ES Ceramics enhance productivity before value chain diversification

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KUALA LUMPUR (Nov 18): ES Ceramics Technology Bhd is banking on automation for further productivity enhancement before expanding along its business value chain.

"We will focus on our efficiency and productivity first, before we diversify further," the glove mould manufacturer's chief executive officer cum executive director Wong Fook Lin told reporters today after the eleventh annual general meeting.

Wong said that the group has allocated not more than RM10 million to invest in automation next year (but did not specified further on timeline).

He explained that the investment was justified by the robust demand in glove.

"Personally I think that the industry's outlook is positive, as glove demand is always there, which will in turn benefit to our topline," Wong explained.

Besides more sales, he also noted that competition has been tense and squeezing the group's margin, therefore it is significant for ES Ceramics to improve cost efficiency.

On plant expansion, Wong said he does not foresee such capital expenditures in the near term, mainly because the group's Hat Yai plant has not fully utilised yet.

ES Ceramics currently has two manufacturing plant that located in Ipoh (1.5 acres), and Hat Yai, Thailand (seven acres).

However, merely about three acres are utilised for the manufacturing operation in Thailand currently, Wong thus said that there are still rooms for the group to expand internally.

Wong said that the Thailand plant is capable to manufacture full range glove dipping formers product, namely examination, surgical, household, and industrial.

On the other hand, the Ipoh plant focus on manufacturing examination glove dipping former only, he explained that the reason for such arrangements is mainly due to demand in the aforesaid product is much higher.

"Last financial year (FY), 80% of our total output were attributed to examination glove mould," Wong said.

ES Ceramics' revenue for FY14 ended May 31 has leaped 43.68% to RM24.67 million, from RM17.17 million; which resulted its net profit to doubled to RM2.62 million, from RM1.2 million last year.

Its FY15 first quarter financial results also shows improvement, where net profit has doubled to RM1.15 million year-on-year, from RM491,000; while revenue grew 15.37% to RM6.13 million, from RM5.31 million in previous correponding period.

ES Ceramics was up one sen or 4.65% to 22 sen in the morning trading session, having over 3 million shares done, giving it a market capitalisation of RM42.15 million.

Its share price has been more than doubled since the beginning of the year.