SLP targets to sell more plastic packaging products
GEORGE TOWN: SLP Resources Bhd is targeting to sell 15,500 tonnes of flexible plastic packaging products this year – a strong single-digit percentage improvement over 2016.
Group managing director Kelvin Khaw told StarBiz that the group had sold more than 11,000 tonnes of plastic packaging products with a market value of over RM100mil based on the current resin prices.
The maximum production capacity of the group is 24,000 tonnes per year.
The price of linear low-density polyethylene (LLDPE) resin is about US$1,180 per tonne, compared with an average of US$1,225 per tonne in the first half of 2017.
“We should register growth in revenue over 2016 and our net profit this year should be maintained at a double-digit percentage of the annual revenue due to the installation of new production lines.
“The current resin price of US$1,180 for LLDPE is still higher than last year’s US$1,100, representing about 7% increase.
“However, despite the higher resin prices, we are able to pass only about 4% of the cost to our customers due to competition,” he said.
In 2018, the group targets to raise its revenue by 12% to 15%.
According to Khaw, the higher revenue would be driven by a production capacity which should hit 32,000 tonne per annum by mid-2018.
“The projected growth in 2018 will have a positive impact on the net profit. The revenue for this year is expected to grow by moderate single-digit percentage over 2016.
“In 2016, the group posted about RM168mil in revenue,” he added.
The group’s flexible packaging products are shipped to Japan, Europe, Australia, New Zealand, China and other markets in SouthEast Asia covering food and beverage, healthcare, industrial and consumer goods sectors.
Khaw also said the group expected positive contribution from China next year.
SLP is expanding its production capacity to 32,000 tonnes per year from the present 24,000.
“We will install machinery soon for the new plant in Kulim.
“The new plant should be up and running in January 2018,” he added.
According to a Wise Guy Research report titled “Flexible packaging – market demand, growth, opportunities and analysis of top key player forecast to 2023”, the global flexible packaging market is expected to reach US$342.85bil by 2023.
“By material, the plastic segment in flexible packaging market accounts for the largest market share and is growing with 6.56% compounded annual growth rate (CAGR) during forecast period.
“By application, food and beverage segment in flexible packaging market accounts for the largest market share and is growing with 6.12% CAGR during the forecast period.
“Geographically, Asia-Pacific accounted for the largest share in global flexible packaging market followed by North America,” the report said.
The report added that the booming e-commerce market in the region was also contributing to the growth of the flexible packaging market.
“North America is the second largest market for the flexible packaging. Declining unemployment levels and growing demand for packaged food are some of the factors driving the demand of the market in this region,” it said.
Demand expansion: The higher revenue would be driven by a production capacity which should hit 32,000 tonne per annum by mid-2018, according to Khaw.