Halex Woolton expects double-digit revenue growth in FY16

PETALING JAYA: Halex Holdings Bhd's wholly-owned subsidiary Halex Woolton (M) Sdn Bhd anticipates double-digit growth in its revenue from the financial year ending Sept 30, 2016 (FY16) onwards, following the appointment of DKSH Malaysia Sdn Bhd as a market expansion services provider for its TenderSoft products.
"With the assistance of DKSH, we also anticipate an improvement to our financial position, not only from the potentially higher revenue but also from more favourable collection days and better economies of scale which should lower costs," Halex Holdings executive director Benny Lim Pang Yan told reporters at the signing ceremony last Friday.
Halex Woolton aims to grow its distribution points to more than 5,000 via the partnership. It currently has less than 1,000 outlets due to its small sales team and limited marketing network.
"As a result of this, our sales have stagnated over the last three years," said Lim.
He said its market share in the healthcare disposable products segment would grow "many times" with the partnership, from the current 15% as DKSH would help it expand further especially in Sabah as well as the north and east coasts of Peninsular Malaysia.
DKSH has a total of 25,000 distribution points in Malaysia.
The two parties signed an agreement last Friday under which DKSH will provide marketing, sales, distribution, logistics and collection services for TenderSoft cotton products, paper tissues and wet wipes.
Effective July 1, 2015, the agreement has an initial period of three years with an option for renewal on a yearly basis subsequently.
Lim said with the expected sales growth, the company will look at the need to increase capacity. The current utilisation rate of its facilities is between 40% and 75%.
"As it stands at the moment, our production facilities, we still have spare capacity which we anticipate for the next one year or so we are still able to cope with the expected increase in distribution and product sales over the period.
"In the meantime we will work closely and review the sales with DKSH on a regular basis, especially in the first three to six months, and we will plan our capacity accordingly when the time comes," he said.
He said it is already in the planning stages and is reviewing the areas in its production line where it may need to increase capacity but any investment into additional capacity will only be done six months later after reviewing its market coverage and strategies with DKSH.
In terms of overseas expansion, Lim said it already exports to Southeast Asian countries and Africa but its focus now remains in Malaysia. About 80% of its TenderSoft product sales is local, with 20% from exports.