Wednesday June 27, 2012
Pelikan earnings to improve
By CECILIA KOK
Cost savings from restructuring will boost performance, says CEO
PETALING JAYA: Stationery manufacturer Pelikan International Corp Bhd expects to perform well and register positive earnings in the financial year ending Dec 31, 2013.
The stronger performance, according to Pelikan CEO Loo Hooi Keat, will be on the back of significant cost savings from ongoing restructuring exercises and better sales as economic conditions are expected to improve next year.
“For now, it will be a year of restructuring for us,” Loo said during the company's AGM yesterday.
“The focus is on bringing back the company to a state where we are profitable,” he explained, adding that 2012 would probably see the company's earnings on the “borderline”.
Pelikan registered a net loss of RM101.3mil on revenue of RM1.92bil in 2011, compared with a net profit of RM130.79mil on revenue of RM1.78bil in 2010.
For the three months to March 31, 2012, the company posted a net profit of RM5.5mil on revenue of RM417.52mil, compared with a net profit of RM4.7mil on revenue of RM460.75mil for the corresponding period last year.
While Pelikan's earnings for 1Q12 have improved from a year ago, Loo said he expected the next three quarters to be “very challenging” for the company. For one thing, he said, sales in European market the main contributor to the company's revenue were not improving.
“We are monitoring the situation there on a month to month basis,” Loo said.
“Regardless, our company's financial health is still good, and we are in a position to address any shortcomings,” he said.
Loo said Pelikan was now in the process of disposing of its non-core businesses, including a massive logistic centre in Berlin, Germany, as well as an information technology company that specialises in SAP business management solutions, as part of its ongoing restructuring exercise.
“Although these are still profitable businesses, they are not our core areas; we deem it necessary to divest from those businesses, so that we can concentrate on our core competencies,” Loo explained, adding that the divestment exercise was expected to be completed this year.
All proceeds from the sale of its non-core businesses, expected to be between 80 million euros and 90 million euros (RM320.18mil and RM360.29mil), would be ploughed back into Pelikan as its working capital, Loo said.
In addition, Pelikan would also be reducing its number of plants from the present 10 to five this year to consolidated its manufacturing activities. Loo, however, stopped short of revealing which were the plants to be closed.
The company's wide-ranging restructuring exercise would also see its Pelikan and Herlitz operations in Germany merging by the end of this year, as well as a retrenchment of up to 350 staff over a period of time. Any gains resulting from the company's restructuring exercise would be used to part reduce its borrowings. Pelikan's total group borrowings stood at RM433.7mil as at end March 2012.