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Monday, March 3, 2008

Muhibbah Engr expects double-digit profit growth

CONSTRUCTION and engineering firm Muhibbah Engineering (M) Bhd, which is in the midst of an internal restructuring, said it expects net profit and revenue growth for the 2008 financial year to be in the double digits, supported by all divisions.

"We expect 2008 to be another good year. We see growth in every single division and expect the group to post at least double-digit increases in net profit and revenue," Muhibbah Engineering managing director Mac Ngan Boon told Business Times in an interview.

The group saw its net profit for the financial year ended December 31 2007 more than double to RM70.2 million from RM33.8 million a year ago.

Revenue rose 31 per cent to RM1.4 billion from RM1.1 billion in 2006.

The construction and engineering division accounted for 52 per cent of the group's 2007 revenue, followed by its crane manufacturing business with 32 per cent and marine unit at 16 per cent.

Mac said for 2008, contributions to the group from its various business units will likely remain similar to last year.

Two major local projects that will drive revenue growth of its construction division this year will be the RM1.1 billion construction works of the South Klang Valley Expressway and the RM450 million job to build a petroleum hub and bunkering facility on a man-made island in Tanjung Bin, Johor.

"Currently, we are awaiting funding for the two projects to be put in place but we expect them to kick off this year. At the same time, we expect contribution to come from our overseas projects in Singapore, Syria, Qatar and Yemen," said Mac.

Muhibbah Engineering has an outstanding order book of RM4.6 billion and is also tendering for local and overseas projects worth about RM10 billion.

"As a company, we can never sit idle. We continue to source and look at the market. Our business development is always ongoing," Mac said.

"However, we are now much more selective in terms of the types of work that we look for. The sectors that we like include airport, port and bridge construction works.

"We want to ensure that our profit margins are protected and that we can give value to our shareholders," he added.

Meanwhile, Mac said Muhibbah Engineering is reorganising its businesses into four cores - construction and engineering, crane manufacturing, marine and concessions.

Part of the restructuring involves regrouping its oil and gas fabrication business under its marine subsidiary.

The move will boost Muhibbah Marine Engineering Sdn Bhd's revenue and put it in better stead to secure more shipbuilding and fabrication jobs in the oil and gas industry.

The company has taken steps to regroup a project it had secured in 2006 to build fabricating steel jackets for an oil and gas project in Yemen under its marine division. The project is currently placed under Muhibbah Steel Industries Sdn Bhd.

"The new structure will be reflected in this year's financials, where we expect Muhibbah Marine's net profit and revenue to grow by 20 per cent this year," said Mac.

Last year, Muhibbah Marine posted a net profit of RM18 million on a revenue of RM301 million, driven mainly by its shipbuilding activities.

By New Straits Times (by Kang Siew Li)

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