KUALA LUMPUR (Sept 25): Engineering services and renewable energy provider Kawan Renergy Bhd (KL:KENERGY) posted a 72.8% decline in third-quarter net profit due partly to cost overruns at its power plant project in Sabah.
Net profit for the quarter ended July 31, 2026 (3QFY2026) fell to RM2.04 million or 0.37 sen per share, from RM7.49 million or 1.36 sen per share a year earlier, according to the group’s bourse filing on Friday.
The group said the cost overruns in the Sabah project arose from additional works beyond the initial agreement as well as a significant increase in manpower deployment to mitigate project schedule delays.
The drop in earnings was also attributed to higher transportation, labour and material expenses, as well as additional tax costs absorbed by the group following the expansion of the sales and service tax.
Kawan Renergy, however, saw its quarterly revenue increasing 32.6% to RM46.49 million from RM35.05 million in 3QFY2025, on better contributions from all its business segments, particularly the renewable energy and co-generation plants segment.
Kawan Renergy did not declare a dividend for the quarter.
For the first nine months of FY2026, the group’s net profit dropped 50.6% to RM8.55 million from RM17.30 million a year earlier due to lower profit margins and higher administrative expenses.
Revenue for the nine months climbed 43.4% to RM136.73 million from RM95.33 million, supported by stronger contributions from renewable energy and co-generation plants segment.
Kawan Renergy said the renewable energy and co-generation plants segment contributed 48.3% of its total revenue, followed by the industrial process equipment segment with 36% and the industrial process plants segment with 15.7%.
Looking ahead, the group said prospects remain strong, supported by its renewable energy and power generation business. It has capitalised on emerging opportunities by securing a major data centre project and will continue working with strategic partners to leverage these capabilities.
As of end-July, the group’s order book stood at RM92.4 million.
Last month, the group announced it has secured feed-in tariff approval to develop a 2.5MW biomass power plant in Tasek near Ipoh under the 2026 FiT system administered by the Sustainable Energy Development Authority Malaysia (SEDA).
Shares of Kawan Renergy closed one sen or 2.67% lower at 36.5 sen, valuing the group at RM200.8 million. The counter has fallen 49.3% over the past year.