Upbeat on consumer products

Manufacturing companies in the north are expanding despite slower GDP growth forecast

GEORGE TOWN: Consumer products manufacturing companies in the north are expanding despite a slower growth forecast of about 5% for the country's gross domestic product (GDP) this year compared with about 7% in 2010.

Spritzer Bhd, NTPM Holdings Bhd, and CAB Cakaran Corp Bhd are among the companies that are investing to expand their operations.

Although the GDP forecast is lower, the expansion plans of the companies are in line with consumer confidence which had stabilised to an index point of 105 in the first quarter of 2011 compared with 107 in the fourth quarter of 2010, according to Nielsen Consumer Confidence Index.

Consumer confidence level that is above or below a baseline of 100 indicates degrees of optimism and pessimism.

Spritzer managing director Lim Kok Boon told StarBiz that the group had injected RM20mil this year to increase its production of mineral water to 360 million litres this year from 150 million litres in 2010.

Last year, Spritzer had spent RM20mil to increase its production capacity.

“The new investment added two production lines which have recently started operations to the Taiping manufacturing facility, which brings the total number of production lines to eight.

“In the Johor and Shah Alam production facilities, we have two production lines for each of the locations,” Lim added.
Lee: The purchase of Union Paper provides a good opportunity for the group to expand its production capacity.

Lim said the fresh investment would increase the company's local market share to over 30%.

“The selling price of our products has yet to increase in tandem with rising material cost.

“The margin has been affected as it has become increasingly difficult to pass the cost to consumers and to stay competitive,” Lim said.

NTPM is spending RM20mil to acquire the Pahang-based Union Paper Industries Sdn Bhd, a tissue paper product manufacturer and trader with strong presence in the central region.

NTPM managing director Lee See Jin said the acquisition would raise the daily tissue paper production of the group to 285 tonnes from 255 tonnes presently.

“The transaction will be completed in six to nine months.

“We believe that the purchase of Union Paper provides a good opportunity for the group to expand its production capacity as well as to set up its production in the central region as part of its expansion plan,” he said.

CAB Cakaran is investing about RM30mil to establish a new day-old chick farm in Seberang Prai to increase its monthly output of day-old chicks to about 4.5 million from three million currently.

“The new day-old chick farm, which will be ready next year will also raise the present five million kg monthly output of broiler meat by 50%.
Chuah: The new farm will raise the output of broiler meat by 50% on a monthly basis.

“With the new day-old chick farm, we will have a total of six such farms in the northern region,” said CAB managing director Chris Chuah.

Chuah added that the group had also allocated RM20mil to set up 10 more Pasar-Raya Gading supermarkets in the country.

“Two of them will be in Bukit Mertajam and in Kuantan this month.

“In Pahang, we currently have three Pasar-Raya Jaya Gading supermarkets.

“Subsequently, there will be two Pasar-Raya Jaya Gading supermarkets set up every six months in the northern region,” Chuah said.

In view of the strong consumer confidence, the Coca-Cola Company is also planning to invest about RM300mil in Malaysia by 2015. Mydin has also announced plans to open seven new hypermarkets this year.