KUALA LUMPUR (Nov 12): Construction and engineering firm Kelington Group Bhd (KL:KGB) has reported a 3.94% increase in its third quarter net profit to RM32.92 million from RM31.67 million a year earlier, thanks to a higher gross profit margin driven by a "strategic focus on revenue composition" and a favourable project mix.

The higher earnings for the quarter ended Sept 30, 2024 (3QFY2024) was also supported by higher contributions from the industrial gases division, the company said in a bourse filing.

"There was an unrealised forex loss of approximately RM6 million, mainly due to the revaluation of foreign currency balances and receivables as the ringgit strengthened," it added  

The higher profit was achieved despite a 23.52% year-on-year fall in quarterly revenue to RM307.31 million from RM401.82 million as several major projects in Singapore and Malaysia had transitioned out of their accelerated phases and are nearing completion, the company noted.

Overall, Kelington said Malaysia contributed 40% of its revenue followed by Singapore (29%), China (26%) and Taiwan (3%).

Kelington declared a third interim dividend of two sen per share, payable on Dec 23. This brings the total dividend declared so far this year to six sen per share, compared with 1.5 sen per share it paid over the same period last year.

On a segmental basis, Kelington said the ultra high purity (UHP) division remained its primary revenue contributor during the quarter, accounting for 70% of total revenue. However, the UHP revenue declined 13% year-on-year to RM216.2 million due to the completion of several projects in Singapore.

Revenue from the process engineering division fell 36% to RM19.2 million, impacted by slower progress on a key project in Malaysia initiated in 2022, which has since progressed at a slower pace following a period of accelerated activity.

The general contracting division, meanwhile, saw a 70% drop in revenue to RM32.8 million, also attributed to a slowdown in project progress in Malaysia after a period of accelerated activity.

Conversely, the industrial gases division posted a 28% increase in revenue to RM39.4 million, driven by strong consistent demand for liquid carbon dioxide from both local and export markets.

For the first nine months of FY2024, Kelington’s net profit jumped 26.13% to RM84.41 million from RM66.92 million in the previous corresponding period, despite a 14.8% decline in revenue to RM967.8 million from RM1.14 billion.

Looking ahead, Kelington said it is well-positioned to benefit from the expansion of the global semiconductor industry. The company secured RM999 million in new contracts in the first nine months, bringing its total order book to RM2.3 billion, of which RM1.45 billion remains outstanding.

“We are confident of delivering a commendable financial performance in FY2024, underpinned by the execution of our existing order book across key markets and the continued momentum in our industrial gas business,” Kelington said.

The company noted that its second liquid carbon dioxide plant in Kerteh, which commenced operations on March 25, has increased its total production capacity to 120,000 tonnes per year, enhancing its focus on higher-margin revenue streams.

Shares in Kelington closed three sen or 1.01% lower at RM2.93 on Tuesday, giving the company a market value of RM2.03 billion. The stock has gained 34% year to date.