Tecnic Group plans RM12mil expansion

Thursday May 6, 2010
By SHARIDAN M. ALI


BANGI: Tecnic Group Bhd, a plastic products manufacturer, plans to invest between RM10mil and RM12mil to expand its capacity in food and beverage (F&B) and consumer product packaging in the first quarter of next year as the outlook for the sector is positive.

Besides F&B and consumer product packaging, Tecnic, formerly known as STS Tecnic Bhd, is also involved in the electrical and electronics, automotive, medical and oil and gas businesses.

Executive director Ivan Gan said the expansion in F&B and consumer product packaging might start as early as the end of this year. The company plans to use internally generated funds to invest in factory expansion and new machineries.

“The sector had insulated us during the global financial crisis early last year, sustaining healthy demand compared to the other business divisions.

“But its growth over the years has somewhat been only marginal so we decided to put more resources and effort to grow the sector going forward,” he told reporters after the company’s annual general meeting (AGM) yesterday.

Gan added that the F&B and consumer product packaging sector contributed between 15% and 20% to the company’s revenue for the past few years.

“And we intend to grow the contribution to up to 30% of our topline post-expansion.

“Furthermore, we have been expanding the other sectors in the past few years and now it’s time to put more focus on the F&B and consumer product packaging sector,” he said.

Tecnic’s major customers in the sector include Unilever, Carlsberg Brewery and Ajinomoto.

At the AGM, Tecnic adopted a dividend policy to maintain a minimum payout of 50% of its annual profit after tax to shareholders with effect from the 2010 financial year.

“This is to reward our long-term shareholders,” said Gan.

For financial year 2009, Tecnic announced a final dividend of 16% tax exempt.

Tecnic posted a net profit RM13.1mil in the financial year ended Dec 31, 2009, up 52% from the previous year. Revenue was at RM137.5mil, up 25.8%. As of Dec 31, 2009 its cash and equivalents stood at RM10.8mil.

On the general business outlook, Gan said the economy was growing steadily and that the the markets that the company operated in in looked intact.

Also, our business is well diversified and that if one sector that we are involved in falters, we have four others to back it up,” he said.