Boustead expects positive turnaround in 2019

By NG MIN SHEN / Pic By MUHD AMIN NAHARUL

Boustead Holdings Bhd is expected to return to profitability this year after posting losses in 2018, following its initiative to dispose of certain assets as well as a turnaround plan, that would coincide with the entrance of incoming group MD Datuk Seri Amrin Awaluddin.

Its ED Datuk Seri Ghazali Mohd Ali said the conglomerate already has strategic plans in place for 2019, which will be discussed with Amrin when he takes office on May 6.

“Rest assured that our management and the board is looking at turning the company around from the results of last year. We have been liaising with him (Amrin) in preparing those plans and I think we have the framework ready for somebody to take over and lead us forward,” Ghazali told the press after the group’s AGM in Petaling Jaya yesterday.

The group announced Amrin’s appointment earlier this month to the position of MD, which has been vacant since Tan Sri Lodin Wok Kamaruddin resigned last year. Amrin will be stepping down as MD of Sime Darby Property Bhd on May 3.

Responding whether the group will succeed in turning profitable this year, Ghazali said “definitely yes, because the ingredients for success are there”.

“Our assets are there, our plans are there, the manpower is there. These three alone will bring success. A fresh outlook from a new group MD would definitely also help the organisation in achieving its targets. Don’t forget, he (Amrin) has a lot of experience. He has a track record of being in oilfields, property development and finance,” he added.

Ghazali also did not dismiss possible changes in the future, adding that the group’s turn- around plan will also involve a review of its entire operations.

Boustead posted a net loss of RM469.2 million for the financial year ended Dec 31, 2018 (FY18), versus a net profit of RM690.14 million recorded in FY17, attributed to losses incurred at its heavy industries and plantation divisions due to provisions and impairments, lower palm oil prices and the adoption of new accounting standards.

The group mainly operates in the plantation, heavy industries, property, finance and investment, trading and industrial, and pharmaceutical businesses.

It is currently in the process of selling its Royale Chulan Bukit Bintang Hotel, located along Jalan Bukit Bintang, to Singaporean firm Hotel Royal Ltd for RM197 million cash. The sale is expected to be
completed by mid-2019.

“There will be some disposals, probably one or two more. This is part of the strategy that we need to discuss and get on board very soon to get us moving forward,” Ghazali said.

He did not disclose details of the future asset disposals, although he alluded to the group’s existing properties and landbank in locations such as Jalan Cochrane, Kuala Lumpur, and Mutiara Damansara, Petaling Jaya.

“These are immediate, quite fast to turn around. You can get the money back this year. At the same time, we also want some money for expansion. Part of the asset disposal proceeds will go to buying landbank and paring down our borrowings,” he said.

The group’s gearing level presently stands at 0.9 times, which its COO and group finance director Fahmy Ismail said rose from 0.7 times in 2017 partly due to acquisitions made by the plantation division and collection issues faced by the pharmaceutical segment.

“0.9 times is still quite comfortable and it’s sustainable for us. It’ll be good to have it at around 0.7 times, but we accept that we have just completed an acquisition at Boustead Plantations Bhd and we have other requirements such as Pharmaniaga Bhd’s issues with the e-Perolehan system. Those are temporary issues that will be resolved over time,” he said.