KUALA LUMPUR (Aug 21): Kelington Group Bhd (KL:KGB) notched a 40% year-on-year rise in net profit amounting to RM26.67 million for the second quarter ended June 30, 2024 (2QFY2024), compared with RM19.06 million a year ago.
The earnings growth was driven by better gross profit margin, which widened to 17.3% from 10.8% in the previous year’s corresponding quarter, attributed to changes in revenue composition and a favourable project mix, as well as the contribution from its industrial gases division.
However, quarterly revenue contracted 24.4% to RM321.21 million from RM424.91 million previously, the group's bourse filing on Wednesday showed.
The construction and engineering group said the decrease in revenue was due to lower revenue contributions from Singapore and Malaysia, as several major projects in these regions moved out of their accelerated phases and neared completion.
In terms of geographical breakdown, revenue contribution was led by Malaysia (40%), followed by China (32%), Singapore (26%) and Taiwan (2%).
The group declared a second interim dividend of two sen per share for the quarter under review — amounting to RM13.6 million — taking total dividends declared to four sen in the first half of 2024 (1HFY2024), compared with 1.5 sen in 1HFY2023. The dividend will be payable October 10.
On a segmental basis, Kelington's Ultra High Purity (UHP) division under the construction segment remained its primary revenue generator, contributing 69% of the group's total revenue in 2QFY2024. However, revenue from the UHP division fell 25% to RM222.1 million compared to the same period last year on completion of several UHP projects in Singapore.
Revenue for its process engineering division fell 32%, totalling RM17.4 million in 2QFY2024 compared to 2Q2023. The decline was primarily due to a process engineering project awarded in Malaysia in 2022, which has since progressed at a slower pace following a period of accelerated activity.
Its general contracting division also saw a drop in revenue of 37% to RM49.8 million, mainly due to slower progress on general contracting projects in Malaysia following a period of accelerated activity.
Meanwhile, revenue from its industrial gases division surged by 21% to RM35.4 million, propelled by a consistent demand for liquid carbon dioxide from both local and export markets.
For 1HFY2024, Kelington's net profit jumped 46% to RM51.49 million from RM35.25 million, despite revenue falling 10% to RM660.49 million from RM733.84 million previously.
Notably, Kelington's net profit for the financial year ended Dec 31, 2023 (FY2023) surpassed the RM100 million mark for the first time in the company's history, after it reported a record-high quarterly net profit of RM35.73 million in 4QFY2023. The company posted an annual net profit of RM106 million.
Looking ahead, Kelington said it is well-positioned to benefit from the expansion in the global semiconductor industry. During 1HFY2024, the group said it secured new contracts amounting to RM564 million.
"Combined with projects carried forward from previous years, our total orderbook stood at RM1.87 billion, of which RM1.29 billion remains outstanding," it said.
"The group remains proactive in tendering for additional projects, with a focus on the semiconductor sector in Malaysia, China, Singapore, Hong Kong and Germany," Kelington said.
Its shares closed unchanged at RM3.40 on Wednesday, as its market capitalisation stood at RM2.32 billion. Year to date, the counter has risen by 56%.