Supermax to focus on organic growth
Filed Under (Business News) by Webmaster on 06-03-2009
Tagged Under : growth, rubber glove, Stanley Thai, Supermax
Supermax Corp Bhd, the world’s second largest rubber gloves manufacturer, does not plan to make acquisitions this year and will instead focus on organic growth, said group managing director Datuk Seri Stanley Thai.
The company prefers to conserve cash and repay loans under the current downbeat economic conditions, he said.
“It makes no economic sense to expand at this time,” he told a media briefing yesterday.
He said the company would also defer, to 2010, initial plans to install 12 new lines in its Meru plant that were valued at RM24mil.
However, the company would continue to upgrade and expand its current production output, he said.
“We hope to increase its total installed capacity to 16,204 million by 2010 from 14,476 million last year,” Thai said.
With the introduction of a 8% export rebate by the Chinese government in last year, Supermax plans to lower its nitrile gloves production this year due to the highly competitive business environment.
However, it will increase production of natural and latex rubber gloves due to an anticipated rise in demand for these type of gloves.
Thai said the Malaysian government should consider introducing a similar tax rebate of 7.5% to 8% in line with China’s move.
On profit growth this year, Thai said Supermax “hopes to maintain growth at last year’s” level.
Meanwhile, the company expects average monthly savings of RM1.7mil from the recent electricity tariff cut, of which 20% to 30% will be passed on to consumers.
Supermax had also decided to stop further investments in 14.09% associate APL Industries Bhd that had caused equity losses to Supermax since 2005, he added.
For the long term, the company hoped to execute a project called Glove City that will see the integration of its plants in one central location.
“We plan to start our Glove City in 2011 and expect to complete it within 10 years,” Thai said, adding that its total installed production capacity would double upon the project’s completion.
On concerns over funding for its projects due to its high gearing ratio, he said Supermax would make loan repayments of RM30mil every year and expected to complete payment of its last tranche of bonds in 2012. – The Star
