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These 2 Companies Reported Lower Profits In Their Latest Quarterly Earnings

The Motley Fool logo The Motley Fool 11/9/2017 Lawrence Nga

We've come to the end of the earnings season. As is common with every earnings season, there will be some companies posting growth, some companies posting mixed numbers, and some companies experiencing declines.

So, which are the companies that recently delivered lower profits? Let's take a look at two of them:

1. Land transport services provider ComfortDelGro Corporation Ltd(SGX: C52) reported its 2017 second quarter earnings in mid-August.

During the quarter, ComfortDelGro's revenue was down by 3.4% year-on-year to $987.2 million. Meanwhile, profit attributable to shareholders fell by 6.8% to S$79.4 million.

Most of ComfortDelGro's segments saw their revenues decline during the quarter, with the exception of the Public Transport Services segment. The segment's revenue growth was driven by SBS TransitLtd (SGX: S61). The public bus services provider, which is majority-owned by ComfortDelGro, experienced an increase in revenue following its transition to the Bus Contracting Model in September 2016.

In other positive notes, ComfortDelGro's free cash flow grew during the quarter (from a negative S$12.6 million a year ago to a positive S$79.0 million), and the company maintained a strong balance sheet that has a net cash position of S$229.5 million.

Looking ahead, ComfortDelGro expects revenue declines in 2017 for most of its business segments, except for Public Transport Services and Driving Centre. The latter is expected to maintain its revenue, while the former is forecast to produce higher revenue in Singapore and Australia.

2. First Resources Ltd (SGX: EB5) also reported its 2017 second quarter earnings in mid-August. The palm oil producer manages more than 200,000 hectares of oil-palm plantations across the Riau, East Kalimantan, and West Kalimantan provinces of Indonesia.

The company saw its revenue for the reporting quarter slip by 0.6% year-on-year to US$134.6 million. A loss on derivative financial instruments (there was a gain in the same quarter a year ago) and a 46% jump in tax expense caused First Resources' profit attributable to shareholders to fall by 11.4% to US$23.2 million.

But, the palm oil producer managed to generate good free cash flow for the reporting quarter (a sum of S$30.7 million). It also produced a stronger balance sheet compared to a year ago, with the net debt position declining from US$346.1 million to US$164.1 million.

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As for what lies ahead, this is what First Resources said in its earnings announcement:

"Given its attractive relative pricing against the other edible oils and continued low inventories in both producing and importing countries, demand for palm oil should remain stable.

 In the longer term, the Indonesian biodiesel mandate and underlying demand growth from emerging markets will continue to underpin the positive outlook of the palm oil industry."

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