KUCHING: Ceramic tile manufacturer Kim Hin Industry Bhd has expanded its export market to the United States, filling the market vacuum left by the withdrawal of China’s suppliers.
According to executive chairman Chua Seng Huat, the Chinese suppliers have abandoned the US market due to the anti-dumping tariff imposed by the US government against China.
He said Kim Hin had, therefore, re-positioned its export market and started shipping its made-in-Malaysia products to US since the last quarter of 2019.
“We look forward to achieving strong growth in this new export market. The group is expected to continue achieving future growth, ” he added.
As one of Malaysia’s leading ceramic tile manufacturer, Kim Hin group owns three plants, two in Kuching and Seremban and a third one in Shanghai, China.
The group exports about 28% of its production output from the Malaysian plants to overseas markets, mainly Australia, the Middle East, Taiwan and Pakistan. The Shanghai plant exports about 48% of its products to the Australian and North American markets.
In 2016, Kim Hin strengthened its foothold and presence in the Australian market by acquiring Outset Holdings Pty Ltd for A$6.37mil. Outset is the holding company of Amber Group Australia Pty Ltd, which operates a network of 31 retail stores under the Amber brand in New South Wales, the Australian capital territory, and Queensland.
Two years earlier, Kim Hin made its first major overseas acquisition and paid about RM22.65mil for Britain-based Norcros Industry Pty Ltd, a major importer and distribution of Johnson Tiles in Australia. Since then, Kim Hin has been manufacturing the premium Johnson Tiles in Malaysia for the domestic and export markets.
Chua said following the downturn of the Malaysian property market in 2018, the demand for tiles had remained subdued,
“The domestic industry underwent a consolidation phase with major players reducing their production capacity and implementing cost-cutting measures. The import of tiles from China remains unabated, and this has created an excess supply situation in the market. Our export markets were also affected by the downturn, especially Australia and the Middle East.
“Property markets remain weak in most regions and (there was) the excess capacity from China as a result of the US-China trade war. This created a supply imbalance to other regions with low import duty, Malaysia being one of them, ” he said in a yearly review of the group’s performance in the company’s 2019 annual report.
In financial year to Dec 31,2019, Chua said the softening property market had affected the group revenue which fell to RM378.6mil from RM402.7mil in FY2018.
As Kim Hin continues its efforts to strengthen and achieve revenue growth for its overseas operations, the combined revenue of its overseas operations has, for the third consecutive year, surpassed the group’s revenue from Malaysia.
In FY2019, the Australian and Chinese operations generated RM147mil and RM45mil revenue, respectively. This combined RM192mil from its overseas operations is 6.67% higher than its Malaysian operations revenue of RM180mil achieved in the same year.
In 2015, the Malaysian operations contributed about 65% to group turnover.
“The group’s initiatives in expanding its operation in its traditional stronghold market, Australia, and a new geographical location in Vietnam have successfully reduced its reliance on the Malaysian operations. “The increased contributions from its overseas operations act as the shield for the group which is facing continual soft market conditions in its Malaysian operation, ” the company said.
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