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Financial review for current quarter and financial year to date
The Group's current quarter revenue of RM93.2 million (2Q17: RM46.9 million) comprises revenue from the Engineering and Manufacturing sectors of RM83.3 million (2Q17: RM42.2 million) and RM9.9 million (2Q17: RM4.6 million) respectively. Comparatively, consolidated revenue for the quarter and year-to-date is higher than the preceding year comparative period mainly attributed to higher revenue recognition from both the Engineering and Manufacturing sectors, in particular from the Civil Construction, Steel Fabrication and Steel Pipes Manufacturing divisions.
Similarly, the Group recorded a pre-tax profit of RM3.3 million against pre-tax loss of RM9.2 million reported in the preceding year corresponding quarter, bringing its year-to-date pre-tax profit to RM5.7 million against a pre-tax loss of RM10.7 million in 1H17. Improved performance of the Group's Civil Construction and Steel Pipes Manufacturing divisions have contributed to the overall much improved results of the Group on the back of higher revenue.Engineering Sector
The sector's revenue of RM83.3 million (2Q17: RM42.2 million) increase significantly compared to the preceding year corresponding quarter, as a result of higher progress billings from on-going project. Under the Construction's Division, revenue for the quarter of RM48.6 million (2Q17: RM26.7 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) undertaken by the subsidiary Company i.e KKBWCT Joint Venture Sdn Bhd which commenced from the 4th Quarter 2016 onwards.
The Group's Steel Fabrication division recorded revenue of RM33.8 million (2Q17: RM14.7 million), improved by more than double or 129.9% as compared to the preceding year corresponding quarter. The newly awarded contract in March 2018 from Petronas Carigali Sdn Bhd for the Provision of Engineering, Procurement, Construction, Installation and Commissioning ("EPCIC") of Wellhead Platforms for D28 Phase 1 project has started to contribute to the Group's earnings.
Revenue for the quarter were derived from the EPCIC of Wellhead Platforms for D28 Phase 1 project, additional work order for the Kinabalu Redevelopment Project (HHP Flowlines), structural steel works for The Proposed Balingian Coal Stockyard in Mukah, Sarawak, fabrication of Mild Steel Casing and other miscellaneous fabrication works.
HDG Division's revenue of RM971K (2Q17: RM850K) was slightly higher as compared to the preceding year corresponding quarter, in line with increased activities of the steel fabrication division.Manufacturing Sector
The Sector's revenue of RM9.9 million (2Q17: RM4.6 million) was higher by 115.2% compared to the preceding year corresponding quarter.
LPG Cylinders manufacturing division recorded an increase in revenue of approximately RM432K (representing an increase of 12.3%), resulting from higher offtake of LPG cylinders from Petronas Dagangan Berhad as compared to the preceding year 2nd quarter. 2Q18 revenue of RM3.9 million (2Q17: RM3.5 million) was mostly for the supply of LPG cylinders to Petronas Dagangan Berhad, Petron Malaysia Refining & Marketing Sdn Bhd (formerly known as Esso Malaysia Bhd) and Mygaz Sdn Bhd.
Revenue from Steel Pipes manufacturing business under subsidiary companies, Harum Bidang Sdn Bhd and KKB Industries (Sabah) Sdn Bhd, registered an aggregate revenue of RM5.9 million (2Q17: RM1.1 million), an increase of 436.4% over the preceding year corresponding quarter. Revenue for the quarter was mainly for the supply of MSCL pipes to Jabatan Bekalan Air Luar Bandar and other ad-hoc customers in Kota Kinabalu, Sabah.
In March and May 2018 respectively, OceanMight Sdn Bhd (KKB's subsidiary) was awarded a contract from Petronas Carigali Sdn Bhd for the Provision of Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) of Wellhead Platforms for D28 Phase 1 Project and the award from Sapura Fabrication Sdn Bhd for the Provision of Procurement and Construction for Wellhead Deck, Pipes and Conductors for the Pegaga Development Project (Mubadala Petroleum) in Block SK320, offshore waters of Sarawak.
With its diversified activities and supported by healthy financial position, the group is well placed to maintain sustained performance and continues to focus on its core businesses and exercise its continuous effort on prudent cost management and operational efficiency to stay competitive.
Riding on the current improved crude oil prices coupled with the existing contracts in hand and 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 Board anticipates that the Group's performance for 3Q18 will remain satisfactory, barring any unforeseen circumstances.
The Board however is cautious that the continued uncertainties in the global economic environment, escalation of costs due to inflationary pressure, volatility of global raw material steel prices and fluctuation of exchange rates are amongst factors that may impact the Group's performance.