Posted on 02 Jun 2014
Flat steel product manufacturer YKGI Holdings Bhd plans to set up trading hubs in neighbouring countries to boost sales overseas, as the company ramps up its steel roof production capacity.
Under the company’s five-year transformation plan launched last year, YKGI will step up investment to expand its factory output volume. This includes a plan to open a new roofing product factory in Miri, Sarawak and another in West Kalimantan in Indonesia.
Managing director and chief executive officer Datuk Soh Thian Lai said the proposed plant in West Kalimantan was expected to be operational in the third quarter of 2015.
The plant will have a capacity to generate annual sales of between RM10mil and RM20mil. Earlier this year, YKGI acquired a steel roofing plant in Kota Kinabalu, Sabah for RM10.2mil. It also invested RM2mil in new manufacturing facilities for roofing products in Bintulu.
Soh said the newly acquired Sabah plant was expected to generate some RM20mil in sales this year, which was expected to be increased to between RM40mil and RM50mil in two years.
“With new manufacturing facilities in different locations, we are targeting to increase the contribution of roofing products to group revenue to 20% in two years from 5% last year,” Soh told StarBiz.
YKGI’s group revenue rose by 21.4% to RM560.3mil in the financial year ended Dec 31,2013 from RM461.7mil previously.
He said the investments in new manufacturing facilities for roofing products had contributed to the improved margins.
On regional expansion to export its products, Soh said YKGI was in the process of setting up a trading hub in Thailand which was expected to be operational in the third quarter of this year.
He said the group would supply galvanised and coloured steel coil products to downstream roofing products manufacturers. There are more than 400 such manufacturers in Thailand.
“In the first 12 months of operations, we target the trading hub in Thailand to generate sales of 6,000 tonnes with a turnover of between RM40mil and RM50mil,” he added.
Soh said YKGI planned to set up similar trading hubs in Indonesia and Myanmar next year with the help of its major shareholder and strategic partner Marubeni-Itochu Steel Inc, which has a 26.78% stake in YKGI.
“With the establishment of the regional trading hubs, we hope to boost the sales of our steel products and raise the utilisation rate of the group’s production capacity to 70% in two years from the current 50% ,” he said.
YKGI has commissioned its RM30mil new “continuous colour coating” line, which boasted an annual capacity of 80,000 tonnes in September last year, and is ramping up its production from 40% currently.
Soh said the group’s main maufacturing plant in Klang, Selangor was working towards obtaining IS0 14000 and ISO 18000 certifications to transform YKGI into a world-class steel producer.
