"Our (order) replenishment will be higher in 2010. We now have an order backlog of RM2.1 billion. In 2009, the market was very bearish, but we were still able to get an order intake of RM1.5 billion," managing director Lee Swee Eng said.
The bearish market resulting from the global economic downturn caused KNM's 2009 net profit to drop to RM171 million from RM336.4 million previously. Group revenue eased to RM1.84 billion from RM2.5 billion.
With the current oil price at around US$70 (RM226) a barrel, the oil and gas sector is recovering but not fully, said Lee. In April this year, Lee dropped his RM3.6 billion plan to take KNM private.
"Maybe, (the sector will fully recover) at the level closer to US$100 (RM323) per barrel," he told reporters after KNM's annual general meeting in Seri Kembangan, Selangor, yesterday.
KNM is repositioning itself to manage costs more effectively and be ready for opportunities when the market is bullish again.
Lee said the repositioning includes plans to produce some of its high-end products being made in Germany at its plant in Gebeng, Pahang.
The move will allow KNM to claim as much as RM1.4 billion in tax incentive over four years till 2013.
The tax incentive was granted in April to KNM's wholly-owned KNM Process Systems Sdn Bhd after its acquisition of Germany's Borsig GmBH for ?350 million (RM1.4 billion). The purchase was completed in mid-2008.
The incentive will be applied against the total taxable income generated in Malaysia by KNM Process, Lee said.
KNM, through KNM Process, will among other things, produce boilers for use in power plants and petrochemical complexes.
The move will enable customers to buy products of similar quality to those produced in Germany at lower prices, Lee said.
KNM is in the process of setting up a production line at the Gebeng factory and Lee expects commercial production to kick off next year.
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