KYM pins hope on business restructuring

KUALA LUMPUR: KYM Holdings Bhd, which made a net loss of half a million ringgit in the first quarter, expects to turnaround from the second quarter onwards, following the restructuring of its corrugated carton division.
"Part of the reduced profits were due to lower performance from the carton division, but that is something we've been aware of, and we're in the midst of restructuring that division, so we do expect better results from the carton division in the future," its CEO Lim Tze Thean told a press conference after the company's AGM here yesterday.
The restructuring he explained will focus on internal productivity revamp in a move to improve the group's efficiency and costs.
KYM recorded a net loss of RM509,000 for the first quarter ended April 30, 2014, mainly due to increase in operating expenses arising from the minimum wages policy and higher raw material cost.
Lim sees the industrial bags division to continue as a strong contributor to the group, with an expectation of achieving RM7 million to RM8 million monthly sales when it reaches full capacity by year-end, from RM5.5 million currently.
Despite the risks involved in currency fluctuation, KYM is still looking to increase overseas markets contribution, which currently accounts for about 30% of total revenue.
"We want to compete at world level … we want to become an Asian player," Lim said, adding that the firm is in talks with potential customers to expand its overseas presence. Key exports markets for KYM currently are Indonesia and Thailand.
Lim also said the new equipment that KYM has invested in will significantly bring down the reliance on labour, which has increased the manufacturing cost.
"We doubled up capacity through the investment of new machines, but the headcounts only went up by 15%," he added.
Meanwhile on its port development plan in Perak which the group proposed a few years back, Lim said the group is still in the discussions on the project.
"We're in the EIA stage, the relevant experts and consultant have been appointed ... however, it takes time," Lim said.
He stressed that the state government is supportive of the project, but did not want to commit a timeline for the commencement of the project.
KYM's associate company Pecoh Industrial Development Sdn Bhd had in February 2011 entered into a joint development agreement with Perbadanan Kemajuan Negeri Perak (PKNK) for the reclamation of 3,400 acres of land in Bagan Datoh, Perak.
Both parties had agreed that the land to be developed into an industrial area, will include the development of a jetty or port infrastructure and services to handle dry and liquid cargo for the needs of a proposed steel mill.
According to the initial agreement, KYM and PKNK will hold 70% and 30% interests respectively in the development.
Lim believes the proposed natural deepwater port will have competitive advantage as its development will not be as costly as a man-made deep water port.