Kian Ann Engineering, the distributor of heavy machinery parts, reported a 28.1% growth in net profit after tax of $7.3 million for the six-month ended 31 December 2009 (1HFY2010).

Group sales increased slightly by $0.2 million from $73.6 million to $73.8 million for the period under review. Sales from Malaysia climbed 17.2% or $3.1 million to $21.3 million, primarily due to a continuous recovery in demand for parts from timber and palm oil industries.

Sales from other Asian countries decreased by 8.1% from $7.8 million to $7.2 million for the period under review as a result of lower demand from India and Pakistan.

Non-Asian countries, particularly North America and Middle East, reported lower sales of $15.8 million from $17.5 million in 1HFY2009. This was primarily due to lower purchase budget from our key customers.

Group gross profit declined by $2.6 million or 13% and gross profit margin decreased from 27.6% to 24% as a result of lower selling prices amidst competitive market conditions.

In contrast to the lower gross profit registered, the group posted an increase of 26.6% in profit before tax to $8.9 million for the period under review. This was mainly due to a decrease in operating costs by $4.5 million or 33.1% to $9.1 million for 1HFY2010.

Lower commissions, reversals of impairment loss of trade debts and allowance for obsolescence inventories were key contributors that significantly reduced the group’s operating costs.

Additionally, the group experienced foreign exchange gain of $0.2 million for 1HFY2010 as compared with foreign exchange loss of $1.3 million for the corresponding period.

Kian Ann has declared an interim dividend of 0.3 cent (2009: 0.2 cent) per share.