Tohtonku targets 12% growth this year

SUBANG JAYA: Tohtonku Sdn Bhd is targeting an aggressive 12% revenue growth in 2015, driven mainly by skincare and fragrance products, said its director Jasper Lim (pix).
This projection is more than double of that it expects in 2014, with an estimated 5% revenue growth from its revenue of RM200 million in 2013. The 2014 numbers are reflective of a restructuring that is expected to be completed by the year-end of 2014, as well as a slowdown in the market.
"Ever since we restructured, we see a huge potential. We have not fully leveraged on brand equity, there are still a lot of distribution gaps to be fixed and internally our supply chain efficiency is not working to its full potential yet. Hence we're consolidating.
"With good support, we're projecting a 12% growth in 2015, above the market's growth of 3% to 4%. The domestic market still has a lot of room to grow," Jasper told SunBiz in an interview recently.
Tohtonku, which was established in 1964, markets personal care and household products, with brands such as Follow Me, Nutox Oxyfusion, Nanowhite, Secret, Ubermen, A'laisyah, Can Can, Everday, Koolfever, Ammeltz, Sawaday, Saniplast, Seirogan, Breathpop, ARS, You&Me, Rainna and King Kong.
Its senior marketing manager Vicky Lim said, the company was focused on fixing its fundamentals in 2014, such as its standard operating procedures and internal structure, hence the less aggressive growth numbers.
"In skincare, you have more international players and only a few local players. One of our expertise is we know the local consumers and we work with good R&D (research and development) teams and OEMs (original equipment manufacturers) and we're confident of our capabilities.
"In fragrance, there are not many options in terms of mass fragrances, and mass fragrances have been growing faster than premium fragrances year-on-year," said Vicky.
She said under the skincare products, it has revamped Nutox from its packaging, brand positioning to formula in 2014 and will be focusing on creating its brand story in 2015. For fragrance, it is looking at more variants and assortments.
"Nutox sales grew 30% this year compared with last year. We've just revamped the range in May and in most of the leading (pharmacy) chains like Watson, we're growing at double-digit compared with the market growth of 2% to 3%.
Ubermen (fragrance) is growing 20% this year compared with last year," said Vicky, adding that it also has another fragrance brand Sence, which was launched in July this year.
Most of Tohtonku's sales are from Follow Me (30%) as well as Nutox and Nano White (30%).
She said despite Follow Me making up the bulk of its sales, it is not heavily promoting the brand compared with its fragrance and skincare range given that Follow Me already has a big base.
"In terms of needs, it (Follow Me) is not customised. Consumers are savvier when it comes to personal care products. The focus is to sustain the business (of Follow Me)," said Vicky.
On the upcoming implementation of the goods and services tax GST, Vicky said while the company does not plan to increase the price of products, it cannot be certain if this is going to affect sales as people would be more prudent in their spending.
"There are consumers who would be downgrading from the prestige or premium products to products that are more affordable in the mass market. For skincare, our products are in the mass market and in terms of pricing, we are considered 'masstige' (prestige in the mass market). We're not the most affordable and most expensive," she said, citing an example that the Nutox serum is RM65.90 compared with the most expensive serum of RM99.90 in the market.
"We're also confident on the growth of fragrance. If people are saving up (from GST) then fragrance is likely the product that they would switch, from a premium to a less premium category because fragrance is less functional and it's all about the scent," said Vicky.
Meanwhile on a potential listing of the company or plans for mergers and acquisitions, Jasper said they are constantly exploring their options.
Tohtonku had submitted for a listing in 1997 but pulled out due to the global financial crisis.
Jasper said they are also in talks to explore M&As or to partner a local party that is in a similar business related to its products.
"It's part of keeping yourself relevant and in line with the market's change. It's also part of the corporate exercise to always be in talks with potential dealers or partners to bring the company to another level."
"The company (Tohtonku) is cash rich and we have low gearing. At this point of time, it (M&A or IPO) is more on exploration than having something in mind. The focus is still (on building the) domestic market."
Currently overseas revenue stood at 14%, signifying that the domestic market is still the mainstay for the company.
Tohtonku is eager to go into big markets like the Middle East, China and Indonesia but considers getting entry into these markets will be challenging.
Tohtonku's products are available in Singapore, Cambodia, Vietnam, Philippines based on a trading model, where it engages with local distributors.