SINGAPORE: Faced with a tough fiscal year ending Dec 31, 2023, Straits Trading reports a S$28.6 million loss in FY2023. This marked a significant reversal from the previous fiscal year, where they bagged earnings of S$551.3 million, The Edge Singapore reports.
The company pointed fingers at reduced transaction volumes, terming it a “challenging year” for divestments, capital recycling, and escalated funding costs.
In the second half of the fiscal year, the loss narrowed to S$43.5 million compared to S$121.8 million in the previous year’s corresponding period.
Loss per share for the fiscal year and the second half stood at 6.4 cents and 9.7 cents, respectively, on a diluted basis.
Total revenue for the fiscal year saw a 6.8% year-on-year drop to S$491.7 million. The decline was chiefly attributed to a 10.1% drop in revenue from tin mining and smelting, which settled at S$424.7 million.
However, this was somewhat offset by a 21.4% year-on-year growth in property revenue, amounting to S$66.8 million.
During the second half of the fiscal year, total revenue dipped by 0.6% year-on-year to S$255.9 million. This dip was primarily due to a 1.9% year-on-year fall in tin mining and smelting revenue, which stood at S$222.7 million, influenced by the weaker ringgit against the Singapore dollar.
Conversely, property revenue rose 9.1% year-on-year to S$33.1 million, driven mainly by the full-year revenue contribution from the company’s investment properties in the UK.
In the real estate segment, Straits Real Estate saw growth in recurring income from its investment properties. The Gloucester Business Park in the UK secured several lease renewals with an average rent reversion increase of 36%.
Rental income remained strong at S$66.8 million, marking a 21.4% increase year-on-year.
The Malaysian arm, STC Property Management, is gearing up to launch the Crowne Plaza Penang in Straits City in the first half of 2024.
The company is optimistic about the growth potential, citing factors such as the Penang 2030 Vision and the revival of the high-speed rail project between Malaysia and Singapore.
Far East Hospitality Holdings, in which Straits Trading holds a 30% stake, witnessed a robust operating performance in FY2023, benefiting from the travel sector’s recovery.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged by 252.6% year-on-year to S$2.7 million.
In its resources segment, primarily through Malaysia Smelting Corp, the company reported an EBITDA of S$47.3 million, down by 13.6% year-on-year due to lower average prices.
Despite this, sales volume increased. Malaysia Smelting Corp will begin the staged decommissioning of the Butterworth smelter.
An interim dividend of 8 cents per share has been declared for the period, remaining unchanged from the previous year.
As of Dec 31, 2023, the company held cash and cash equivalents of S$458.1 million, enabling it to actively engage in capital recycling, enhance real estate operations, and seek optimal risk-adjusted returns.
Straits Trading remains bullish about its future prospects. “The group remains optimistic that the resources and hospitality businesses will continue to benefit from the industry cyclical tailwinds,” the company’s statement on Feb 27 read.
Executive Chairman Chew Gek Khim expressed confidence in the company’s ability to navigate challenges and pursue sustainable growth through prudent investment decisions.
He said, “Straits Trading has managed to navigate the challenges in the current business environment with our diversified business strategy as an investment conglomerate.
With a strengthened balance sheet, we will continue to evaluate investment opportunities to deliver sustainable business growth.” /TISG
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