SUBANG: PECD Bhd hopes to return to the black in the current year
ending Dec 31, or by the next fiscal year, according to group chief executive
officer Rosman Abdullah.
He said the company's turnaround plan was based on four thrusts -
strengthening its financial position, improving competencies, enhancing
operational excellence, and emphasising risk management and internal control.
To improve its balance sheet, PECD is pursuing the recovery of more than
RM1bil in outstanding claims for several projects, including the Prince Court
Hospital in Kuala Lumpur, Precinct 11 in Putrajaya, projects involving the
company at the Dubai International Financial Centre and a marine terminal
project in Sudan.
“Whether we're out of the woods or not, will be subject to recovery of the
claims,” he told StarBiz.
PECD has also disposed of its non-core and
low-yielding assets such as some landbank and its office building in Shah Alam,
which it is presently leasing, against owning it previously. These raised
proceeds of some RM50mil.
PECD is also rationalising its operations by seeking projects with better
margins, in addition to reducing its manpower to 750 from 1,100.
As a
result, operating costs in the first quarter ended March 31 declined about 30%
year-on-year.
“We're stronger now compared to a year ago,” Rosman said.
The entry of
two new shareholders early this year also beefed up its finances. So far, the
new shareholders have invested about RM30mil to expedite projects and to meet
financial obligations.
Since the second quarter of the year, PECD had been more aggressive in
pursuing new projects. Its current tender book value stands at RM715mil, of
which 90% are local projects and 10% overseas.
Two of the projects, which
were private finance initiatives, had a combined value of RM500mil and were in
the advanced stage of negotiations, he added.
The group's outstanding order book amounted to RM648mil as of end-May and was
likely to increase to over RM1bil by year-end, he said.
PECD has signed a
preliminary agreement with Dubai Investment Group LLC (DIG) and Dubai Property
LLC for the foreign partners to take up a 70% stake in Dubai-based PECD LLC.
Rosman said the partnership was a different approach from in the past, when
the company had ventured overseas on its own.
“PECD LLC will be able to
leverage on Dubai Property and DIG's presence in the property and oil and gas
sectors in Dubai,” Rosman said.
On the recent termination by the developer of the Oceana project in Dubai,
Rosman said this was “not done on a proper basis.” “The delays were beyond the
control of PECD. The Dubai-based engineer also did not respond to our request
for an extension of time,” he said.
However, the termination does not necessarily mean that the company lost
money. “Our investments can be reimbursed through claims but we will have to go
through certain negotiations,” he added.
Rosman said wholly-owned subsidiary Warga Hikmat Kejuruteraan Sdn Bhd could
tap into the huge demand in the Middle East for shutdown maintenance in the
petrochemical and oil and gas sectors given its 50-year track record.
In
Indonesia, PECD will continue to look for oil and gas jobs given their
attractive margins.
Rosman said about 30% of revenue was derived from the oil and gas, or energy
division, adding that this contribution was likely to get bigger.
