KUALA LUMPUR: KUB Malaysia Bhd’s new controlling shareholder Datuk Seri Johari Abdul Ghani has been frank about the once solid company.
Johari revealed to the New Straits Times that of KUB’s four activities, only liquefied petroleum gas (LPG) business had been profitable.
The other three businesses - plantation, ICT and power - had been losing money.
Things were tough for the former A&W franchise holder in Malaysia that it had sold about RM400 million of assets and investments over the past 10 years.
“Most of the proceeds from the disposals were to finance its overhead,” said Johari, who was responding to the NST report on March 27, quoting sources, that his entry would likely lead to a slew of other changes at KUB, including layoffs and disposals of certain subsidiaries.
It was also reported that the KUB board members were willing to step down if required by the former Second Finance Minister.
He added that the continuous disposals of assets and investments to finance KUB’s overhead costs were certainly not sustainable for the group.
Johari, who became KUB’s largest shareholder after buying a 31.99 per cent stake on March 1, said the plantation division had lost some RM40 million. Its ICT and power businesses posted losses in the financial year 2018.
“Many people misunderstood the business of power as they thought KUB has a power plant or is an independent power producer. Actually it is only a contracting business.” he clarified.
“If not because of the gain on the disposal of assets and investments, KUB would have recorded losses at the group level end of 2018,” he added.
KUB posted a net profit of RM1.17 million in the year ended December 31 2018 versus a net profit of RM32.95 million previously.
As of December 31 2018, KUB had cash of RM92.83 million.
Johari assured the management and board of KUB that he would work closely with them to pave a better way forward for the group.
“As the largest shareholder, I will certainly play a role in helping KUB to set up a clear direction moving forward.
“(But) it is still early to tell at the moment on the plans to revamp KUB. Suffice to say that I am still going through the process of understanding the entire group business and assist the board to work out a clear direction for its future growth.”
Potentially, one of his initial main decisions may spell the end of its ICT and power divisions.
Johari said these two divisions were insignificant to the entire group’s operation.
“We may consider these two divisions non strategic to the group. The only business that I think KUB can further explore will be its consumer LPG business. This could include vertical expansion of its current bottling operation as well as expanding its distribution networks,” he added.
On possible layoffs, he said any decisions to downsize would “greatly depend on whether or not any particular business continues to provide significant returns to the group.”