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The Group registered a revenue of RM26.1 million in 4Q16, registering an increase of 103.9% compared to the preceding year 4th Quarter, mainly attributable by the improved revenue of the Steel Fabrication division but offset by a reduction in the Group's Steel Pipes revenue.
The Group posted a quarter pre-tax loss of RM6.6 million against pre-tax loss of RM2.4 million achieved in the preceding year 4th Quarter.
Overall, the weak performance of the Group was mainly due to the increasing cost of raw materials and higher direct overhead costs on the back of lower business volume in the absence of major projects for both the steel fabrication and construction divisions.Engineering Sector
The Sector's 4th Quarter revenue of RM20.3 million recorded an increase of 306.0% compared to RM5.0 million in the preceding year 4th Quarter, mainly attributed to higher revenue recognized from the steel fabrication division.
The current quarter's revenue for the Steel Fabrication division improved to RM15.0 million, from RM3.7 million recorded in the preceding year 4th quarter which was mainly from spill over works from previous quarter(s). Current quarter's revenue were mainly derived from the on-going fabrication works involving the supply of Low/High Tension Steel Poles, subcontract works for the fabrication of Wellhead Platforms and other miscellaneous fabrication works.
The Construction division's revenue for the quarter of RM3.8 million was solely derived from the newly awarded project for the development and upgrading of the Proposed Pan Borneo Highway in the State of Sarawak (Phase 1 Works Package Contract – WPC-09) undertaken by the subsidiary Company i.e KKBWCT Joint Venture Sdn Bhd which has just commenced during the 4th Quarter 2016 and is still at the early stage to have any significant contribution to the Group's earnings.
HDG division quarter's revenue of RM1.5 million (4Q15: RM1.2 million) recorded an increase of 25%, mainly contributed from the supply of Hot-Dip Galvanised Steel Poles.Manufacturing Sector
The sector's revenue for the quarter of RM5.9 million (4Q15: RM7.8 million) was 24.4% lower compared to the preceding year corresponding quarter, mainly due to slower demand of steel pipe resulting in a much lower revenue contribution from the Group's Steel Pipes division.
LPG Cylinders sales for the current quarter shows an increase of 22.5%, with revenue of RM4.9 million (4Q15: RM4.0 million) mainly due to higher sales volume recorded compared to the preceding year 4th Quarter. 4Q16 revenue was for the supply of LPG cylinders to Petron Malaysia Refining & Marketing Bhd (formerly known as Esso Malaysia Bhd), Mygaz Sdn Bhd and for export of LPG cylinders to Brunei Shell Marketing Company Sdn Bhd.
Revenue from the Group's Steel Pipes manufacturing business under the two subsidiary companies, Harum Bidang Sdn Bhd ("HBSB") and KKB Industries (Sabah) Sdn Bhd ("KKBIS") decreased by 75.9%. The current quarter's sales of RM890K compared to RM3.7 million recorded in 4Q15 were mainly for sales to ad-hoc customers while contracts for the supply of MSCL Pipes and Specials to its major customer, CMS Infra Trading Sdn Bhd had mostly been fulfilled.
The Group is continuously pursuing various engineering projects, particularly projects related to the basic social-infrastructure works for Steel Fabrication, Water Supply and related infrastructure projects that are planned to be implemented throughout Sarawak and Sabah.
The Group's entry into the Oil & Gas sector, via associate OceanMight Sdn Bhd, will continue to tender for new projects and stay resilient and overcome this period of slower activity. It will continue to exercise its effort on prudent cost management and operational efficiency to stay competitive and focused on its effort to identify viable new strategic and business opportunities.
2017 will no doubt be another challenging year for the Group against the backdrop of continued uncertainties in the global economy. Depreciating ringgit exchange rates which are almost acrossthe- board will cause higher import bills and add sparks to domestic cost-push factors and inflationary pressures.
Notwithstanding, our diverse portfolio of businesses coupled with the Group's healthy financial position with low gearing will provide us with the resilience to mitigate the adverse effects under the prevailing competitive and challenging business environment.
The Board remains cautious in light of the prevailing market environment and that the Group's performance for financial year ending 2017 shall remain challenging.