Borneo Oil Berhad (BornOil) saw its profit before tax soaring by some 50% for its first quarter ended 30 September 2022 to touch RM5.71 million (2021: RM3.79 million) against revenue almost doubling to RM21.41 million (2021: RM11.07).
In an announcement to Bursa Malaysia to explain the results, BornOil said that the Group will remain prudent and focus on improving productivity, further implementing cost control measures and promoting long-term sustainable development of its businesses.
Diving deeper into the results, BornOil said that:
- The Head Office and Others (“HOO”) recorded a profit before tax of RM7.47 million against the profit before tax of RM5.47 million for the corresponding quarter, mainly due to the unrealised exchange gain of RM5.68 million and fair value gain of RM3.43 million on the quoted securities for the current quarter under review.
- The Food and Franchise Operations (“FFO”) recorded revenue of RM13.05 million and profit before tax of RM0.14 million for the current quarter against revenue of RM9.58 million and loss before tax of RM0.15 million for the corresponding quarter. The higher reported revenue for the current quarter reflects the market sentiment improvement post covid. The lower reported profit was due to the start-up costs in the new plantation business involving chilli and maize planting.
- The Property Investment & Management (“PIM”) registered revenue of RM6.23 million and loss before tax of RM0.21 million for the current quarter compared to revenue of RM0.03 million and loss before tax of RM0.70 million for the corresponding quarter. The revenue for the current quarter was due to the full resumption of the on-site installation activities for the project management of an Integrated Limestone Processing Plant (“ILPP”). In contrast, there were no installation activities on-site due to the Full Movement Control Order for the preceding quarter.
- The Resources & Sustainable Energy (“RSE”) reported revenue of RM2.12 million and loss before tax of RM0.88 million for the current quarter against revenue of RM1.44 million and loss before tax of RM0.83 million for the corresponding quarter. The revenue for the current quarter was mainly derived from the sale of limestones/stones. However, the loss before tax was due to normal fixed operating costs against the lower reported revenue for the current quarter.
Business Today had previously reported about how BornOil had also recently emerged as the majority shareholder of Sabah’s sole ILPP. It’s a massive development as it would result in the BornOil Group diversifying its principal activities to include the manufacturing and trading of clinker, cement and related products, thereby opening a new and potentially lucrative business stream.
This development is an extremely positive one for BornOil as the outlook for Sabah’s clinker and cement industry is favourable given the high cement prices in Sabah and the ILPP’s proximity to the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).
According to estimates, Sabah has an annual demand of between 1.2 million to 1.4 million metric tons of cement per year. These numbers do not include the future development projects planned on the East Coast of Sabah, and the demand in the BIMP-EAGA region with close proximity to the east coast of Sabah.
There are also strong synergies between BornOil’s existing limestone quarrying business operations and the ILPP, among which include the ILPP being situated adjacent to BornOil’s limestone quarry lands in Lahad Datu. BornOil is today the largest private owner of limestone reserves of cement grade quality in Sabah and has heavily invested in the resource. This development has enabled the BornOil group to move downstream its quarrying resources to further boost the BornOil Group’s bottom line.
You can read the indepth interview with BornOil executive directors Datuk Joseph Ambrose Lee and Georgianne Suzanne Lingam (pic) here.
