Below expectations. Stripping out the tax incentive arising from the purchase of Borsig of around RM40m, 1QFY12/10 core net profit of RM0.3m came in below expectations. The variance was largely due to: 1) lower-than-expected demand from China, Europe and Middle East; and 2) lower utilisation rates. Note that 1QFY12/10 average utilisation rate declined to 45% (vs. 55% in 4QFY12/09 and 70% in 1QFY12/09). Nevertheless, the company reported 1QFY12/10 operating profit of RM11.3m (vs. operating loss of RM61.9m in 4QFY12/09) mainly due to lower operating expenses stemming from tight cost-control measures.
KNM Group Berhad : Not Out Of The Woods Yet- 24/05/2010
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