The group undergo challenging conditions due to the depressed global oil market in 2Q20 and MCO, which impacted its sales demands and operations
by LYDIA NATHAN
KUB Malaysia Bhd recorded earnings of RM158.6 million and revenue of RM584 million for the financial period ended June 30, 2021, largely attributable to several exceptional one-off items.
The engineering services company stated the items included the gain on disposal of two of its oil palm plantation estates in Kluang, Johor, for RM122.5 million, the gain on disposal of an associate company, KUB Berjaya Enviro Sdn Bhd of RM30.5 million, and the gain on disposal of freehold lands in Langkawi, Kedah, of RM8.2 million, according to an exchange filing yesterday.
“The results for the financial period reflect the culmination of our transformational efforts to reduce any future losses through the disposal of our non-core/ non-strategic businesses and to direct our focus and commit resources to the core business segments of the group.
“Notwithstanding the challenging operating and economic backdrop, I believe we are now on a much stronger and stable footing to execute our strategic plans going forward to become a sustainably profitable company,” KUB chairman Datuk Seri Johari Abdul Ghani (picture) said in a statement yesterday.
The group added it underwent challenging conditions due to the depressed global oil market in the second quarter of 2020 (2Q20) and the implementation of the Movement Control Order (MCO), which impacted its sales demands and operations.
Despite the challenging operating environment, the group’s key sectors still recorded commendable profits.
KUB’s cash position surged from RM145.6 million as at Dec 31, 2019, to RM423.1 million as at June 30, 2021, and its gearing ratio has reduced from 31% to 8% during the same period.
KUB had changed its financial year end from Dec 31, 2020, to June 30, June 2021.
KUB’s oil palm plantation segment recorded a high revenue of RM82.8 million, driven by the strong uptrend in average crude palm oil, despite a significant reduction in fresh fruit bunches production in the current quarter following the disposal of the Johor and Sabah estates.
Its liquified petroleum gas (LPG) division recorded lower revenue of RM451 million as a result of lower average monthly sales volume in both domestic and industrial segments following the series of MCO restrictions.
The group noted restaurants and factories were operating at a reduced capacity, thereby affecting overall LPG demand.
The prolonged closure of the Malaysia-Singapore border has further worsened the demand in the southern region.
Its ICT division saw its revenue contributed by the commencement of new projects in the 3Q20, however, to a certain extent, was impacted by the interstate and inter-district movement restrictions that caused a delay in project fulfilment of certain orders.
KUB foresees economic uncertainty, market turbulence and weak consumer sentiment to remain in the next financial year due to the rising Covid-19 cases and volatility in global crude oil prices.
It added the prolonged restrictions are bound to have an impact on the LPG business and are expected to persist throughout the next few months despite the vaccination rollout.
“The group will continue to implement mitigation measures to cushion the impact, including enhancing the robustness of our product mix model and customer segmentation strategy, improving supply and inventory management capabilities and initiating cost containment efforts across the division.”