KUCHING: KKB Engineering Bhd has chalked up a 34.7 per cent jump in group revenue to about RM634.3 million in financial year ended Dec 31, 2024 (FY2024) from RM471 million in FY2023 or up by RM163.3 million, driven by mainly the strong performance of its civil construction business.
However, the higher revenue did not translate into increased profits due to goodwill impairment of RM1.6 million and provision of slow-moving stock/obsolete stock written off amounting to RM2.5 million in the current financial year.
Year-on-year, group net profit dipped by 1.6 per cent to RM26.2 million against RM26.63 million recorded in 2023.
Earnings per share fell to 9.07 sen from 9.22 sen.The company has proposed higher dividends of 7.5 sen per share compared to 7 sen per share in 2023.
“Group revenue for the current year-to-date increased by 34.7% to RM634.3 million compared to RM471.0 million in the preceding year-to-date.
“Higher revenue recognition from the steel fabrication and civil construction divisions within the engineering sector which contributed a combined revenue of RM613.6 million compared to RM443.7 million in the preceding year was the prime mover for the overall growth in revenue.
“Group’s current year-to-date profit before tax (PBT) of RM55.6 million increased by 6.7% compared to RM52.2 million in the preceding year comparative period, mainly attributed to the strong performance of the steel fabrication division within the engineering sector although impacted by the impairment of goodwill and provision of slow-moving stock/obsolete stock written off coupled with lower contribution from the manufacturing sector,” KKB said in explanatory notes to its financial results.
KKB delivered sharply higher group net profit of RM10.61 million in 4Q2024 against RM3.61 million in 4Q2023 or up by a hefty 193.7 per cent in tandem with a surge in group revenue to RM231.58 million from RM166.1 million.
The company attributed the 39.5 per cent jump in revenue in the current quarter to the strong performance of the engineering sector, which contributed 98 per cent or RM227.1 million (4Q2023:RM158 million) to group’s total revenue.
However,group pre-tax profit fell by 19.6 per cent to RM11.9 million (4Q2023:RM14.8 million) because of the goodwill impairment and write off of obsolete stocks.
“The group’s civil construction division registered revenue of RM158.4 million in 4Q2024,which increased by 141.5% as compared to RM65.6 million in the preceding year corresponding quarter.
“Higher revenue in the current quarter mainly due to higher progress claims from the Pan Borneo Highway project (Phase 1 works package contract – WPC09) undertaken by the subsidiary company, KKBWCT Joint Venture Sdn Bhd, which contributed revenue of RM150.4 million in the current quarter compared to RM54.3 million recorded in the preceding year corresponding quarter in line with its progress of completion.
“The newly secured water related construction project for the proposed Serian regional water supply Phase II (Stage 1) contributed a revenue of RM8.5 million in the current quarter and still at the early stage to contribute positively to the overall group’s revenue and earnings,” said KKB.
On the performance of the steel fabrication division, the company said group revenue fell by 25.6 per cent to RM68.5 million (RM92.1 million), with sales coming from the engineering, procurement and construction (EPC) of standard wellhead plateofmrs for MLNG FaS for Sarawak Shell Bhd; module fabrication/supply of steel structures for the Malaysia Rosmari & Marjoram onshore gas plant project in Bintulu; and fabrication of bridge and boat landing for Kasawari carbon capture & storage project.
The hot-dip galvanising division posted lower revenue of RM194,000 (RM328,000), with sales generated mostly from ad-hoc walk-in customers.
Reviewing the performance of the manufacturing sector, KKB said its revenue in the current quarter under review dropped to RM4.4 million (4Q2023:RM8.1 million) mainly due to lower activities for both the steel pipes and LP gas cylinders manufacturing divisions.
For the LP gas cylinders manufacturing division, current quarter’s revenue of RM1 million (RM2.1 million) was for the supply of new and reconditioning/requalification cylinders as well as the supply of LPG compact valves predominantly to Petroniaga Sdn Bhd.
Revenue from the group’s steel pipes manufacturing division decreased by 43.3 per cent to RM3.4 million (RM6 million), mostly generated from sales of mild steel concrete lined (MSCL) pipes and fitting for Sibu’s Salim water treatment plant.
“The recent order secured in December 2024 from Gamuda Bhd for the supply of MSCL pipes and specials in Sabah is still at the early stage to contribute to the group’s performance,” added KKB.
The group’s 4Q2024 financial results bettered that of the immediate preceding quarter (3Q2024) when KKB recorded lower net profit of RM8.44 million (4Q2024:RM10.6 million) on lower revenue of RM143,1 million (RM231.6 million).
Quarter-on-quarter, KKB attributed the 61.8 per cent jump in group revenue to the sharply higher sales of the engineering sector, in particular, the civil construction division, which recorded revenue of RM158.4 million (3Q2024:RM52.7 million) as well as improved sales from the manufacturing sector as a result of higher sales from both the steel pipes and LP gas cylinders manufacturing activities.
On prospects for the new financial year (FY2025), KKB said despite the generally uncertain and volatile economic backdrop, the group reported a respectable bottomline for 2024.
“The group is determined to build on this momentum and continue its efforts to monitor and align its business plans and strategies to remain robust and competitive.
“KKB group, via its subsidiary company, OceanMight Sdn Bhd, shall continue to be a competent and competitve player in the oil & gas sector to the many production sharing contractors.
“We are actively pursuing and looking for new opportunities to secure more infrastructure projects, including water supply and construction projects to replenish our order book for both engineering and manufacturing sectors.”
KKB added: “Generally, the group is guided by the Sarawak’s Post Covid-19 Development Strategy 2030 and also the Petronas Activity Outlook.
“The group’s continuous and strategic plan shall focus on basic infrastructure development in Sarawak and Sabah, Sarawak water supply grid programme, our specialised engineering and construction activities in the major onshore fabrication for the oil & gas sector and initiatives in the renewable energy in Sarawak.
“With the existing contracts in hand and the group’s diverse portfolio of robust businesses coupled with a healthy financial position, management and board (of directors) remains positive that KKB group will perform favourably for the financial year ending 2025, barring any unforseen circumstances.
“The group continues to manage the challenges of uncertanties in the global economic environment, escalation of costs due to inflationary pressures, volatility of global raw material steel prices and fluctuation of exchange rates are amogst factors that may impact the group’s performance.”
