Friday, 08 October 2021
KPS expects moderate business progress in H2
SHAH ALAM: Kumpulan Perangsang Selangor Bhd (KPS) expects moderate business progress in the second half due to supply chain challenges including the shortage of integrated circuit (IC) chips, escalated resin and paper prices, and limited freight capacity.
It planned to take a more sustainable price-to-cost position by expanding the cost-pass-through mechanism to a more extensive customer base while supporting demand.
“We are circumspect about the prospect of the business in the immediate term, heeding from the cautionary signals in the operating environment,” said KPS managing director and group CEO Ahmad Fariz Hassan in a statement.
KPS posted a net profit of RM1.6mil for its second quarter ended June 30, 2021 (Q2’FY21), compared with a net loss of RM11.4mil a year ago, on the back of a 46% year-on-year (y-o-y) growth in revenue to RM323.8mil mainly due to higher sales from its manufacturing segment.
The manufacturing segment which comprised Toyoplas, Century Bond Bhd (CBB), CPI (Penang) Sdn Bhd (CPI), King Koil Manufacturing West LLC (KKMW) and King Koil Sales Inc, contributed RM276.6mil or 85.4% of the group’s revenue in Q2’FY21.
However, the group pointed out that sales in Q2’FY21 were still lower than expected as they were affected by the persistent global IC chip shortage.
“Furthermore, the resurgence in the number of positive Covid-19 cases since May has put Malaysia under a nationwide lockdown, forcing factories and businesses to operate with limited production capacity,” the group said. The group’s injection and tooling division Toyoplas led the revenue contribution with RM131mil (49.2% higher y-o-y), followed by CBB with RM59.7mil (35.4% higher y-o-y), and the healthcare and communication and information technology divisions CPI with RM48.8mil (44% higher y-o-y).
Its mattress manufacturing unit KKMW saw a 169% y-o-y revenue jump to RM32.6mil, supported by steady retail sentiment and consumer demand in the United States.
Meanwhile, RM29.7mil or 9.2% of the group revenue was derived from the trading business, represented by Aqua-Flo Sdn Bhd which saw revenue drop 2% y-o-y due to lower sales of water chemicals and sluggish demand from industrial and commercial businesses.
Its licensing business King Koil Licensing Company Inc saw revenue rise 10.3% y-o-y to RM8.6mil due to higher traction from international royalties.
Also, the group’s share of profit from associates moderated to a loss of RM200,000 (compared with RM800,000 a year ago), due to lesser contribution by NGC Energy Sdn Bhd on lower revenue from the domestic sales of liquefied petroleum gas.
There was also weaker contribution in Q2’FY21 from Sistem Penyuraian Trafik KL Barat (Sprint) Holdings Sdn Bhd, given the lower traffic volume at Sprint Expressway, exacerbated by the movement control order.
For the six months ended June 2021 (H1’FY21), KPS posted a net profit of RM12.6mil, compared with RM8.3mil loss a year ago, while revenue increased 38.7% to RM632.1mil.
The improved financial performance was also due to a 49.5% growth in the manufacturing businesses, which contributed RM543.6mil or 86% to group revenue.
“For our manufacturing, supply chain challenges persisted.
“The shortage of IC chips has thwarted the flow of orders from our automotive and consumer electronics customers; the shortage of global freight capacity has fluctuated order volumes of our subsidiary companies with regional and global presence; and the shortage of raw materials such as polyurethane foam and resin has pushed input prices.
“All of which have resulted in higher cost of goods sold and, consequently, lower margins,” Ahmad Fariz said.
