By Sharen Kaur
sharen@nstp.com,my
Published in NST on October 29, 2012
PROFITABLE NOW: Group hopes to wipe out losses of the company it acquired in 2003 by the end of this year
BRAHIM'S Holdings Bhd hopes to wipe out the RM170 million accumulated losses incurred by MAS Catering Sdn Bhd when it took over the business in 2003 by the end of this year, its chief said.
"We have turned around the operation and it is a profitable business now. Going forward, after settling the losses, we expect earnings to grow substantially," said Brahim's group executive chairman and major shareholder, Datuk Ibrahim Ahmad Badawi.
Malaysia Airlines (MAS), which owned MAS Catering, had incurred losses to the tune of about RM200 million from the business with negative shareholders' funds of about RM80 million.
The government (at that time) under Tun Dr Mahathir Mohamad's administration had proposed that MAS stick to its core business of operating an airline and hive off the loss-making catering business.
Brahim's, manufacturer of famous household brand, Brahims, came in with a proposal and landed the deal to acquire 70 per cent of MAS Catering, now known as LSG Sky Chef-Brahim's Sdn Bhd (LSGB), from MAS in 2003.
The stake was acquired by Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG), in which Brahim's owns 51 per cent while LSG Asia GmbH, the catering arm of Lufthansa AG, with 49 per cent.
"Besides taking over the accumulated losses, we paid RM175 million upfront to take over the business. It was a rescue operation. We are now investing RM5 million to RM6 million a year to grow the business," Ibrahim told Business Times in an interview.
He said that Brahim's hopes to maintain its 15 per cent net profit margin from the catering business, despite increasing cost of raw materials and logistics.
Brahim's latest data showed that around 92 per cent of revenue came from the flight catering business.
LSGB, which operates the in-flight catering business, has a 25-year concession from 2003 to provide catering and related services to MAS at Kuala Lumpur International Airport (KLIA) and the Penang Airport.
Besides MAS, it also caters for 35 other airlines that land at the KLIA. The company's operation in Penang caters to 10 airlines.
Brahim's now plans to acquire LSG Asia's 49 per cent stake in BLSG for RM130 million and hopes to conclude the deal by the end of this year after getting approval from shareholders at an extraordinary general meeting on December 5.
The acquisition would make Brahim's the sole owner of the 70 per cent stake in LSGB, with MAS maintaining its 30 per cent share.
"Malaysia Airports Holdings Bhd is projecting around six per cent growth in passenger movement at the KLIA this year. We are expecting reasonable growth in the aviation industry and airline catering," Ibrahim said.
 |
"We have turned around the operation and it is a profitable business now. Going forward, after settling the losses, we expect earnings to grow substantially," said Brahim's group executive chairman and major shareholder, Datuk Ibrahim Ahmad Badawi.
Malaysia Airlines (MAS), which owned MAS Catering, had incurred losses to the tune of about RM200 million from the business with negative shareholders' funds of about RM80 million.
The government (at that time) under Tun Dr Mahathir Mohamad's administration had proposed that MAS stick to its core business of operating an airline and hive off the loss-making catering business.
The stake was acquired by Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG), in which Brahim's owns 51 per cent while LSG Asia GmbH, the catering arm of Lufthansa AG, with 49 per cent.
"Besides taking over the accumulated losses, we paid RM175 million upfront to take over the business. It was a rescue operation. We are now investing RM5 million to RM6 million a year to grow the business," Ibrahim told Business Times in an interview.
He said that Brahim's hopes to maintain its 15 per cent net profit margin from the catering business, despite increasing cost of raw materials and logistics.
Brahim's latest data showed that around 92 per cent of revenue came from the flight catering business.
LSGB, which operates the in-flight catering business, has a 25-year concession from 2003 to provide catering and related services to MAS at Kuala Lumpur International Airport (KLIA) and the Penang Airport.
Besides MAS, it also caters for 35 other airlines that land at the KLIA. The company's operation in Penang caters to 10 airlines.
Brahim's now plans to acquire LSG Asia's 49 per cent stake in BLSG for RM130 million and hopes to conclude the deal by the end of this year after getting approval from shareholders at an extraordinary general meeting on December 5.
The acquisition would make Brahim's the sole owner of the 70 per cent stake in LSGB, with MAS maintaining its 30 per cent share.
"Malaysia Airports Holdings Bhd is projecting around six per cent growth in passenger movement at the KLIA this year. We are expecting reasonable growth in the aviation industry and airline catering," Ibrahim said.
No comments:
Post a Comment