KTC: PACKAGED GOODS SET TO DELIVER FATTER MARGINS
Company upbeat on fatter margin after RM20m revamp kicks in
KIM Teck Cheong Consolidated Bhd (KTC) is confident of generating fatter margins for its consumer-packaged goods distributorship by streamlining its business to reduce operating cost.
Executive director Dexter Lau Wei Dick said KTC was in “stable” mode after investing more than RM20 million in the past two years, mainly to improve its infrastructure facility, including warehousing, asset, equipment and logistical arrangements.
“We believe our consumer-packaged goods segment will generate higher revenue base,” he said recently.
Lau said the company’s ongoing effort of improving its operation would provide the right profitability, while expanding its distributorship areas in Sabah and Sarawak.
“That’s why we need to rationalise our business to reduce the operating cost and monitor employees’ productivity,” he said, adding that the revenue base was expected to increase in the financial year ending June 30 next year.
Lau said KTC had gained the trust from its existing suppliers, mainly for products like food and beverages, pharmaceutical and beauty care. “They give us more business and territories for distributorship in East Malaysia and Brunei,” he added.
Lau said the firm expected to increase distribution to suppliers to over 50 brands in financial year 2019. “Recently, we secured new distributorship contracts, which are estimated to contribute a combined monthly internal target revenue of RM14.7 million, translating to RM71.6 million in FY18.
“This is estimated to increase the annual internal target revenue close to 41.2 per cent to RM177.1 million in 2019, assuming business remains stable.”
Lau believes if the current momentum of securing the contracts remains, it will drastically boost the company’s bottom line by financial year 2019.
He said the management would re-look at the overall cost structure and employees’ contribution as well as improve its synergistic alliance with suppliers.
“Currently we have 500 to 600 workers in East Malaysia. We want everyone to work harder and be productive. We can also digitise the company to make the process flow even more efficient with less error,” he said.
Lau said suppliers would grant KTC the “exclusivity” to distribute and market its products in certain territories to retailers.
“We do the after-sales services. We are also involved in marketing and selling on behalf of the suppliers,” he said.
Lau said currently KTC would not have any capital expenditure allocations, noting that the company was keen to reap the benefits from its initial investment made in recent years.