Nordic executive chairman Chang Yeh Hong presenting to OCBC remisiers and investors last Friday. Photo by Colin Lum.
Chang Yeh Hong, executive chairman of Nordic Group: "No erosion of the normal gross profit margin in 1H2015; 1H2014 had enjoyed an exceptional variation order from a customer."
Photo by Leong Chan TeikNEXT TUESDAY (Sept 8), shareholders of Nordic Group will find an interim dividend credited to their accounts.
At 0.4-cent a share, it equates to about 2.5% yield on a stock price of 16 cents.
It's decent, though not astounding, but what it signifies is the maiden payout under the company's policy of sharing 40% of its earnings as dividends.
Nordic earned 1 cent in earnings per share (or $4.0 million) in 1H2015, up 25% y-o-y.
The 40% payout ratio is high and Mr Chang Yeh Hong, the executive chairman of Nordic Group, said this is possible because of the cashflow and recurring business of two subsidiaries -- MultiHeight Scaffolding and newly-acquired Austin Energy.
These businesses serve petrochemical companies operating on Jurong Island, providing scaffolding and insulation services which are required on an ongoing basis.
Have these customers placed a squeeze on the margins? Gross profit margins contracted 3.3 percentage points and 5.0 percentage points in 1H and 2Q, respectively.
CEO Dorcas Teo. Photo by Leong Chan TeikMr Chang explained: "In 1H2014, we had an exceptional variation order from a customer which enhanced the margins. Our normal range is 32-33%, so there has been no erosion in 1H2015."
Aside from gross profit margin, all other metrics were up in 1H2015: "We are firing on all cylinders, and we are optimistic about the next six months," quipped Mr Chang.
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