KUCHING: Sarawak Cable Bhd group net loss has worsened to RM21 million in third quarter ended Feb 29, 2024 (3Q2024) from RM14.2 million a year ago as sales of power cables and wires plummeted.
Group revenue shrank to RM74.4 million from RM130.6 million recorded in 3Q2023.
Company’s losses per share widened to 5.27sen from 3.55sen.
In the nine-month period to Feb 29, 2024 (9m2024), Sarawak Cable group net loss widened to RM69.6 million from RM26.4 million a year ago as revenue plunged to RM273.9 million from RM455.9 million.
The bulk of the losses or RM45.78 million was incurred by the helicopter services and corporate segment.
The cables and wires segment, which contributed 87.5 per cent to group revenue in the latest financial period, saw its revenue plunged to RM239.8 million (9m2023:RM387.1 million) but its pre-tax loss narrowed to RM15.8 million (-RM23.4 million).
Sarawak Cable said as the group is currently operating under a lower capacity using all its internal resources, this has resulted in a reduced production and, therefore, lower revenue recorded.
“Since the production has reduced, this has led to higher unabsorbed overheads, resulting in a segment loss for the reporting period.
“As the restructuring programme was rejected, the group is in the midst of negotiating with its creditors on a new restructuring.
While this is in progress, our credit and financing lines are on a stand-still,” explained the power cable manufacturer in notes accompanying its financial results.
According to Sarawak Cable, a PN17 company, the market demand for power cables and wires remains strong, and the group continues to have good book orders in hand.
In the financial period under review, the group revenue from sales of galvanised products and steel structures dipped marginally to RM13 million (RM13.15 million) and the segment continued to be in the red with pre-tax loss of RM2.41 million (-RM2.63 million).
“The segment is also operating using internal resources as its financing lines are also on a standstill while negotiation with creditors is in progress.
This has resulted in reduced operations and, therefore, the low revenue was insufficient to cover the manufacturing and operating expenses, leading to a segment loss recognised for the reporting period.
“Market demand for products under this segment has stated to pick up gradually,” added the company.
In the latest nine-month period, the revenue of the transmission lines construction segment fell sharply to RM21.2 million (RM55.1 million), resulting in pre-tax loss of RM1.2 million (+RM519,000).
“Progress of all projects are also affected by the stand-still of its financing lines.
Despite that, we are making every effort to ensure that all on-going projects are to be completed within the committed construction period,” said Sarawak Cable.
On Jan 15, 2024, Sarawak Cable entered into an agreement to dispose of its wholly-owned subsidiary Trenergy Infrastructure Sdn Bhd. The loss on disposal is about RM11.8 million.
Commenting on prospects, Sarawak Cable said: “The group’s cables and wires segment book orders remain high, with an encouraging increase in book order for galvanised products and steel structures which will contribute positively to the group.
“The group is currently in the midst of negotiating with its bank creditors to restructure its banking debts.
The successful implementation of this restructuring will rehabilitate the financial performance of the group.”
Updating the winding up petition served by OCBC Bank (Malaysia) Bhd (petitioner) on its subsidiaries Leader Cable Industry Bhd and Universal Cable (M) Bhd (respondents), Sarawak Cable said a case management had been fixed on April 29, 2024 to update the Kuala Lumpur High Court on the filing status of the petitioner’s winding-up petition while a clarification and/or decision for the petitioner’s winding-up petition and the respondents summon in chamber to stay the winding-up petition had been fixed on May 15, 2024.
The respondents are indebted to the petitioner some RM46.16 million and RM28.35 million respectively as at Sept 15, 2022, with interest that continues to accrue to the petitioner.
Besides, on April 8, 2024, Sarawak Cable and its whollyowned subsidiary, Universal Cable, were served writs of summons and statements of claims by Hong Leong Islamic Bank Bhd (HLIBB) and Hong Leong Bank Bhd (HLBB) in the Kuching High Court for about RM78.29 million and RM14.73 million respectively.
In addition, HLBB is also claiming against Universal Cable for RM2.5 million (as at Feb 14, 2024) under the banker’s acceptance facility whereas Sarawak Cable is the corporate guarantor of the facility.
“The group is in the negotiation with the respective creditor banks including both HLIBB and HLBB to resolve these matters,” said the company.
In Dec 2023, Sarawak Cable announced that Serendib Capital Limited had emerged as a white knight for the company, and that Serendib had submitted its interest in performing a “resuscitation exercise” for the financiallydistressed company.
Serendib, according to Sarawak Cable, had prepared a RM250 million war chest to be used to restructure and pay down the company’s outstanding creditors as well as capital injection into the company to fund its power manufacturing business.
