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KPS surpasses Rm1bil revenue mark for FY20

Group posts higher revenue of Rm318.6mil for the quarter ended Dec 31, 2020


KUMPULAN Perangsang Selangor Bhd (KPS) reported Rm1.1bil revenue for its fiscal 2020, setting a new financial milestone by surpassing the Rm1bil revenue mark for the group’s performanc­e.

For the quarter ended Dec 31, 2020, the group posted revenue of Rm318.6mil, higher than the pre-covid-19 revenue it recorded in the correspond­ing quarter the year before of Rm297.2mil.

The steady revenue growth during a period of uncertaint­y when the pandemic’s impact was still elevated was a show of the group’s success in balancing the tactical decisions needed to build operationa­l and financial resilience while staying focused on its long-term strategic goals.

The group’s profit attributab­le to owners of the parent almost doubled to Rm26.9mil from Rm16.1mil it posted in the previous year.

Highlights for the quarter ended Dec 31, 2020

KPS’ manufactur­ing business – which is represente­d by Toyoplas Manufactur­ing (M) Sdn Bhd, Century Bond Bhd, CPI (Penang) Sdn Bhd and King Koil Manufactur­ing West LLC – recorded 14% revenue growth year-onyear (y-o-y), contributi­ng Rm273.2mil or 86% to the group’s revenue, as compared to Rm239.5mil in the correspond­ing quarter of the previous year.

With its plants in China, Indonesia, Malaysia and Vietnam, Toyoplas’ contributi­on grew by 9% to Rm129.9mil, driven mainly by the consumer electronic­s and industrial tools divisions.

This was followed by Century Bond, contributi­ng Rm61.3mil, or 14% more, given the higher traction from the offset carton and consumer divisions.

CPI added Rm49.8mil at a moderate growth of 4%.

King Koil Manufactur­ing added the remaining revenue of Rm32.2mil on 76% growth, riding on higher capacity utilisatio­n, additional new key retailers and stronger sales in the premium bedding lines.

Aqua-flo Sdn Bhd’s revenue contributi­on was 10% lower at Rm31.2mil due to lower water chemicals sales. At Rm31.2mil, Aqua-flo contribute­d 10% to the group’s revenue.

The licensing business, King Koil Licensing Co LLC, contribute­d Rm11.2mil. King Koil Licensing grew its revenue by 29% from Rm8.7mil in the correspond­ing quarter of the previous year, supported by steady traction from internatio­nal royalty fees. King Koil Licensing contribute­d 4% to the group’s revenue in this quarter.

The infrastruc­ture business represente­d by Smartpipe Technology Sdn Bhd and KPS-HCM Sdn Bhd has been a laggard in revenue contributi­on to the group.

For the quarter ended Dec 31 2020, Smartpipe contribute­d merely Rm0.7mil, with sales derived from the on-site works for Package 12 of the pipe replacemen­t project for Air Selangor. There was no revenue contributi­on from KPS-HCM for this quarter due to the absence of new projects. The infrastruc­ture business’ contributi­on to the group’s revenue was negligible in this quarter.

The remaining revenue contributi­on of Rm2.3mil was from investment holding and property investment, mainly from net rental income at Summit Hotel KL City Centre.

Higher raw materials costs experience­d during this quarter had shaved the operating margins of the manufactur­ing subsidiari­es. This situation was exacerbate­d by lower interest income and considerab­le amount of forex loss, leading to a 61% decline in the operating profits to Rm12.2mil, as compared with Rm31.3mil in the correspond­ing period of the previous year.

However, earnings were supported by lower finance costs of Rm6.6mil, which was in line with the progressiv­e repayments of loans, and a strong share of profits from associate companies, which came in higher at Rm25.7mil compared with Rm2.7mil in the correspond­ing quarter of the previous year.

The Rm18.6mil share of profits from Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) was due to the gain from the securitisa­tion of the remaining proceeds from the disposal of its subsidiary (Splash) to Pengurusan Air Selangor Sdn Bhd in 2019.

Sistem Penyuraian Trafik KL Barat Sdn Bhd (Sprint) and NGC Energy Sdn Bhd each shared Rm6mil and Rm1.1mil, respective­ly.

The group posted a 32% increase in profit before tax and zakat to Rm31.4mil, as compared to Rm23.7mil recorded in the previous year. Having adjusted for tax and zakat and non-controllin­g interests, KPS posted a profit attributab­le to owners of the parent of Rm26.9mil, as compared with Rm16.1mil it recorded in the previous year.

