KUB Malaysia to lay off staff 
and dispose of asset in Mukah

Company is looking to reduce total headcount as part of its review and cost-cutting measures, says MD

By RAHIMI YUNUS / Pic By TMR

KUB Malaysia Bhd plans to lay off staff and dispose of an asset this year to reduce operational costs amid weaker crude palm oil (CPO) prices.

Its president and MD Datuk Abdul Rahim Mohd Zin (picture) said the company is looking to reduce total headcount as part of its operational review and cost-cutting measures.

“It is basically people rightsizing. We are still figuring out the scale, but it will be good (package) for the staff,” Abdul Rahim said to reporters after the company’s AGM in Kuala Lumpur yesterday.

He did not disclose the number of employees expected to be affected by the exercise.

KUB, which has businesses in agriculture, information and communication technology, energy, property and power industry, currently has some 300 staff (excluding estates staff).

Abdul Rahim stated that the fall in CPO price to RM2,000 a tonne has caused huge losses to its oil palm plantation business.

“It was a very challenging time for us for the financial year 2018 (FY18), as the fall in CPO price caused a huge dent to our plantation segment. The unfavourable weather pattern in Sarawak also increased production costs as well,” he added.                 

He said KUB is in an advanced stage of negotiations to sell its asset in Mukah, Sarawak, now under its 66%-owned unit KUB Maju Mill Sdn Bhd.

KUB’s oil palm plantations in Sarawak accounted for about half of its total acreage of 8,866ha. It has two estates in Sarawak, one in Sabah and two in Johor.

Abdul Rahim said the disposal of the mill in Mukah is expected to improve the company’s earnings.

He said the company wanted to dispose of some other non-core properties, but asset prices are not accommodative presently.

In FY18, KUB’s net profit plunged 96.4% to RM1.2 million due to significant impairment losses on the palm oil mill in Mukah and operational losses incurred at both of the Sarawak estates and mill.

The agro-business contributed about 11% to KUB’s revenue in FY18.

This year, the company is reviewing its operation to improve efficiency and production.

KUB has allocated capital expenditure between RM40 million and RM50 million for the year. Some RM11 million will be used for the commencement of a new liquefied petroleum gas (LPG) cylinder bottling plant in Beranang, Selangor.

The new bottling plant is expected to begin operation in the third quarter and is to cater to the company’s expansion into the eastern and northern sites of the Klang Valley.

At present, KUB operates a refrigerated LPG terminal at Westports in Port Klang, Selangor.

Abdul Rahim said KUB is identifying new dealers to penetrate deeper into the industrial or in-bulk LPG customers.

For the telecommunications and power segments, he said KUB’s orderbook currently stands at RM80 million and RM15 million respectively.