Spritzer eyes 45% of market share

Spritzer's mineral water production plant in Taiping.// 30 MAY 2019

GEORGE TOWN: Spritzer Bhd will offer new products soon to increase its market share in the country to 45% from the current 40% over the next three to five years.

Group managing director Datuk Lim Kok Boon told StarBiz after its AGM that the group planned to introduce functional drinks in the market and 250ml and 300ml-sized mineral water to expand its market share.

“We are planning to produce a new range of fibre drinks. Currently, we only have the Spritzer BonRica fibre drink in the market.

“In June, we will introduce the smaller-pack drinks under the Cactus and Spritzer brand names,” he said.

On its overseas business, Lim said overseas sales growth would be gradual.

“Export sales generate about 10% of the group’s revenue. As we introduce new products, we can expect overseas sales to gradually increase,” Lim added.

Spritzer sells its products via a wholly owned trading company in Guangzhou, China. He said the company has distributed in Guangzhou and the surrounding areas since April 2016.

“The group has also exported its mineral water products under the brand name ACILIS by Spritzer to the UK since January 2017.

“We have also recently exported to Holland,” he added.

Moving on, the financial year 2019 (FY19) is expected to remain challenging amidst global and domestic economic uncertainties, according to Lim. He added that consumer sentiment is expected to remain soft due to the higher cost-push inflation and the impact of the volatility of commodity prices and the domestic currency.

“The ringgit recovery could have a positive effect on consumer spending. The group is also experiencing higher operating costs,” he added.

On dividends, the group has approved a first and final dividend of 3.5 sen (2017: 5.5 sen) per ordinary share in respect of its FY18 ended Dec 31. The dividend will be paid to shareholders on June 21, 2019.

“The current dividend payout ratio is lower at 30% (2017: 45%), as the group has substantial capital expenditure in 2019 to support our business growth, capacity expansion, innovation and cost efficiencies.

“Whilst we do not have an official dividend policy, we have consistently paid out cash dividends in every financial period since it was listed in the year 2000.

“We are committed to rewarding our shareholders with appropriate dividend payments which are in line with our earnings and cash-flow requirements,” Lim said.

On expansion, the group will spend about RM25mil over the next two years to expand its PET (polyethylene terephthalate) plant, water-processing capacity and solar power projects to keep up with the group’s enlarged customer base and enhance its competitive edge.

“The company needs to expand further its PET facilities in Ipoh and Taiping to keep production cost low.

“Although PET resin prices have come down compared to 2018, they are still high, as most of our cost comes from packaging the product.

“The expansion exercise, scheduled to start at the end of the year, should be completed in two years’ time, raising the PET bottle and cap output by 10%,” said Lim.

Spritzer will also install solar panels to supply power for the PET plant in Ipoh and the mineral water production plant in Taiping.

Meanwhile, the group’s RM50mil automated warehouse in Taiping should be operational by early next year. “The new automated warehouse should help to improve our delivery system in the country,” he added.

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