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Financial review for current quarter and financial year to date
The Group's current quarter revenue of RM49.3 million (3Q17: RM27.6 million) comprising revenue from the Engineering and Manufacturing sectors of RM45.6 million (3Q17: RM21.8 million) and RM3.7 million (3Q17: RM5.9 million) respectively. Quarter-on-quarter comparison of the Group's consolidated results saw an increase in revenue of 78.3%, while pre-tax profit rebounded sharply to register an increase of about RM7.0 million or 3,815.2% to record RM6.8 million pre-tax profit in the current quarter against a loss of RM184K registered in the preceding year corresponding quarter. The increase in revenue was mainly attributed to higher revenue recognition from the Group's Civil Construction division but offset by lower revenue from the Group's Steel Pipes manufacturing division as compared to the preceding year corresponding quarter.
Similarly, the current year cumulative nine-month's pre-tax loss has been narrowed down to RM3.9 million compared to a full year pre-tax loss of RM9.1 million recorded in financial year ended 31 December 2016.
Improved margin of the Steel Fabrication Division, mainly from the subcontract works for the fabrication of Wellhead Platforms for the Bunga Pakma project coupled with improved performance of its Associate Company attributed to the variation works for the fabrication of Wellhead Platforms for the Kinabalu Redevelopment project have contributed to the overall improved results of the Group during the quarter and year-to-date.Engineering Sector
The Sector's revenue for the quarter of RM45.6 million (3Q16: RM21.8 million) represents 92% of the overall Group's turnover. The sector's revenue increased by more than doubled, as a result of higher progress billings from on-going projects under the Civil Construction division. The Construction Division's revenue for the quarter of RM24.3 million was solely derived from the development and upgrading of the Proposed Pan Borneo Highway in the State of Sarawak (Phase 1 Works Package Contract - WPC-09) which commenced during the 4th Quarter 2016.
Revenue from the Steel Fabrication Division of RM20.0 million (3Q16: RM20.8 million) reduced marginally by 3.8%, compared to the preceding year corresponding quarter. Revenue for the quarter were mainly derived from the on-going fabrication works involving the supply of Low/High Tension Steel Poles and Mild Steel Casing, subcontract works for the fabrication of Wellhead Platforms and other on-going miscellaneous fabrication works.
The current quarter also saw improvement in Hot Dip Galvanising Division's performance. Revenue for the current quarter of RM1.3 million (3Q16: RM971K) increased by 33.9% compared to the preceding year corresponding quarter. The improved performance was mainly contributed from the supply of Hot Dip Galvanised Low and High Tension Steel Poles.Manufacturing Sector
The Sector's earning for the current quarter mostly contributed from the sales of LPG cylinders. LPG Cylinders manufacturing division recorded an increase in revenue of approximately RM1.1 million (representing an increase of 45.8%) over the preceding year corresponding quarter. The Division saw the returning of supply orders to NGC Energy Sdn Bhd, with billings for the quarter worth RM2.1 million. The supply contracts of LPG cylinders to NGC Energy Sdn Bhd, Boustead Petroleum Marketing Sdn Bhd, Petron Malaysia Refining & Marketing Bhd (formerly known as Esso Malaysia Bhd) and Mygaz Sdn Bhd have sustained the growth and performance of the Division.
Revenue from the Group's Steel Pipes Manufacturing division under the two subsidiaries reduced significantly from RM3.4 million in 3Q16 to a mere RM157K in 3Q17. Revenue for the quarter was mostly for the supply of Mild Steel Cement Lined (MSCL) Pipes and Specials to adhoc customers. The newly secured orders for the supply of MSCL Pipes and Specials worth some RM20.9 million will only be realized in 4Q17.
The Group weathered a tough 1H2017, but we saw a positive sign of recovery towards the 2H2017.
Amid the threat of adverse effect from the volatility of raw material steel prices and foreign exchange rates on its performance, the risk of which is constantly being managed, the Group maintains its effort on cost management, product quality and operational efficiency to further improve its operating results.
The Group will continue to bid for new contracts/projects, particularly the government infrastructure projects whenever the opportunity arises and identify new strategic and potential business opportunities in the Major Onshore Fabrication, in collaboration with OceanMight Sdn Bhd and other strategic partner(s).
With its existing contracts in hand for the supply of Mild Steel Cement Lined Pipes and Specials, LPG cylinders and Steel Fabrication works, together with the on-going construction works for the development and upgrading of the Proposed Pan Borneo Highway in the State of Sarawak (Phase 1 Works Package Contract - WPC-09), the Group anticipated to achieving a satisfactory performance in the remaining last quarter of 2017, barring any unforeseen circumstances.