Friday 29 Mar 2024
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MELAKA (May 15): DRB-Hicom Bhd's 96.87%-owned unit Composites Technology Research Malaysia Sdn Bhd (CTRM) is expecting to breach the RM1 billion revenue mark by its financial year ending March 31, 2019 (FY19).

Petroliam National Bhd, or Petronas, owns the remaining stake in CTRM.

At a media briefing today, CTRM group chief operating officer Shamsuddin Mohamed Yusof said the growth will be mainly driven by the transfer of French aircraft manufacturer Airbus' A350 independent fan cowl manufacturing line in Chula Vista, US, to CTRM's plant in Melaka.

Fan cowl is one of the exterior components of an aircraft engine.

"Both Airbus and CTRM plants are having seven shipsets per month now, they are doing half of it and the other half is being done by us, so they are phasing out and we are phasing in. The revenue of this business is about RM27 million to CTRM now," he said.

"So we will do everything here, all seven shipsets by October this year after Airbus moves its fan cowl manufacturing line here. Then, we will increase to nine shipsets a month; that is about RM107 million revenue. We hope to go up to 13 shipsets a month, in two to three years' time, [that's] about RM174 million sales," he added.

For FY17, CTRM's revenue grew 5.77% to nearly RM855.22 million, from RM808.58 million. Moving forward, Shamsuddin said he is expecting a 4.5% revenue growth per annum over the next two financial years.

"Typically, our growth has to rely on the orders we get, which can be different every year. But because of the additional revenue after the transfer programme, it is likely our revenue could go beyond the RM1 billion mark in two years," he said.

"Therefore, because of these additional works, investment for expansion is inevitable," he said, adding CTRM's five-building manufacturing plant now is not sufficient to cope with increasing market demand and hence it is in the midst of adding a sixth building.

"The expansion will involve an investment of RM93.4 million, for construction and key equipment. The building is expected to be completed by February next year," he said.

"We are in a growing industry, not only is there a substantial growth market for us to capture, there is also a huge replacement market as well, so we have to build our capacity and capability now, so that we can provide more offerings and serve more customers," he added.

CTRM currently has an order book of RM11.9 billion, which will keep it busy until 2035. So far, Shamsuddin said about 70% of CTRM's sales are related to Airbus, of which 9% are done through direct orders, while the remainder comes from Airbus' tier-one suppliers like Spirit Aerosystems Malaysia Sdn Bhd and UTC Aerospace Systems (Utas).

Shamsuddin also shared that currency fluctuations play a role in the company's financial performance, especially since most of CTRM's transactions are not done in ringgit.

"Last year was a challenging year for us. Because of Brexit, pound sterling to US dollar fell from about 1.5000 to about 1.2200. Around 30% of our revenue were denominated in pound sterling, 70% in US dollar; but 90% of our costs are in US dollar. We would have done better if the currencies were not as volatile in 2016," he said.

 

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