The economy may not be in a good way, but that’s not holding back Penang-based, consumer goods manufacturer Sky Resources. In fact, they are increasing investment and expanding their product range.
INNOVATION is the key to boosting revenue growth during periods when the economy is depressed, Sky Resources Group believes.
Far from roling back spending, the Penang-based manufacturer, which owns the popular MyKuali white curry mee brand, is concentrating on coming up with innovative products in 2016 to improve revenue and margins.
Chief executive officer H.K. Tan says the group’s margins had dwindled by about 10% last year, and as such it was necessary to introduce new products to arrest this decline.
“Our margins was about 30% in 2014 but because of the higher cost of importing raw materials due to the weakened ringgit, the margin eroded by about 10%,” he explains.
“We also plan to produce a new range of cosmetic, skincare, and health food products,” Tan announces.
“We are spending about RM2mil to develop the new products, which will be introduced in 2016,” he adds.
The new products are expected to raise revenue for 2016 from the cosmetic, skincare and health food segments by about 20%.
Presently, these three segments contribute about RM60mil to the group’s revenue, which is projected to be about RM100mil in 2015, up from RM90mil in 2014.
“The cosmetic and skincare products are produced under the brand name of our customers or original equipment manufacturer (OEM) market. “About 30% of these cosmetic and skincare products are for the OEM market in Asia, while the health food products are for the OEM segment in the country,” Tan discloses.
On the noodle market, Tan says the demand from the low- and medium-income groups had shrunk last year.
“This is due to the current economic challenges and the fact that MyKuali is better positioned in the higher income segment,” he says.
To expand its range of noodles, Sky Resources plans to introduce new flavours, including bah kut teh, salted fish and soto noodles this year to tap into different income segments.
Tan says that about RM500,000 would be spent on producing the new range of noodles.
The cosmetic, healthcare and health food segments contribute about RM60mil to the group’s revenue, while their noodle products generate the remainder.
According to Tan, the group also plans to invest RM15mil on a new facility in Batu Kawan on a 2.7-acre site, which has been designated as a halal food hub.
“We are now waiting for the state government to complete the infrastructure work. Construction work for the plant should start in 2017,” he predicts.
Tan says the group has over the past 25 years invested about RM30mil for its three facilities in Bukit Tengah, which not only manufacture but also package the products.
“All packaging is done in-house, which cuts the cost of outsourcing packaging work to third parties,” Tan says.
About 20% of the raw materials such as minerals and extracts of health food are imported from Europe, South Korea, the US and Japan, to maintain the standards of the health food products.
“Ingredients like palm oil-based raw materials are sourced locally,” he says.
Keen to expand its presence overseas, Tan says the group is now exploring new markets in Indonesia, Vietnam, Cambodia, and Thailand for its new range of noodle products.
“We are already present in the Singapore, Hong Kong, China, Europe, the US and Canada markets with our noodle products,” he points out.
Tan adds that the group has recently secured a deal to export noodles to the Japan market.
Currently 70% of the noodle products under the MyKuali brand name are exported to 13 countries.
When it was established in 1991, the company operated out of a 1,000q ft office space, which included an operation centre, a small-scale research centre and a mini-size store.
Today, Sky Resources operates in three plants with a total built-up area of about 151,000sq ft, employing about 400 workers.
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