By SHAHEERA AZNAM SHAH / Graphic By TMR
HANDAL Resources Bhd’s financial performance improved for the second quarter ended June 30, 2018 (2Q18), supported by higher revenue from all segments.
The company’s revenue rose 26% year-on-year to RM14.98 million from RM11.91 million, mainly contributed by its fabrication of crane and servicing industrial equipment business segments.
The company’s net loss was also down 24% to RM984,000 from the RM1.29 million reported a year ago as a result of the higher revenue and operating income registered for the majority of its business segments.
MD Sunildeep Singh Dhaliwal said in a statement that the firm is cautiously optimistic as the oil and gas industry remains a challenge coupled with volatile oil prices.
“Taking this into consideration, we will manage the challenges ahead of us and optimistic to emerge as a stronger organisation in the near future.
“Going forward, the new board will be working hand-inhand with the senior management team to execute new directions and strategic plans toward achieving better financial results,” he said.
Handal’s revenue from the supply, servicing industrial equipment and tank business segment rose 53.9% to RM1.74 million from RM1.13 million following the increased activities in the business segment.
The company’s gross profit margin was maintained at 18% in 2Q18 compared to the performance in the previous year.
The crane fabrication segment achieved RM1.14 million of sales compared to a nonprofit quarter in 2Q17.
However, Handal’s integrated crane segment’s revenue fell 8.2% to RM9.89 million from RM10.78 million due to lower maintenance activities completed during the quarter.
The firm’s gross profit margin also declined to 38% compared to 49% a year ago, due to lower operational efficiency.
Handal noted its balance sheet remains healthy with a current working capital ratio of 3.33 times and a net cash position of RM1.04 million. With the recent internal restructuring exercise, the company also expects to implement measures that could further improve its financial health.
“Handal recently embarked on an internal restructuring exercise, which saw the entry of highly reputable and experienced corporate profiles, from various fields on board.”
The company said it has embarked on a turnaround plan which includes salary reduction and limiting ancillary benefits.
“The firm’s initial steps for a turnaround include a cost rationalisation plan that will involve an immediate reduction in EDs pay by 30%, as well as reducing other ancillary benefits resulting an estimated cost savings of RM2.5 million per annum.”