KUALA LUMPUR (April 25): Loss-making timber products manufacturer NWP Holdings Bhd is seeing the possibility of turning profitable with its diversification into the sand-dredging business, coupled with ongoing cost-cutting initiatives.
NWP’s executive director Tan Jyy Yeen said additional revenue and earnings from the sand-dredging business put the group in a strong position to turn profitable in the financial year ending Feb 29, 2024 (FY2024).
“Our cost-cutting initiatives have successfully borne results. The management has taken proactive measures to streamline our business and focus our efforts on managing our costs, as the mould and timber businesses have been struggling for several years.
“While these challenges remain going forward, we are confident that a leaner workforce and a more efficient operation within the group will help us to turn around in the near term,” said Tan in a statement on Tuesday (April 25).
The group, which has been incurring losses every year since 2006, has formed a 51:49 joint venture with OneOne Auro Marine Sdn Bhd in June last year to undertake contracting work for dredging, transporting, and loading marine sand from a concession area for export and local reclamation sites.
OneOne Auro Marine is owned by OneOne Auro Sdn Bhd, which in turn is wholly-owned by Datuk Wira Chia Shee Tong Tom, according to NWP’s past stock exchange filing.
Earlier this month, NWP secured a two-year RM36 million contract for a marine, mining, and transportation project in Melaka.
Tan believes this project could potentially bring NWP back into profitability by this financial year.
The project, located in the Malacca sea area, will involve the deployment of a fleet of engineering vessels that will extract marine sand from the designated sea area and transport it to a specified location directed by Gezhouba Engineering Sdn Bhd, where it will be discharged or unloaded from the barge. Gezhouba is wholly owned by China Gezhouba Group Co Ltd.
Last week, NWP announced that its net loss for FY2023 narrowed by 70% to RM5.25 million from RM17.37 million, while revenue fell 19% to RM2.63 million from RM3.23 million.
NWP attributed the lower loss for FY2023 to savings following the termination of a lease, coupled with lower financing cost for the lease.
The group also recorded lower expenses following management’s cost cutting measures, which resulted in lower headcount. The group also relocated its office to a site with lower rental.
Shares of NWP were trading at 20.5 sen as at 4:36pm, up half sen or 2.5%, giving it a market capitalisation of RM118.7 million.