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Financial review for current quarter and financial year to date
Group revenue for 4th Quarter 2017 of RM70.2 million (4Q16: RM26.1 million) saw the highest quarterly sales compared to the preceding quarters of the year; comprises revenue from Manufacturing and Engineering sectors of RM55.4 million and RM14.8 million respectively. Revenue rose by about 169.0% compared to the preceding year corresponding quarter, while the Group's year-to-date revenue increased to RM209.3 million (2016: RM103.1 million), mainly driven by higher revenue from the Group's Civil Construction and Steel Pipes manufacturing divisions.
The Group recorded a higher pre-tax profit of RM10.3 million against pre-tax loss of RM6.6 million in the preceding year corresponding quarter, after taking into account the share of results from its associate Company amounting to RM1.4 million (4Q16: RM371K). Similarly, the cumulative twelve months pre-tax profit shot up to RM6.4 million compared to pre-tax loss of RM9.1 million recorded in the preceding year period.
The overall improved results of the Group was mainly due to the improved performance of both the Manufacturing and Engineering sectors, in particular from the Group's Steel Pipes manufacturing division for the supply of Mild Steel Cement Lined Pipes during the quarter and improved performance 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.Engineering Sector
The Sector's revenue for the quarter of RM55.4 million (4Q16: RM20.3 million) represents 79% of the Group's total revenue whereby 63% of the Group's revenue in 4Q17 is contributed by the Civil Construction division. Revenue from the Civil Construction division for the quarter of RM44.6 million (4Q16: RM3.8 million) was solely derived from the development and upgrading of the Proposed Pan Borneo Highway project 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 during the 4th Quarter 2016.
Steel Fabrication division recorded revenue of RM9.3 million, reduced by 38% as compared to RM15.0 million achieved in the preceding year corresponding quarter. Revenue for the quarter were mainly derived from the subcontract works for the fabrication of Wellhead Platforms which has reached its tail end and other on-going fabrication works involving the supply of Low/High Tension Steel Poles, Mild Steel Casing and other miscellaneous fabrication works.
Hot-Dip Galvanising division's revenue of RM1.5 million (4Q16: RM1.5 million) for the quarter remained fairly consistent with the preceding year corresponding quarter, mainly contributed from the supply of Hot Dip Galvanised Low and High Tension Steel Poles.Manufacturing Sector
Current quarter's consolidated revenue of RM14.8 million (4Q16: RM5.9 million) surpassed the preceding year corresponding quarter's sales by 150.8%, showed Steel Pipes manufacturing business leading the pack with RM11.9 million in revenue or contributing 80.4% of the Manufacturing sector's total revenue in 4Q17. The supply of Mild Steel Pipes & fittings to Jabatan Bekalan Air Luar Bandar (JBALB) through CMS Infra Trading Sdn Bhd, with billings worth some RM11.5 million attributed to the positive growth in revenue in the current quarter.
LPG Cylinders manufacturing division recorded lower revenue of RM2.9 million (4Q16: RM4.9 million), due to lower off takes of LPG cylinders from Brunei Shell Marketing Company Sdn Bhd, Petron Malaysia Refining & Marketing Sdn Bhd and Mygaz Sdn Bhd but offset by increased orders from Boustead Petroleum Marketing Sdn Bhd as compared to the preceding year corresponding quarter. 4Q17 revenue of RM2.9 million was for the supply of LPG cylinders to Petron Malaysia Refining & Marketing Bhd (formerly known as Esso Malaysia Bhd), Boustead Petroleum Marketing Sdn Bhd, Brunei Shell Marketing Company Sdn Bhd and Mygaz Sdn Bhd.
The Board 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.
Notwithstanding, our diverse portfolio of businesses coupled with the Group's healthy financial position with relatively low gearing will provide us with the resilience to mitigate the adverse effects under the prevailing competitive and challenging business environment. We remain focused and continue our efforts to strengthen and grow our core business in both the engineering and manufacturing activities based on strong fundamentals to optimise our operations towards a sustainable growth for the financial year ending 2018.
The Group will continue to bid for new contracts/projects, particularly the government infrastructure projects whenever the opportunity arises. The group also remains focused on its effort to identify viable new strategic and potential business opportunities in the Major Onshore Fabrication, in collaboration with OceanMight Sdn Bhd and other strategic partner(s), to acquire technology and competitive edge in the medium to long term.
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), coupled with its existing contracts in hand for the supply of Mild Steel Cement Lined Pipes and Specials, LPG cylinders and Steel Fabrication works, the Board anticipates that the Group's performance for 2018 will remain satisfactory, barring any unforeseen circumstances.