Gamuda Q1 net profit falls 38pc

Gamuda Q1 net profit falls 38pc
By Sharen Kaur
Published: 2008/12/18
BT

GAMUDA Bhd (5304) , Malaysia's second-biggest builder by market value, said its first-quarter net profit fell 38 per cent due to slower construction activities and weaker profits from its property division.Nevertheless, Gamuda expects earnings for the remaining three quarters to remain stable due to its existing order book.Managing director Datuk Lin Yun Ling had warned that profits in the first quarter will dip as projects get delayed.Although higher income from its Middle East projects will offset any drop in turnover, it will not help earnings because of low margins from the foreign jobs, he said on Tuesday.

Its net profit for the quarter to October 31 2008 was down to RM55 million from RM88.1 million in the same period a year ago.Revenue was also down 27 per cent to RM614 million.Gamuda said profit fell because of slower construction activities, led by the RM12.5 billion electrified double-tracking project as the authorities in Penang were slow to hand over land.Gamuda should have been given over 95 per cent of the total land instead of 61 per cent since the project started.It said the project faces a potential delay because of this.

In addition, sales of certain commercial parcels to investors at its RM8 billion to RM10 billion central district project in Hanoi, Vietnam have been delayed due to difficulties in obtaining financing.

It also said it is still in negotiations with Electricity Generating Authority of Thailand for a new tariff agreement which will take into account the increase in construction cost due to the delay in project implementation by the client.

Contribution from its water-related and expressway concessions was also lower than previously.