KUCHING: Quality Concrete Holdings Bhd has narrowed its losses, thanks to cost cutting measures for its ready mixed concrete business.
For the financial year ended Jan 31, 2019 (FY2019), group’s pre-tax loss was reduced by RM3 million to RM10.5 million from RM13.5 million in FY2018 as revenue rose to RM124.7 million from RM111.9 million.
However, in the current fourth quarter, pre-tax loss climbed to about RM6.3 million from RM5.8 million in 4Q 2018 as the group’s manufacturing segment had recorded a higher loss due to impairments of receivables and inventories, Quality Concrete said in its latest financials released yesterday (Friday).
In FY2019, the company said the 11.4 percent increase in group revenue to RM124.7 million was contributed mainly by the construction & property development segment, which recorded a RM12.3 million increase in turnover.
The company attributed the segment’s improved performance to better sale of properties and well progressing construction projects.
The manufacturing segment recorded revenue of RM98.9 million as compared to RM99 million in FY2018.
The pipe manufacturing division saw its revenue rose by RM5.9 million as it has benefitted from the state government’s programme to improve water supply to rural areas.
“However, the improved revenue from pipes manufacturing division was partly offset by the drop in revenue from the ready mixed division, which saw its revenue dropped by RM5.5 million due to the lacklustre demand for concrete products,” said Quality Concrete.
The group is also involved in quarry operation and trading activities.
On the reduced group’s pre-tax loss at RM10.5 million, the company explained that the manufacturing segment has reported lower loss of RM7.7 million (RM9 million in FY2018) due mainly to lower expenses as a result of cost cutting measures for the ready mixed concrete division.
The construction and property development division also registered lower pre-tax loss of RM1.1 million on the back of higher revenue registered.
“Other than that, the changes in accounting standards (MFRS 15 Revenue) has also negatively impacted the results of the current financial year as revenue on development projects which are previously recognised on completion of project basis is now recognised based on stage of completion.
“This has resulted in about RM2.2 million of profit which should be recognised in the current year being restated to prior year period.
“The group has also recorded impairment of receivables amounting to RM1.6 million as well as impairment of inventory amounting to RM0.5 million in the fourth quarter of the current year,” said Quality Concrete.
On the prospects of the new financial year, the company said it is taking measures to improve the group’s performance and ensure better efficiency.
“Externally, we will continue to seek new opportunities to secure more revenue while internally, cost cutting and streamlining the operation to achieve better outputs and efficiency.
“The market will continue to pose a big challenge to the construction industry, and management will continue to be prudent in our approach to ensure the group is in a strong footing to meet the challenges,” it added.
