This article first appeared in The Edge Financial Daily, on June 7, 2016.

KUALA LUMPUR: KUB Malaysia Bhd is disposing of its entire stake in loss-making unit KUB Precast Sdn Bhd for RM19 million to JEKS Precast Sdn Bhd, and exiting the engineering and construction sector altogether.

KUB Precast, currently a wholly-owned unit of KUB, is primarily engaged in the manufacturing and trading of precast concrete slabs and concrete elements largely sold to the construction industry.

In a bourse announcement, KUB said the the group’s original cost of investment in KUB Precast was RM19 million.

In a statement, KUB said for the financial year ended Dec 31, 2015, KUB Precast reported a loss before tax of RM5.32 million, and a net loss before tax of RM1.22 million for the first quarter of the financial year ending Dec 31, 2016.

The proposed disposal is in line with its strategy to dispose of non-performing assets to improve profitability. It plans to use the sale proceeds to finance its core businesses’ working capital and capital expenditure.

“Following the divestment of KUB Builders Sdn Bhd in December 2015, we re-examined the overall viability of maintaining our continued presence in the engineering and construction sector. After extensive internal deliberation and considering our new strategic direction, we decided to exit this sector altogether,” said KUB president and group managing director Datuk Abdul Rahim Mohd Zin.

He added that KUB is realigning its focus and efforts on its core businesses, namely agro, energy and information and communications technology, to sustain its future growth.