Maxwell to delay capacity expansion on slowdown

Maxwell International Holdings Bhd chairman and executive director Jenny Li Kwai Chun in an interview with StarBizWeek on Dec 22, 2010.

KUALA LUMPUR: Sports shoe maker Maxwell International Holdings Bhd has decided to delay its plan to double the group’s installed production capacity in view of the overcapacity and prolonged slowdown of the industry.

President and executive director Li Kwai Chun, in her statement in the annual report submitted on Friday, said the group had completed building a new factory building in Henan Province, China, at the end of last year.

The original plan was to install progressively four new production lines at the new premises, thus eventually doubling the capacity to about 16 million pairs of shoes per annum.

She noted that RM12mil from the company’s initial public offering proceeds was allocated for the capacity expansion but only RM2.4mil had been spent so far, with the rest earmarked for the four new lines.

Under the revised plan, she said the group would adopt a tactical business strategy of leasing out the newly-completed factory to external parties or enterprises either as short-term or long-term tenants.

“The businesses that we are targeting to rent or lease out our new factory floor space may be involved in a wide range of industries and various types of businesas, such as plastics prodicts, garments, toy manufacturing, warehousing, logistic centres, food production, etc.

“This action plan would enable the group to earn additional rental income while waiting for a full recovery of the sport shoes industry,” she said.

Maxwell sold 5.03 million pairs of sports shoes in the last financial year ended dec 31, 2015 (FY15), down from 5.77 million pairs in the preceding year and translating to 15.7% lower revenue of RM194.15mil.

The group recorded a net loss attributable to owners of the company at RM65.16mil in FY15 against a net profit of RM16.81mil previously.

Li noted that the group had a huge cash reserve of RM366.7mil as at the end of last year.

This, she said, allowed the group to look out for potential business opportunities and to expand beyond the core sports shoes OEM (original equipment manufacturer) and ODM (original design manufacturer) businesses.