KUALA LUMPUR (Aug 22): Engtex Group Bhd's net profit for the second quarter ended June 30, 2019 (2QFY19) shrank 84.3% to RM985,000 from RM6.29 million a year earlier, due to softer demand for its manufactured steel products and property units coupled with higher tax expenses and increased procurement and operating costs for certain metal-related trading products and manufactured steel products.

Its earnings per share declined to 0.22 sen for 2QFY19 against 1.43 sen for 2QFY18, the group said in a Bursa Malaysia filing today.

Revenue declined 11% year-on-year (y-o-y) to RM254.64 million from RM286.14 million previously.

For the six months ended June 30, 2019 (1HFY19), the group recorded a 93.18% decline in net profit to RM1.1 million from RM16.17 million in 1HFY18. Revenue for the quarter was also down 9.49% to RM528.89 million from RM584.34 million a year ago.

Engtex said the performance of the group was affected by factors such as domestic demand, volatility in international and domestic metal prices and delay in the implementation of projects in the construction, utilities, infrastructure and property development sectors.

Moving forward, it said the outlook in the forthcoming year will remain challenging.

“Notwithstanding this, the wholesale and distribution division will continue to focus on expanding its existing customer network and product range and sourcing for new products locally and abroad,” said Engtex.

For its manufacturing division, Engtex said the division will improve, automate, optimise and expand its operating capacity and continue to look for new business opportunities.

Currently, the group is installing a new ductile iron pipe production line to produce pipe with diameter up to 1,200mm to broaden the range of product sizes in the water and sewerage sectors and the commissioning will be delayed to the third quarter of 2019.

Meanwhile, Engtex said it does not intend to launch new property development projects on its existing land bank in light of the weak property market other than selling its remaining unsold residential and commercial properties in Kepong and Selayang.

For the hotel division, the group said it will focus on increasing its revenue stream by increasing their average occupancy and room rates, and targeting the right customer mix to achieve higher gross operating profits to meet its finance cost and depreciation incurred.

Engtex's share price closed at a six-year low of 64 sen, giving it a market capitalisation of RM278.33 million. Over the past year, the counter has retreated some 40.19% from RM1.07.