PETALING JAYA: Southern Cable Group Bhd continued to deliver solid financial performance amid strong demand for cables and wires, with its net profit rising to RM14.4 million in the second quarter ended June 30, 2024 (Q2’24), more than double the RM5.3 million posted in the corresponding quarter last year.
The profit was driven by a 36% increase in revenue to RM315.3 million, which was up from RM231.8 million previously due to higher sales volume for power, control and instrumentation cables and wires. Additionally, the commendable result was a result of improved margins from lower plastic compound costs and a better product mix.
The increase in revenue was in line with higher raw material prices (copper and aluminium) and was further supported by larger production capacity following the commencement of a new production facility at the cable and wire manufacturer’s headquarters in Kuala Ketil, Kedah, which has an annual capacity of 5,000km, producing low-voltage power cables and wires.
The group is ramping up operations at the new facility, increasing its annual cable and wire production capacity to 45,480km from 41,980km as at March 31. By the end of 2024, full operation of the new facility is expected to raise the group’s annual capacity to 46,980km, allowing it to accommodate more orders and boost revenue.
Managing director Tung Eng Hai said cables and wires are crucial for national development, and Malaysia is progressing rapidly, driven by the government's infrastructure efforts and increased foreign direct investments in the manufacturing sector.
In response to the robust growth, he added, Southern Cable is investing in production capacity to meet the growing demand for cables and wires as it continues to receive enquiries from various industry players, including power transmission and distribution, construction, and infrastructure, as well as data centre builders.
“With the increasing demand for power to support new developments, Southern Cable is poised to see a new leap in the revenue base,” Tung said.
The group’s orders in hand stand at RM923.1 million, which includes a supply contract from Tenaga Nasional Bhd worth RM99.6 million that was secured recently. These orders, expected to be fulfilled by 2026, involve supplying underground cables and conductors to power utility companies, rectifier and battery systems to a major telecommunications company, and purchasing orders from engineering, procurement, construction and commissioning contractors.
Meanwhile, the group’s revenue from overseas in Q2’24 rose 81.3% to RM13 million from RM7.2 million previously, mainly due to higher sales to the United States. The group aims to achieve RM50 million in overseas sales in 2024, with the majority expected from the US.
Tung said: “We are seeing an increase in orders from the US, in line with the rising construction activity there. Moving forward, we anticipate a gradual improvement in overseas revenue. We are also looking into expanding our product line to cater to the US market, aiming for long-term sustainable revenue growth that aligns with the country’s development and supports our growth.”
In the first half ended June 30,2024, the group’s net profit grew 171.8% to RM28.5 million, from RM10.5 million in the same period last year, attributed to lower plastic compound costs and a better product mix. The increase came on the back of a 32.7% higher revenue of RM627.4 million, compared to RM472.8 million previously, on higher sales of power cables and wires.
