MALAYSIAN Oxygen Bhd (MOX) is confident of achieving double-digit growth this year, provided current operating conditions do not change.
The country's leading manufacturer and supplier of industrial, medical and specialty gases, and welding electrodes and equipment, has shown good growth in its first quarter despite continuing uncertainty in the global economy.
MOX managing director David John Fuller said making predictions was difficult as the world was in a state of flux, awaiting news of possible war in Iraq.
However, growth seen in the first quarter should continue throughout the year if economic conditions remained unchanged, he added.
This is the hardest year to predict growth going forward, not because of issues of the Malaysian economy, but because of the state of flux in the world,'' he said.
Fuller told a news conference this after the company's AGM in Petaling Jaya yesterday.
The Malaysian economy is dependent on exports to the US and Japan, and exports to those two countries over the past 12 months have been healthy. If things continue as they are, there is no reason why our first-quarter growth will not continue for the rest of the year,'' he said.
MOX reported a 13% increase in pre-tax profit to RM32.7mil for the first quarter ended Dec 31, 2002, from RM29mil a year ago. Revenue rose to RM130.8mil from RM115.5mil and net profit improved to RM25.4mil from RM20.7mil.
The company earned 18.33 sen per share for the quarter compared with 14.93 sen previously.
There are two reasons for MOX's good first-quarter growth. The first is its RM217mil acquisition of rival Nissan Industrial Oxygen Inc Bhd (NIOI) in September last year, and the second the underlying growth existing in the economy.
Fuller acknowledged that the bulk of growth for the first quarter came from the acquisition of NIOI, and he expects the same for the rest of the company's financial year.
NIOI's operations were integrated into MOX at the end of September last year, which saw the closure of four of six NIOI plants. Approximately one third of NIOI employees joined MOX.
Fuller said that while all segments of the group's business were growing it was the steel, glass, electronics and, food and beverage segments that experienced stronger growth in the first quarter. He, however, raised concerns over the prospects of future growth given the slow pace of foreign direct investment into Malaysia.
Foreign direct investment coming into the country has been very low. We need that to return to an ongoing basis to give us good and continuing growth,'' he said.
Fuller said the absence of new investments in high-tech electronic projects in Malaysia caused revenue from equipment and pipeline installations in the sector to drop significantly.
He said sales of such products to the electronics sector, which fell 10% during the company's 2002 financial year, needed new investment to recover.
MOX reorganised last year along three lines of business, namely, process gas solutions, industrial and special products, and electronics. For last year, first process gas solutions recorded sales at RM209mil, up by 19%. Industrial and special products recorded sales at RM151mil, with sales up by 4.5%, and electronics recorded sales totalling RM140mil, down by 10%.
Fuller said MOX saw no need to set up new plants this year. The company built two plants, in Malacca and Kota Baru, last year, which began operations in January and March, respectively, last year.
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