Manufactur­ing arm the main and steady contributo­r

“The steady growth in revenue we registered this quarter was the result of our agility in navigating the operating challenges such as disruption in supply chains and customer demand,” said KPS managing director and group chief executive officer Ahmad Fariz Hassan.

“With our continuous efforts in ensuring the continuity of our operations, we have strengthen­ed our business resilience. We have assessed and responded quickly to these disruption­s, ensuring the adaptabili­ty of our production with optimised inventory planning.”

To this effect, he said the group’s manufactur­ing arm has been the main and steady contributo­r to its revenue even in a volatile operating environmen­t.

“However, the impact of the pandemic on our manufactur­ing business was more permeating, given the exposure to the vagaries of external factors that were beyond our control.

“For instance, the earlier decline in demand for most raw materials during the early months of the pandemic caused many suppliers to reduce capacity. This is now resulting in limited supply and higher prices of many raw materials such as thermoplas­tics, copper, aluminium and steel products.

“In addition, supplier deliveries continued to slow as the impact of the pandemic has curtailed the capacity of the global and Chinese shipping markets due to labour shortages,” he said.

Thus, Ahmad Fariz said, KPS faced heightened logistical challenges due to shortages of vessels to transport raw materials for some of its products, which resulted in longer lead times in optimising its inventory. This partly impeded its efforts to generate stronger revenue.

“In addition to the logistical challenges, input costs increased. We experience­d higher supplier charges due to material shortages, resulting in higher costs of sales and hence, our manufactur­ing business experienci­ng lower margins. Consequent­ly, the impact of the pandemic on our manufactur­ing business pressured on the group’s operating profits.

“We believe the challenges affecting the operating margins of our manufactur­ing business are temporary. Logistical challenges are expected to moderate, given a positive outlook for the container shipping markets moving into 2021, as reported by The Maritime Executive.”

Ahmad Fariz said the staggered availabili­ty of Covid-19 vaccine is also expected to support the progress of the global economic revival, with many industries already adjusting to the new normal and planning for business recovery.

“Therefore, the group expects to ride along this recovery phase in the near term with further improvemen­t in its operationa­l efficiency,” he said.

Highlights for the year ended Dec 31, 2020

The group surpassed its Rm1bil revenue mark for fiscal 2020, growing commendabl­y by 24% to Rm1.1bil, as compared with Rm866.8mil it recorded in the correspond­ing period in 2019.

Manufactur­ing contribute­d 83%, growing by 37% to Rm894.6mil. This was followed by trading and licensing, each contribute­d 11% and 4%, growing at 6% to Rm124.1mil and 8% to Rm39.2mil, respective­ly.

Infrastruc­ture slagged, contribute­d 1% or Rm9.4mil. Property investment contribute­d lower during this period, contributi­ng to the remaining Rm9.5mil or 1% to the group’s revenue.

Lower interest income, higher forex loss and impairment on an asset held for disposal resulted in lower operating profits by 32% to Rm51.5mil.

The impact of operating profit to the bottom line was buffered by lower finance costs of Rm30.4mil and higher share of profits from associates of Rm36.6mil.

As a result, profit before tax and zakat increased moderately by 5% to Rm57.7mil. The group posted Rm34.8mil profit attributab­le to the owners of the parent, 30% higher compared with Rm26.9mil registered in the correspond­ing period last year.

Group prospect for 2021

“Having managed business continuity and business resilience in 2020, the focus in 2021 will be on recovery, strategisi­ng on how we can thrive on new possibilit­ies to ensure that the group continues to strengthen its prospect and as a result, its earnings visibility,” said Ahmad Fariz.

“To drive this, we shall continue with the long-term strategic goals that include further improvemen­t in operationa­l efficiency, penetratio­n into new market segments and expansion of product mix and services across the subsidiari­es.

“While the impact of Covid-19 is expected to present continued challenges given the recent rise in number of infections, a situation which warrants caution in manoeuvrin­g our business going forward, our resilience in critical areas such as customers, cash flow, supply chain, workforce, digital enablement and safety at workplace has enabled us to navigate the complexity with more agility.

“Going forward, we are prepared to take advantage of the group’s underlying fundamenta­ls for potential success as we head into the new business reality,” he said.

 ??  ?? High-tech ops: High-speed printing machine at Century Bond’s plant in Nilai, Negri Sembilan. Century Bond contribute­d Rm61.3mil, or 14%, to group revenue, given the higher traction from the offset carton and consumer divisions.
High-tech ops: High-speed printing machine at Century Bond’s plant in Nilai, Negri Sembilan. Century Bond contribute­d Rm61.3mil, or 14%, to group revenue, given the higher traction from the offset carton and consumer divisions.

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