Tong Herr Resources Bhd, a specialist in the production of bolts and nuts, expects exports to Europe to take up 40% of its output this year compared with 28% last year, its managing director Tsai Ming Ti said.
“Last month, the European Commission lifted its 8.8% anti-dumping and countervailing duties on stainless steel fasteners imported from Malaysia, enabling us to increase our exports to Europe,” Tsai told StarBiz.
Tsai said that in line with the group’s plan to export more to Europe, Tong Herr would soon expand its yearly production output to 15,000 tonnes from the current 12,200.
“This will also increase the utilisation of our production capacity to 70% from 60%. We also plan to increase our workforce to 200 this year from the current 160,” he said.
Tsai said the outlook of the group’s business looked bright this year as the price of wire-rod, an essential raw material for the manufacture of stainless steel fasteners, was expected to be maintained or rise slightly above the current rate of US$1,700 per tonne.
“Over the past one year, due to a shortage, the price of wire rod has risen to US$1,700 from US$1,250 per tonne in March last year, representing an increase of about 30%,” he said.
Tsai said that because of the rising price of wire rod, the group generated a higher profit before tax, despite recording a lower turnover for the financial year ended Dec 31, 2002.
The group generated a pre-tax profit of RM16.5mil for the year ended Dec 31, 2002, compared with RM8.8mil in 2001, while revenue decreased slightly to RM102.2mil from RM103.6mil previously.
“Because of our profits, the group is recommending a first and final tax-exempt dividend of 8% subject to the shareholders approval at the forthcoming AGM in May,” Tsai said.
Listed in 1999, Tong Herr operates in a 315,000-sq ft manufacturing facility on 12.8 acres in the Prai industrial estate. To date, it has invested more than RM100mil in its Penang operations.