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Friday, August 30, 2013

Pantech: Equal contribution by 2015


PETALING JAYA (Aug 30, 2013): Pantech Group Holdings Bhd expects to see equal revenue contribution from its manufacturing and trading divisions by 2015, said its executive director Adrian Tan (pix).

The trading division accounted for 60.5% of the group's revenue in the last financial year ended Feb 29, 2013 (FY13), while the remaining 39.5% came from the manufacturing division.

Tan said the 50:50 contribution is achievable in view of the highly positive revenue from the manufacturing division.

Pantech is increasing its manufacturing output at three of its manufacturing plants in the UK, Selangor and Johor.

Already, for the first quarter ended May 31, 2013 (Q1FY14), the manufacturing unit's contribution surged more than half or 50.8% of the group's revenue.

Tan said the oil and gas industry will continue to be the industry which generates the bulk of the revenue of the group. With its manufacturing capabilities that now covers a more diversified range, constraints by factory production lead-time is expected to be better managed.

"When you have a manufacturing plant, it's easier to control your strategy. You can be more competitive. You know what items are on demand and you can zero in on that," Tan told a press conference after the group's AGM here yesterday.

"You're able to meet the demand of the market faster and you can also set up you own brands.

"On the other hand, when you do trading, you have to depend on the mills," he added.

Following its acquisition of UK-based Nautic Group in March last year, the Pantech's plant (through Nautic Steels (Holdings) Ltd) in Tamworth, the UK is currently running at full capacity at 600 tonnes per year and has orders to last the group for the next three months.

Pantech has also bought a factory lot near the current Nautic factory for £1.24 million and the expansion will increase the Nautic land size to 101,450 sq ft.

"We target to double our UK sales to £20 million from £10 million now within the next three years," said Tan, adding that Brazil has been identified as a growth area.

The group is also planning to expand the types of items produced at Nautic, which holds a Lloyd's Register certification to manufacture nickel alloy fittings to Norsok M650 standard.

"A lot of factories in this part of the world cannot obtain the Norsok approval hence we're able to supply at higher premiums so we get higher margins," said Tan.

Today, about 40% of the group's revenue comes from the export market, in which it supplies to 59 countries.

Pantech's plant in Klang (via Pantech Steel Industries Sdn Bhd) is also running at full capacity at 18,500 tonnes per year of carbon steel fittings and has orders to last it until December 2013.

Tan said the factory has just started to focus on higher-end products and reducing its capacity on lower-end products.
Its plant in Pasir Gudang, Johor (through Pantech Stainless & Alloy Industries Sdn Bhd), is running at 83% of its 14,400 tonnes per year capacity of stainless steel pipes and fittings. It has about two-and-a-half months of orders in hand.

Tan said the group is always open for merger and acquisition activities "if there's opportunity for us in manufacturing as well as oil and gas-related businesses".

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