Saturday August 23, 2008
By YEOW POOI LING
SUNGAI BULOH: Success Transformer Corp Bhd expects demand for transformers and lighting products from the Middle East and Asean countries to remain strong, says a company official.
Transformers and lightings are the bread and butter for the company, contributing about 78% of its net earnings in the first-half year while the balance came from process equipment business.
“We only had a slight adjustment in pricing despite the pressures from higher raw material prices and labour cost. This probably gave us the advantage over our competitors in the local market during the first six months,” the official said.
About 50% of raw materials for transformers are steel-related products, for which prices have increased by 30% to 40% this year.
However, Success Transformer only adjusted its selling prices marginally as productivity improved, thanks to the cost-cutting measures implemented last year, he added.
The company’s 60%-owned joint venture in China, Ningbo Success Zhenye Luminaire Ltd Liabilities Co, is anticipated to start operations next month.
Ningbo Success has also given a profit guarantee of 7 million renminbi for 24 months from September.
“This would give us better cost control abilities in terms of purchasing and sourcing of light fittings in China,” the official said.
Additionally, Success Transformer is penetrating markets in Europe like France, Portugal and the Netherlands as it has secured the relevant certification and met the required standards of quality.
The official said the company was running at 80% of production capacity for transformers and lightings.
Success Transformer is currently sourcing for new warehousing facilities in anticipation of more demand.
Its process equipment subsidiary, Seremban Engineering Sdn Bhd (SESB), contributed about 38% of revenue and 22% of net profit in the first-half year. The spokesman said SESB’s contribution to bottomline would eventually reach 30%.
SESB’s fifth factory would be completed this year, boosting capacity by 20%. “Depending on the demand, we may consider setting up the sixth factory,” the official said, adding that SESB’s existing two-acre site, which houses the fifth facility, could easily accommodate another.
SESB’s order book is about RM40mil and it was bidding for RM50mil worth of projects,” he said, adding that it ventured into the waste management sector in Singapore earlier this year.
http://biz.thestar.com.my/news/story.asp?file=/2008/8/23/business/1870187&sec=business
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