KUALA LUMPUR: Refined sugar producer MSM Malaysia Holdings Bhd intends to expand its export market presence and engage with the government for a price increase for standard sugar soon.
Group chief executive officer Syed Feizal Syed Mohammad said the company’s retail business segment was generally experiencing negative margins, which has resulted in net losses to its bottom line.
“There is a convergence of the rising prices of four input costs, especially raw sugar, which makes up some 80% of our costs.
“Then, there are energy or gas prices, which make up about 9% of our costs, followed by freight costs that had doubled last year and the weakened ringgit. Inflation (has also) hit us hard,” he said at a press briefing after its AGM yesterday.
Syed Feizal said MSM had started to revise selling prices. “We have also had to get our customers to accept these new prices. We will see new (price) premiums taking effect this year, which will at least allow us (room) to absorb the increase in input costs.”
Syed Feizal stressed that contrary to public perception, sugar was no longer a subsidised food item by the government for many years already. There is, however, a ceiling price that is in place for standard sugar.
MSM’s premium sugar product, called Gula Super, is sold on a floating price basis locally but the company still needs to engage with the government soon on the price of standard sugar.
“We hope that with the introduction of Gula Super it can help to address some of the structural changes needed in the industry for long-term sustainability,” he added.
How soon the company can return to the black would also depend on the outcome of the discussions with the government, said Syed Feizal, adding that MSM was seeking an increase in sugar prices.
“Costs have been going up, so when we sell (standard sugar) we are selling it at a loss. So with Gula Super, this would help us cover our costs and whatever margins we make we would balance it out,” MSM chief financial officer Aini Shahar said.
Syed Feizal said any increase in sugar prices would also help the company better compete internationally as it aims to expand its export markets.