LONG viewed as a poorly managed company, Fitters Holdings Bhd may gradually change perceptions.
This will take some time to do because it continues to be poorly perceived even though it has started to deliver respectable results. The fire-fighting systems group posted a net profit of RM6.3mil last year compared with RM2.9mil in the previous year.
Its earnings per share last year amounted to 15 sen. Its debt position has also improved. Those who look beyond the operating figures would have seen that the group had sharply reduced its short-term debts to RM15.7mil from RM26.2mil the year before. “We're almost zero-geared now. The debts are generally trade lines,” its managing director Datuk Richard Wong said in an interview with StarBiz.
Explaining the group's poor earnings record in earlier years, he said Fitters was listed on Bursa Malaysia in the mid-1990s and it felt the force of the regional financial storm soon after that. “We were beaten from three sides. We paid high interest rates, we had bad debts and exchange rate losses – we import British and American products,” he added.
The group was geared for normal business conditions, and it was not prepared for a crisis. “We had to make provisions of RM15mil for bad debts over two to three years after the crisis. We had RM80mil (worth of jobs) out there when the crisis came, and we had borrowings of RM45mil,” he said.
Wong spent the last few years to clear these financial burdens. The group has now completed that process, has trimmed operating costs and is ready to take on a much larger volume of business.
Fitters is now out of the woods. All the doubtful debts have been provided for. In fact, some of those are being repaid by customers. “There is no forex issue,” he said, adding that interest rates are low. Fitters’ financial health was restored without resorting to a cash call on shareholders. It has not made any rights issues, not in the 10 years since its public listing.
The group has five divisions, all of which are in fire-fighting services and equipment. Fitters is one of the largest producers of fire-rated doors and this, together with fire extinguishers, contributes about 35% of group sales, with other divisions being contracting services (35%), fire-rated apparel (13%), raised floors (10%) and central monitoring systems (7%).
The contracting division is engaged in the sale of centralised fire-fighting and security-control systems to commercial and industrial clients. This has traditionally provided the bread and butter. It also causes earnings to fluctuate widely from quarter to quarter as it involves large projects and are booked on completion in certain quarters only.
The door-manufacturing division is doing a brisk business. There is a steady demand for it as the front doors of all apartments must be fire-rated. Recent orders clinched include the Hilton Kuala Lumpur and Le Meridien hotels in KL Sentral. That alone adds RM18mil to its order book.
Wong described the apparel division as a pet project; it makes a small demand on capital employed and yet it contributes substantially to turnover. Currently, it is fitting out orders from Tenaga Nasional Bhd and Petroliam Nasional Bhd.
Fitters imports fire-resistant material from DuPont of US and sews that in its Sungai Buloh plant.
In the raised wooden floor division, the product has a fire-impeding quality. Fitters had furnished raised floors for Petronas Twin Towers for which the group's contract for an entire fire control system totalled RM100mil.
The central monitoring division installs computerised systems for commercial clients and these systems are linked to the nearby fire brigade. It has 3,000 customers that pay RM1,800 a year each. “That's a steady stream of revenue of more than RM5mil a year,” said Wong.
Fitters can also supply fire trucks. It imports the chassis and fabricates the rest of the vehicle. The group is searching for supply contracts in the domestic and regional markets.
Recently, Fitters formed a division to undertake mechanical and engineering (M&E) jobs for property projects. This is a related diversification as Fitters' fire-fighting systems contracting “is the E in the M&E,” he said.
“It is obvious for us to expand into M&E since we can use our people for that,” he added. M&E covers works related to power supply, plumbing and water mains, besides fire-prevention systems. This is a promising new business division, he added. It is currently fitting out the plumbing system for the Sungai Buloh hospital.
Services are the kind of business that suits the management. Wong's background was, after all, in the marketing of fire-fighting equipment before he started his own business. “It's a service industry more than one of technology,” he said.
For the next level of market expansion, Fitters has three products that are competitive in export markets - fire extinguishers, fire-rated apparel and raised floors. In Singapore, the contracting division has two jobs worth a total of S$5mil (RM11mil) for fire fighting systems.
Wong is glad his business is growing for more than financial reasons. He finds satisfaction that he is now more engaged than ever in the protection of life and property.
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