOverseasBankmissedpredictionsbecauseofhigherprovisions.

Loansgrowthwasakeyconcerninthefourthquarter,andsluggishnessisexpectedin

2012.

'I'mlookingatearningscontractionforallthreebanksin2012,'MrLengsaid.

Commodities-related names had a tough end to the year amid extremely volatilematerialsprices.

'Fourth-quarterwasgenerallyweakbutinlinewithexpectations,'saidKimEnganalyst

JamesKoh.

Wilmar International was highlighted by a number of analysts as a notable

disappointment,asmarginstookahitandcoreincomemissedestimates.

Theoutlookforthesectorremainsmuted.

'Commoditypriceshaveseensomekindofstabilisationsincethestartoftheyear,'Mr

Kohsaid.

Property developers also saw a slowdown, although sales in Singapore beat

expectations.

'Forcompaniesthatarediversifiedintoothercountriesandregions,youcanseethat

theearningsactuallycamedowninthelastquarteroratleastlasthalfof2011,'said

AmFraseranalystLauWeiChong.

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CapitaLandandKeppelLandbothfacedheadwindsinChina,whichcouldpersistinto

2012,MrLausaid.CityDevelopmentscameinbetterthanexpected,and'hospitality

wassurprisinglyresilient',headded.

A new accounting treatment of project sales took effect in 2011 for the industry,leading to a slew of 2010 restatements and complicating year-on-year comparisons.

The new rules require revenue for certain projects to be recognised only upon

completion,insteadofbasedonthepercentagecompletionoftheproject.

But the restatements should end for most developers in 2012, and make future

numbersalittlemoreuseful,ifstilllumpy.

'FY12willgivebettercomparisons,'MrLausaid.

Thetechnologysectorwasespeciallybeateninthefourthquarter,theculminationof

theMarchearthquakeinJapan,theeurozonecrisisandthefloodsinThailand,which

wreakedhavoconsupplychains.

VentureCorpwassurprisinglyresilient,andgaveasourceofhope.

'Theoutlookispositive,especiallyforfirstquarterandgoingintosecondquarter,but

visibilityisstilllow,'saidDBSanalystTanAiTeng.

NeptuneOrient Lineswas the biggest lossmaker, reporting aUS$320million fourth-quarterdeficitinadismalyearforshippingcompanies.

'For the shipping side, in away, it is a very toughenvironment,' UOB-KayHian'sMr

Chowsaid.'Stillalotofoversupply,evenwiththeproposedincreasein(freight)rates.'

Source:TheBusinessTimes

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