Global economy affecting sales of branded household appliances

Chew: ‘We hope sales will pick up in December, January, and February due to the forthcoming Christmas and Chinese New Year holidays.’

GEORGE TOWN: Manufacturers and retailers of branded household appliances are bracing for tough times ahead due to the sluggish global economy.

Pensonic Holdings Bhd, Daewoo Electronics (M) Sdn Bhd, CT Frank Technology Sdn Bhd, and Star Electronics Sales and Services Sdn Bhd are experiencing the impact of a contracting global economy.

Pensonic managing director Dixon Chew said the group's domestic sales had slowed by a single-digit from September for November compared with the same period a year ago.

“We hope sales will pick up in December, January, and February due to the forthcoming Christmas and Chinese New Year holidays.

“As Pensonic has already established a strong presence in the local market, we believe that even in a weakened market, our brand will still be the top choice,” he said.

Star Electronics Sales and Services managing director Joseph Hon said the company was expecting a 10% drop in sales this year, compared with a year ago.

“Although there is demand from new house owners, the purchases are, however, for products with lower specifications.

“Our plan to open three new outlets in the northern region is delayed until next year,” he said.

CT Frank Technology Sdn Bhd chief executive officer Roland Beh Cheng Siong said the fourth quarter was expected to be slower compared with the third quarter.

“Sales from the fourth quarter are expected to be around RM8mil this time compared with the about RM15mil usually achieved in a quarter,” he said.

For the whole of 2012, CT Frank's revenue is projected to be around RM62mil, up slightly by 3% from RM60mil a year ago, according to Beh.

“To meet the challenges ahead, we are reducing our inventory,tightening our terms of credit, and reviewing our production cost,” he said.

Daewoo Electronics director Lim Kai Seng said the company's growth would be 8% this year, slightly slower than the 10% growth experienced in 2011.

“The projected revenue for 2012 is around RM86mil, up by 8% from 2011.

“Last year we grew by 10% over 2010,” he said.

Most companies are focusing on emerging overseas market and developing new value-added products to drive growth next year.

Pensonic is counting on emerging markets to drive growth next year.

“The group is targeting overseas contribution to grow to 40% by 2015.

“Four years ago the overseas contribution was 10%.

“For the 2012 fiscal year, the overseas contribution grew to 25%.

“Next fiscal year, we are aiming for contribution to grow to 30%, and 40% by 2015.

“Saudi Arabia, Egypt, Angola, and Nigeria are key emerging markets that have contributed to our revenue growth,” Chew said.

The group is also allocating RM49mil for the development of innovative products and for its new research and development centre in Penang Science Park until 2016.

Chew said that some RM20mil was spent this year for the development of light-emitting-diode (LED) products under the brand name Carinae.

“Another RM29mil will be spent between 2013 and 2016 for our new corporate headquarters cum research and development centre in Penang Science Park, which will be ready next year,” he said.

Chew said LED products contributed significantly to the group's fiscal year 2013 first quarter ended Aug31, 2012.

Daewoo is working on expanding its sales of washing machines and refrigerators in the Asean region.

“We are appointing distributors in Brunei, Laos, Vietnam, and Myannmar to expand overseas sales, which generate 70% of the company's revenue.

“To drive growth next year, we are also coming out with washing machines that use less water and detergent.

“These new washing machines, developed in South Korea and assembled in our plant in Sungai Petani, will be launched early next year,” Lim said.

CT Frank is counting on new technological products such as internet televisions and smart display screen with touched-screen and interactive features for the domestic market to spur growth.

Beh said the company had spent about RM5mil to develop these new products for the domestic market, which contributed about 70% to the company's revenue.

“We will focus on the domestic market next year, as our exports comprised only cathode-ray and LCD televisions, which are facing tremendous price pressure from competitors,” he said.

Beh added that the company had recently widened the range of home appliance products such as jug kettle, thermo pot, water heater, rice cooker, and gas stove under the in-house brand ISONIC for the domestic market.

Meanwhile, OCBC Bank (M) Bhd emerging business head Wong Chee Seng said for the last three quarters of 2012, OCBC Bank had granted more than RM5bil in loans to SMEs, representing a high single-digit growth against the same period in 2011.

“For 2012, we expect a similar growth progression for revenue and loans approvals for the SME sector.

“This will be driven mainly by the domestic businesses of the wholesale and retail sectors,” Wong said.

According to the latest Business Monitor International report released in November 2012, spending for consumer electronics in Malaysia will grow by about 7% in 2012 to US$8.4bil, backed by strong sales of smartphones and LED televisions.

“The growth in outstanding credit card balances has also remained on a steady downtrend since January 2011.

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