KUALA LUMPUR (Nov 21): Engineering and construction firm Zelan Bhd continued with its streak of profitability in the third quarter ended Sept 30 (3QFY14) as the payment for its project in Abu Dhabi had started. In the quarter, it made a net profit of RM13.33 million, compared with the previous year’s net loss of RM6.22 million.
Revenue meanwhile, jumped 22.27% year-on-year to RM63.08 million. Zelan’s explanatory notes showed local projects’ revenue contribution inched up by 3.65% to RM59.7 million, while the Meena Plaza project in Abu Dhabi contributed RM3.2 million in this quarter, as opposed to a negative revenue of RM6.3 million last year.
Zelan’s filing with the stock exchange said the group’s return to the black was due to the higher gross profit of RM11.09 million, against the previous corresponding quarter’s RM8.31 million. This was due to a flow-through of higher revenue.
“In addition, in the corresponding quarter last year, the group recorded loss on fair value of derivatives, higher administrative expenses and higher finance costs, resulting in the loss after taxation,” Zelan added.
For the six months ended Sept 30, 2014 (6MFY14), Zelan made a net profit of RM25.903 million or 3.07 sen per share. In the previous corresponding period, it incurred a net loss of RM1.64 million or 0.29 sen per share.
The group, a 39.25%-owned associate of MMC Corp Bhd, attributed profitability to a higher gross profit and interest income. Additionally, it also incurred lower interest costs, and administrative and operating expenses.
It recorded revenue of RM124.104 million in 6MFY14, slightly higher from previous year’s RM122.32 million.
Going forward, Zelan said its business strategy is to now focus on home market.
“The company has taken positive steps to improve the group’s performance, through continuous assessment of internal and external risks, and implementation of strategies to control operating costs. With the currents projects in hand, the company is expected to improve its earnings from operations,” said Zelan of its prospects.
Zelan share price dropped one sen or 3.03% today, to end the week at 32 sen, with 2.31 million shares having changed hands. Zelan’s market capitalisation was RM278.82 million.
By Kamarul Anwar / theedgemarkets.com
