Eng Kah Corp Bhd expects increased sales orders for its coloured cosmetics, skin care and perfumery divisions this year with the implementation of the Asean free trade area (Afta).
It is also eyeing new contract manufacturing business from local and foreign companies involved in the cosmetics, perfumery and skincare business, according to group chairman and managing director Ewe Eng Kah.
Coloured cosmetics, skin care and perfumery products were previously taxed at between 20% and 40% when entering the neighbouring countries.
With Afta having come into effect, these duties have been lifted or reduced, which means multi-national corporations and public listed companies, who are our customers, can now export a greater volume to the neighbouring countries.
As we are their contract manufacturer, this would mean our sales orders would increase also, Ewe told StarBiz, adding that coloured cosmetics, perfumery and skincare products contributed about 70% to group revenue last year.
Ewe said the group was now trying to source business from local and foreign companies.
We want them to appoint us their contract manufacturer. Our selling point is that they can export to the neighbouring Asean countries from Malaysia without having to pay hefty duties, he said.
Ewe said the groups RM22mil facility in Bayan Lepas was operating at almost full capacity.
We plan to relocate some of our household and toiletry products manufacturing activities in Bayan Lepas to our new RM5.5mil manufacturing facility in Nilai, Negri Sembilan soon to tap the market for these products in the central and southern regions.
The plant in Bayan Lepas will also have more capacity to manufacture coloured cosmetics, perfumery, and skin care products, which are capable of yielding higher profit margins, he added.
For the year ended Dec 31, 2002, the group generated a profit before tax of RM13.3mil, about 3.5% more than the RM12.8mil projected in last years prospectus.
Our revenue was RM46.8mil, which is about 19% less than the RM55.8mil forecast in our prospectus last year.
We were able to achieve a higher pre-tax profit despite failing to achieve the projected turnover because our coloured cosmetics, skin care, and perfumery products yielded higher profit margins, he said.