Posted on 18 Dec 2014
KKB Engineering Bhd has recorded a sharp increase in steel pipes manufacturing activities but its steel fabrication business has slowed down.
In the third quarter to Sept 30 (3Q-2014), the group’s steel pipes manufacturing division revenue soared to RM45mil from RM3.5mil in 3Q-2013 or up by RM41.5mil.
“The increase is principally attributed to the on-going urgent supply of polyurethane lined mild steel pipes,” KKB said in explanatory notes to its latest quarterly results. The group’s steel pipes manufacturing is carried out by two subsidiaries - Harum Bidang Sdn Bhd and KKB Industries (Sabah) Sdn Bhd.
Harum Bidang had in November, 2013 accepted an award worth an estimated RM227mil from CMS Infra Trading Sdn Bhd for additional supply of polyurethane lined mild steel pipes and pipe specials for the Tanjung Manis water supply project (phase I) in Mukah Division. CMS Infra is a subsidiary of Cahya Mata Sarawak Bhd (CMS), which is a major shareholder of KKB.
Despite the strong performance of the manufacturing segment, KKB group revenue and pre-tax profit fell to RM44.8mil and RM4.8mil respectively in 3Q-2014,down from RM56.9mil and RM9.8mil in 3Q-2014.The group businesses are made up of manufacturing and engineering segments.
The manufacturing sector’s revenue rose by more than five fold to RM47.2mil from RM7.4mil in 3Q-2013, with the bulk contribution from the steel pipes manufacturing division. However, the LPG cylinders manufacturing division recorded a 46.2% drop in LPG cylinders manufacturing due mainly to the lower uptake of the cylinders by major customer, Petronas Dagangan Bhd.
The steel fabrication division within the engineering segment recorded lower revenue due to an adjustment made in its revenue of RM15.5mil upon the completion and finalisation of major structural steel and cladding works/project in Bintulu. Activities for the group’s construction division had also slowed down.
Revenue for the engineering segment during the quarter under review was derived mainly from fabrication of structural steel works for Petronas LNG 9 Train project, SAMUR project in Sabah and University College of Technology Sarawak project in Sibu, as well as the supply of low/high tension steel poles and infrastructural works in Samalaju Industrial Park.
The hot dip galvanising division posted a 70.2% rise in revenue to RM1.2mil in 3Q-2014.
Over a nine-month period, KKB group posted significantly lower pre-tax profit of RM18.9mil against RM42.2mil in the preceding year corresponding period as revenue fell to RM135.9mil from RM181.3mil.
