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Tuesday, June 23, 2009

Muhibbah MD sees better year for infrastructure construction

SHAH ALAM: Muhibbah Engineering (M) Bhd sees better performance from its infrastructure construction business this year due to cheaper materials after the division posted losses last year.

Nevertheless, the current general business environment remains slow and a pick-up in the construction industry is not seen for another six months, said managing director Mac Ngan Boon.

Mac said the group’s infrastructure construction business was expected to perform better this year as raw material prices overall had decreased by 10% to 15%.

“Last year was a difficult period as we had to endure high prices for raw materials and scarcity of equipment for our heavy engineering works.

“Going forward, we see a trend reversal and that (will have a) positive impact on our ongoing jobs,” he told reporters after Muhibbah’s annual general meeting yesterday.

The company’s infrastructure construction division registered a pre-tax loss of RM21.5mil in its previous financial year ended Dec 31 mainly due to increased costs in oil, construction materials, transportation as well as other operating costs.

This had a negative impact on the company’s net profit, which fell to RM21.8mil from RM70.2mil in FY07, although revenue rose to RM2.1bil from RM1.4bil.

Mac said although the construction business was currently slow, “our present strength lies in the orderbook that should last another two years during which we can replenish our orders.”

“The secured projects also give us the choice to select projects that would be highly beneficial for the company and not just aggressively fight to get jobs,” he said, adding that the company had bid for jobs worth RM3bil for both local and overseas projects.

“But the market environment is more competitive today,” Mac acknowledged when asked on the success rate of the jobs tendered for.

Muhibbah’s order book for construction projects stands at RM2.6bil currently with 55% local projects and the rest goreign.

On its crane business, Mac believes that demand will be more robust in the latter part of the year.

By The Star

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