KUALA LUMPUR (March 21): Wastewater engineering and construction firm Salcon Bhd (KL:SALCON) said it is pushing to grow its existing healthcare and renewable energy (RE) segments, and is proposing to include the two into its principal activities.

The group, which is principally involved in water and wastewater engineering, also operates rubber glove manufacturing, healthcare, trading and services (transportation services, solar power services and technology services) and property development segments, among other non-core businesses.

In the financial year ended Dec 31, 2023 (FY2024), the healthcare business contributed 1.83% of the group's RM298.73 million revenue, while the RE business's contribution came in at 0.73%. The core engineering and construction segment contributed 77.21% of its top line, followed by glove manufacturing with 16.04%. 

In a bourse filing on Friday, Salcon said it had stepped up efforts to grow its healthcare and RE businesses, noting its loss-making position in FY2023 with a net loss of RM21.19 million, and in FY2022 with RM24.33 million.

The FY2023 loss was largely due to a RM24.5 million impairment loss under the glove manufacturing segment, and RM7.54 million in impairment losses in joint ventures and associate companies attributed to the engineering and construction segment.

“In cognisance of the group’s financial performance, the group has been actively identifying other business opportunities to expand its revenue stream to mitigate the loss-making position, and to reduce dependence on its existing sources of revenue,” it said in reasoning for the proposed diversification.  

With expectations the healthcare and RE segments would each contribute at least 25% of the group's profit or result in a diversion of at least 25% of net assets, it proposed to seek shareholders' approval for the diversification. The proposed diversification is expected to be completed by the second quarter.

Salcon returned to the black in FY2024, with a net profit of RM16.46 million and RM289.73 million in revenue, driven by its engineering and construction segment's higher project completion rate and higher sales under the glove manufacturing segment.

Shares in Salcon ended half a sen or 1.67% higher at 30.5 sen on Friday, valuing the company at RM315.81 million.

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