Boilermech mulls merging ops

SUBANG JAYA: Biomass boiler manufacturer Boilermech Holdings Bhd, which is in the midst of setting up a new plant in Klang, said it is currently considering to consolidate its current operations in Subang Jaya, as part of its effort to optimise its operations and efficiencies.

Boliermech, which is serving mainly the palm oil milling industry, has two manufacturing plants in Subang Jaya.

“Currently we have sufficient capacity. We are building more capacity for future use. So, now, since the outlook of the future becomes more uncertain and also less bullish, then we have to look on it,” its deputy managing director Chia Lik Khai told reporters after the company’s AGM yesterday.

“We already have two plants in Subang. So right now we are still reviewing whether to build the new plant (in Klang) full, half or to consolidate the plants (in Subang Jaya),” he added.

Previously the company said it will spend RM60 million to set up the new plant in Klang in a bid to increase its production capacity by 20%, where the first phase is expected to begin in mid-2016.

For the first quarter ended June 30, 2015, its net profit fell 23% to RM7.82 million from RM10.08 million in the previous corresponding quarter.

Revenue for the quarter also decreased 19% to RM60.02 million from RM74.14 million previously.

Chia said the decrease in revenue was mainly due to the decrease in boiler deliveries.

“Even though we already have the orders, our deliveries have slowed down, so our revenue recognition also slowed down. But margin wise, we don’t see that much of the drop,” he added.

Chia reiterated that the slowdown in deliveries of its boiler was mainly due to the current tough market condition, which is believed to affect the end-users cash flow and financial strength that causes late payment.

Moving forward, he said the market remains challenging in the near term, given the weaker ringgit against US Dollar, as well as the low crude palm oil price.

“I think overall, the entire industry is experiencing this (market slowdown), and we are not exempted from it.”

“This year, I think despite the challenging market condition, we will strive to achieve similar or better performance than what we have achieved last year in FY15,” he added.

Boilermech is involved in the manufacture, installation and repair of bio-energy systems, including the generation of energy from bio-based materials and trade of related parts and accessories.

The company currently has an order book in excess of RM300 million.