KUALA LUMPUR: KUB Malaysia Bhd is looking to divest A&W Restaurants (Thailand) Co Ltd. It is also seeking a partner to take a majority stake in A&W (M) Sdn Bhd as part of the group’s plan to reposition its business, said group managing director Datuk Wan Mohd Nor Wan Ahmad.
“The board has agreed to sell [A&W Thailand], and we are currently looking around for a buyer. We are hoping to complete the sale by year-end,” he said.
According to KUB’s FY11 annual report, revenue from Thailand accounted for 3.2% of the group’s total revenue, or RM21.7 million.
As to the fate of A&W Malaysia, Wan Mohd said KUB is looking for partners to take up a stake in the fast food franchise, which has been struggling in the competitive landscape.
“We have been on the lookout for an equity partner to take a majority share in A&W Malaysia to help to grow the business. If we are unable to find anyone who wants to take a majority, we will settle for a significant minority,” he said.
In an effort to curb the losses seen in the food division, Wan Mohd said KUB will close down 24 non-performing outlets, while trying to grow revenue at the more profitable stores.
For FY11, A&W Malaysia and Thailand reported losses totalling RM44.5 million, half of which were impairment losses. This was due to a weaker consumer market and the floods in Thailand, which impacted A&W Thailand’s operations.
When asked if KUB would also consider disposing of A&W Malaysia, chairman Datuk Seri Abd Halim Abd Samad said it isn’t on the cards. Market talk was that government-linked private equity firm Ekuiti Nasional Bhd (Ekuinas) was looking to acquire A&W Malaysia.
“We have been talking to Ekuinas, but we have been in discussion with other parties as well,” said Wan Mohd.
This streamlining forms part of the effort to return KUB to the black following five straight quarters of losses. According to Wan Mohd, the company is hoping to turn around by next year. For its 1Q ended March 31, KUB reported a net loss of RM4.1 million.
There have been news reports about a possible management tussle taking place within the organisation. These reports surfaced following the resignation of KUB’s previous managing director Datuk Mohd Nazar Samad, ahead of the expiration of his contract.
Wan Mohd said KUB had simply chosen not renew some of its contract staff.
“He [Nazar] resigned, we did not force him to leave,” said Wan Mohd.
Despite possessing numerous government projects, KUB has never seemed to be able to capitalise on these contracts.
Last year its biggest coup was when it was awarded a contract for work on klia2 worth RM268.8 million. Most recently, KUB was awarded an RM11.69 million contract from the Home Ministry to supply printer ink and toner to the police force.
Diversified KUB will concentrate on three sectors — plantation and agriculture, the LPG business, and property, engineering and construction (PEC), according to Wan Mohd.
In terms of plantation and agriculture, KUB intends to grow its landbank from the present 18,000ha to 50,000ha over the next two years, with a focus on east Malaysia.
According to KUB, the company is looking to form joint ventures with other companies that have land and help in developing the plantations.
As for its PEC business, Wan Mohd said the company is currently bidding for RM2 billion worth of contracts. Its current order book stands at RM300 million.
“In order to have more sustainable earnings, we have been talking to the government about getting a concession-based contract. In particular, a toll road concession,” he said.
In FY11, the LPG business accounted for 59.3% of KUB’s revenue, followed by information and technology at 12.2%, food (12%), PEC (9.6%) and plantation (7.1%).