Karex OBM revenue contribution to exceed 4%, says CEO

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KUALA LUMPUR (Oct 3): Condom manufaturer Karex Bhd expects revenue contribution from its own brand manufacturing (OBM) products to exceed 4% of group turnover.

Karex CEO Goh Mian Kiat said original equipment manufacturing (OEM) products currently contributed about 97% of group turnover. The main markets for Karex's OEM products are the US, besides China and Brazil, Goh said.

"We expect contribution from the OBM sector to continue growing and exceed 4%," he said at a press conference here, in conjunction with Karex's planned acquisition of a controlling 55% stake in Global Protection Corp (GP) — a US-based condom distriboutor

Karex’s existing OBM products come under the “Carex” and “INNO” brands. Karex will have another OBM product under the "ONE" brand, as a result of the GP stake acquisition.

"ONE" was established in 2004 and is currently the fourth-largest brand in the US, with sigificant growth rate over other brands.

The GP stake acquisition gives Karex the exclusive license for the manufacturing, distribution and selling of GP’s products. Karex will also manufacture condoms for GP, which does not own a factory.

Commenting on the GP stake purchase, Goh said new products from GP were expected to be introduced by first half of 2015, within the South East Asia region.

"The products will be first launched within the South East Asia region in Malaysia, Singapore and Thailand.

"Then, we will expand the brand's footprint to Australia, New Zealand and China gradually," he said.

Going forward, Karex expects its global market share for condoms to expand to 15%, from 11% currently.

Goh said this took into account condom demand growth of 7% a year.

"In line with this, we will increase our capacity to six billion by 2016, to capture emerging markets," he said.