‘PAVING BETTER PATH FOR KUB’
Company’s continuous disposal of assets to finance overhead costs not sustainable, says controlling shareholder Johari
KUB Malaysia Bhd’s new controlling shareholder Datuk Seri Johari Abdul Ghani has revealed that out of the company’s four main segments, only the liquefied petroleum gas (LPG) business was profitable.
Its three other segments are plantation, information and communications technology (ICT) and power.
Johari said it had been tough for the former franchise holder of A&W in Malaysia, so much so that it had to sell RM400 million worth of assets in the past 10 years.
“Most of the proceeds from the disposals were to finance overheads,” he told New Straits Times.
He was responding to the NST report on March 27, quoting sources, that his entry would likely
lead to a slew of changes at KUB, including staff layoffs and disposal of some subsidiaries.
It was also reported that KUB board members were willing to step down if required.
The former second finance minister said the continuous disposal of assets to finance KUB’s overhead costs were certainly not sustainable for the group.
Johari, who became KUB’s largest shareholder after acquiring a 31.99 per cent stake on March 1, said the plantation division had lost RM40 million while the ICT and power businesses also posted losses in the financial year 2018.
“Many people thought that KUB had a power plant or was an independent power producer but in reality, it is only a contracting business,” he said.
“KUB would have recorded losses at the group level at the end of the last financial year if not for the gain made on the disposal of assets and investments,” he said.
KUB posted a net profit of RM1.17 million for the year ended December 31 last year, compared with a net profit of RM32.95 million in 2017.
As of December 31 last year, KUB had cash on hand of RM92.83 million.
Johari assured the KUB management and board that he would work closely with them to pave a better way forward for the group.
“As the largest shareholder, I will play a role in helping KUB set up a clear direction.
“(But) it is still early to tell on the plans to revamp KUB.
“I am still going through the process of understanding the entire business and assisting the board to work out a clear direction for its future growth.”
Potentially, one of his initial decisions may spell the end of the company’s ICT and power divisions.
Johari said the two divisions were insignificant parts of the entire group’s operations.
“We may consider the two divisions as being non-strategic to the group. The only business that I think KUB can further explore is its consumer LPG business. This may include vertical expansion of its bottling operations as well as expanding the distribution network,” he said.
On possible layoffs, he said any decision to downsize would “greatly depend on whether any particular business continues to provide significant returns to the group”.