Business

Tuesday March 10, 2009

Emico sees uptrend in its business

By DAVID TAN


Contract manufacturer boosted by drop in raw material prices

GEORGE TOWN: Emico Holdings Bhd expects its contract manufacturing business to grow this year amid the worldwide recession.

The global recession has presented opportunities for the group, especially in the area of products for the handicapped, according to group chief executive officer Jimmy C.K. Ong.

“We expect sales to improve significantly this year,” Ong told StarBiz. “We are already seeing an increase in orders for such products this year from Europe.”

Last year, the company generated RM10mil in sales in this segment from customers in Europe.

Jimmy Ong showing chairs for the handicapped specially designed for the European market.

Emico manufactures products for the handicapped, such as chairs, toilet seats, and reachers for an international brand name based in Europe.

The drop in raw material prices has helped to boost Emico’s sales in this segment.

“The price of plastic resin which we use to manufacture household items for the elderly and physically challenged people had dropped substantially,” Ong noted. “On average, the price had come down by some 50% from RM6.20 per kg during the peak last year to RM3.50 presently. This brings down the selling price which prompts our customers to order more and increase our sales.”

Ong said that since the company traded in US currency, it would also benefit from the weakening of the ringgit against the greenback, which recently went to 3.70 to the dollar.

Emico has also recently ventured into the manufacturing of chasis for cleaning equipment used for oil tanks.

“We are manufacturing such chasis for an European customer. This marks our entry into the high-end precision moulding manufacturing business for the general industry,” he said.

Emico is also now reaping the fruit of its collaboration with an Italian design company in the trophy manufacturing business.

“As a result of two years of collaboration we are able to increase the designs of our trophy products, which has widened our customer base. Our trophies are now sold in more than 30 countries. Our new range of trophy products are made of acrylic, as it is lighter and can easily be moulded into different designs,” he said.

Last year Emico sold some 4 million pieces of trophies worldwide with an estimated value of RM12mil.

“Our trophy products have a higher margin and yield, although the volume sold is lower compared with our specially designed household aids for the elderly and handicapped,” Ong said.

Emico operates a plant manufacturing plastic souvenirs and gifts for the domestic market in Ho Chih Minh City, Vietnam.

“The market over there is now very challenging due to the slowdown in the country’s economy,” he said.

The group has so far invested about US$2mil in the plant.

Emico’s manufacturing business, comprising products for the handicapped, trophies and souvenirs, contributes about 60% to the group’s revenue.

On Emico’s property business, Ong said the group was still carrying out its Bandar Mutiara project on 320 acres in Sungai Petani.

“Since 2001, we have developed and sold some 900 units of landed residential properties comprising terrace and semi-detached houses with an estimated gross sales value of over RM80mil.

“We have about 700 more houses to build, which will be launched progressively to meet market demands.

“These properties will be priced affordably between RM88,000 and RM130,000.

“Recently, we launched 120 units of terrace and semi-detached properties, of which 50% had been sold,” he said.

Ong said the group also owned a 32 acres in Kuah, Langkawi, which it was considering to sell to raise working capital.

 
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