Business

Tuesday May 26, 2009

Success expands in economic downturn

By YEOW POOI LING


Firm’s sixth factory to begin contributing in second half

PETALING JAYA: Success Transformer Corp Bhd’s process equipment subsidiary, Seremban Engineering Sdn Bhd (SESB) is constructing its sixth factory at a time when the country’s manufacturing sector is still grappling with the slowdown.

According to a company official, SESB’s fifth factory was ready late last year and has started contributing positively to the group this year.

The setting of the sixth factory is currently underway and expected to be completed in July.

“The sixth factory is likely to start contributing to the group in the second half of this year,” he told StarBiz in a phone interview.

SESB also added capacity last year when it subscribed to a 60% stake in Sepen Engineering Sdn Bhd, which manufactures process equipment. The group’s process equipment is mainly for the food industry where demand has not contracted.

The official said SESB’s first four factories are currently running at 80% capacity while the fifth plant is running at 30% to 40%. Its projects in hand are worth some RM39mil.

Success first bought 60% of SESB in March 2007 and upped the stake to 100% a year later as the acquisition proved to be profitable.

The acquisition has worked well as SESB had three plants at that time, and under Success, it will grow to six.

Yesterday, Success reported its results for the first quarter ended March 31, 2009. Net profit rose almost 19% to RM6.1mil compared with RM5.1mil in the preceding year.

Revenue increased to RM45.5mil from RM42.6mil previously. Earnings per share improved to 5.08 sen against 4.25 sen previously.

In the filing with Bursa Malaysia, it attributed the improvement to increase in sales from process equipment segment and an additional contribution from SESB after the acquisition of the remaining 40% stake in SESB.

Net profit in the first three months was also higher than the fourth quarter thanks to an increase in sales from the process equipment division, savings in production cost, operating expenses and improved production efficiency.

The group’s transformer and industrial lighting division produced an operating profit of RM5.2mil, down from RM5.8mil in the first quarter last year, while SESB contributed RM3.1mil, up from RM2.1mil in the corresponding quarter last year.

Despite the challenging global economic environment, the company’s strategies would continue to be leveraging on its extensive customer network, competitive products, quality services and wider range of products.

The group was optimistic to achieve comparable results in the present financial year from the previous year, it added.

 
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