Sarawak Cable remains cautiously optimistic on Covid-19 impact
KUCHING: Sarawak Cable Bhd (Sarawak Cable) is cautiously optimistic that as a group involved in the manufacturing of power and telecommunications cables which has been categorised as an essential infrastructure component, it may be insulated from a full-blown financial meltdown.
According to managing director Datuk Ahmad Redza Abdullah in Sarawak Cable’s Annual Report 2019, like any other manufacturing concern, the full effect of this phenomenon is yet to unfold and it would be speculative to identify with any tangible losses.
“The initial impact is directly felt by the immediate loss of revenue during the two to three months of a manufacturing standstill throughout the Movement Control Order (MCO). This means having to play “catch up” upon the resumption of manufacturing,” he said in his management discussion and analysis.
“As this goes to print, we are pleased to state that our cables and wires sector have fully reopened their factories. With a strong order book of exceeding RM500 million, we remain optimistic that the Cables and Wires segment will recover swiftly from the business disruption due to the MCO and resume its consistent performance for the rest of the year.”
Ahmad Redza forewarned that business opportunities may not be so readily available as in the past and Sarawak Cable intends to expand its book orders notwithstanding the challenging times ahead.
“Let us first state that our cables and wires business segment remain the very backbone of this group,” he affirmed. “We still maintain a healthy order book to the tune of approximately RM511 million as at the close of 2019.
“These contracts and orders are primarily domestic in nature, wherein Tenaga Nasional Bhd (TNB), Telekom Malaysia Bhd and various other governmentbacked projects such as the Light Rail Transit and Mass Rapid Transit remain the main components of our business. That means our cables and wires business segment is a very stabilising factor for the group.”
As its core business, the cables and wires segment registered an increased revenue of RM696.6 million from RM667.6 million in 2018, this contributed 87.78 per cent towards the group’s total revenue for FY2019.
The increase in revenue was mainly due to the increase in sales of TACSR (Trapezoidal Aluminium Conductor Steel Reinforced) conductors to TNB in the 500kV backbone transmission line projects in Peninsula Malaysia and higher demand of normal ACSR conductors from Sarawak.
Notwithstanding the above, the cables and wires segment spared no effort in continuous cost reductions, efficiency improvement, and product development initiatives to ensure long term sustainability of the business.
“As a result, despite the sluggish market sentiment in Malaysia and worldwide economic uncertainty, this segment performed commendably with a RM49.2 million profit before tax.”
On the other hand, the group faced daunting challenges in its aviation and construction business.
Sarawak Cable’s aviation business today comprises of its lease with the Ministry of Defence for the use of five helicopters and a simulator. The group has disposed of three other helicopters and this substantially reduced its gearing and operating costs in this sector.
In respect of helicopter H225, the management remains confident that it shall secure some logistical related business in 2020.