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Tuesday, September 30, 2014

SLP sees rising revenue


GEORGE TOWN: Plastic packaging manufacturer SLP Resources Bhd plans to double the contribution of polyethylene (PE)-based thin-gauge plastic packaging materials to its revenue in 2015 from about 16% presently.
Group managing director Kelvin Khaw told StarBiz that the group planned to add another eight production lines by 2015 to increase its total production lines at its Kulim manufacturing facility to 55 from 47 currently.
“Six new lines will be installed this year,” he said.
The materials are in demand from the consumer and retailing industries in Japan, New Zealand, and Australia, as they provide cost-savings of about 25% to the customers, given the reduced raw materials used in production, according to Khaw.
The new materials are marketed under the Maxinflax, according to Khaw.
“We are forecasting more sales from overseas in view of re-stocking activities and the forthcoming festive holidays in the final quarter of 2014.
“The materials should help us to raise the contribution from overseas sales to 70% by 2017 from 50% in 2014,” he said.
Khaw said it was necessary to produce the new range of packaging solutions given the rising cost of operations and high raw material prices.
Resin prices are now hovering between US$1,600 and US$1,750 per tonne compared with US$1,500 in June 2013.
“Due to strong oil prices of about US$100 per barrel, resin prices are to stay stable within the US$1,600 and US$1,750 per tonne range, provided the political situation in the Ukraine and the Middle-East do not worsen,” Khaw said.
Khaw said the production output of plastic packaging materials this year should exceed 32,000 tonnes this year, compared to 28,000 last year. In the first half of 2014, the group’s revenue improved by 16% compared with the same period a year ago, backed by domestic and overseas sales, with Malaysia being the the largest market.
“Malaysia remained the largest market in the first half of 2014, making up 50% of group revenue, with Japan in second place with 26.4% contribution,” he said.
For the first six months of 2014, the group posted RM5mil in net profit on the back of RM89.9mil in turnover, compared to RM4.9mil and RM77.5mil in the same period of 2013.
According to the UK-based research and consulting firm, GlobalData, worldwide polyethylene demand is forecast to rise by about 3.7% per annum between 2013 and 2018.
This higher-than-historic increase will occur in the United States and Europe, GlobalData’s latest report says.
“The US will witness a 2.4% growth rate per annum during the forecast period, a marked increase compared to its 0.7% levels from 2003 to 2013.
“Demand in Europe, primarily in Russia, will meanwhile climb at 2.8% per year from 2013 to 2018, almost three times the level of growth during the last decade.
“These demand rises in the US and Russia will somewhat offset lower demand in Asia.
“A lower increase of 4.8% in Asia is predicted over the 2013 to 2018 period, compared to its 6% rate during 2003-2013, due primarily to the region’s slower economic growth,” the report added.

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