Friday, October 28, 2011

SILK Holdings to be profitable in 'couple of years'

KUALA LUMPUR: SILK Holdings Bhd is confident the company will be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

Chairman Datuk Mohd Azlan Hashim said on Friday, Oct 28 that "we expect with the continued increase in traffic flow in that area, these losses will eventually be wiped out and there will be a turnaround in profitability".

The highway division's loss of RM26 million for the financial year ended July 31, 2010 was reduced to RM19 million in FY11, he told reporters after the AGM.

He said the decline in losses, coupled with a continued increase in traffic flow in the Kajang area, SILK Holdings would be able to make a profit in the next couple of years.

"We've been experiencing traffic flow rates of 17% per annum for two years running now. There is tremendous growth potential and as development happens in that area, traffic is generated," he said. Currently, the area is low density, he added.

On their marine support services division, he said group was expanding its fleet and renewing with more modern vessels. Currently, they own 14 vessels and expect to acquire a few more vessels in the next few months.

Azlan said that the oil and gas sector in Malaysia is an exciting area to be in as it was one of the national key economic areas to be developed under the Economic Transformation Programme.

"We are positioning ourselves to serve that need. At the moment, a quarter of the group's revenues are contributed by the highway side and the remaining is by the marine support services arm," said Azlan.

"Having said that, the highway business takes time to build up as the concession is for 36 years and we are only in the early part now," he added.

"In the highway business, there is heavy capital outlay and a long gestation period," he said. "You have to be patient. The initial years will show losses but once you hit your critical mass in terms of traffic, then you will be out of the woods."

For the financial year ended July 31, 2011,SILK recorded net loss of RM11.24 million compared with net loss of RM10.03 million in FY10.

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