CSC Holdings (C06) H2 2023 earnings summary

Executive summary

• FY23 revenue slipped to $264.6m from $268.7m; attributable net loss was $26.7m versus $5.9m profit in FY22, as project margins compressed and costs rose.

• About $310m of projects were secured in FY23, though delayed starts deferred revenue recognition; cash and cash equivalents were $22.8m at year-end and operating cash flow remained positive.

Financial highlights

• Revenue was $264.6m, down from $268.7m; gross profit fell to $6.3m from $27.7m and gross margin to 2.4% from 10.3%.

• Results from operating activities were a loss of $22.7m versus profit of $2.6m; net finance expenses rose to $4.6m from $1.3m.

• Net loss was $27.1m; loss attributable to owners was $26.7m versus FY22 profit of $5.9m. Basic and diluted EPS were both a loss of 0.76 cents, versus earnings of 0.16 cents.

• EBITDA declined to $2.9m from $32.4m; operating cash flow was $10.7m, while cash and cash equivalents on the balance sheet totaled $22.8m at 31 March 2023.

• Other operating expenses rose 6.3% to $23.3m; included a $1.9m FX loss and $0.8m provision for bad debt from financially distressed main contractors.

Outlook and guidance

• FY24 operating conditions expected to remain challenging; Singapore and Malaysia construction-services demand was expected to be stable, with material, energy, interest and labour costs pressuring margins.

• BCA forecast 2023 Singapore construction demand of $27bn–$32bn, on par with 2022, mainly supported by public housing and infrastructure; management cautioned that higher input costs inflate the estimate.

• Higher interest rates were expected to persist; foreign worker quota reductions from September 2023 and levy increases from January 2024 were expected to raise labour costs.

• Unsatisfied construction-contract performance obligations totaled $122.3m; 43% was expected to be recognised in FY24 and the balance in FY25.