KUALA LUMPUR (Nov 27): Kim Teck Cheong Consolidated Bhd (KTC) expects to take another year to realise its investments in infrastructure, including warehousing facilities and 600 sales and distribution points throughout Brunei.
“It has taken us longer than we had expected, but we will get there. What we need now is to bring in more businesses to surpass our break-even point and profitability will follow,” its executive director Dexter Lau told reporters, after the group’s annual general meeting today.
In March, KTC had acquired a 60% equity interest in Grandtop Marketing Sdn Bhd for B$600,000 (RM1.79 million), which is principally engaged in the business of distribution of consumer packaged goods (CPG) in Brunei.
In the past two years, the group has invested some RM20 million to beef up its warehousing facilities, logistic infrastructure and human resource in Sabah, Sarawak and Brunei, to take advantage of opportunities as they arise, Lau said.
He added that KTC is currently in talks with five to six notable third-party CPG brands in Sabah, Sarawak and Brunei, which may come onstream in the current financial year ending June 30, 2018 (FY18).
Lau also noted the downward pressure on the group’s profit margins, due to cost-cutting measures at the retail level.
However, he is confident that KTC’s strong foothold in Sabah and Sarawak can bring strong double-digit revenue growth this year, to help minimise impacts on its margins.
KTC saw its net profit fall 41% to RM1.09 million in FY17, from RM1.85 million in the previous year, even though revenue grew 26% to RM428.48 million, from RM341.13 million in FY16.
As at end-June, the ACE Market-listed company operated 7,355 sales and distribution points in Sabah, Sarawak and Brunei, with a coverage of over 200 brands for 37 brand owners, according to its annual report.
KTC shares ended the morning session unchanged at 18.5 sen today, with 409,800 shares done, for a market capitalisation of RM94.4 million.