Heveaboard allocates RM20 mln capex for 2016

KUALA LUMPUR: Particle board manufacturer, HeveaBoard Bhd, has allocated RM20 million in capital expenditure (capex) this year to increase the capacity of its existing production line.

Group Managing Director Yoong Hau Chun said RM8 million would be utilised by HeveaBoard to upgrade equipment while the remaining RM12 million would be utilised by its ready-to-assemble (RTA) furniture manufacturing unit, HeveaPac Sdn Bhd.

“We are seeing stronger demand for our RTA segment as proven by our fourth quarter results.

“We want to introduce newer and a wider range of products to the market to achieve better sales this year,” he told a press conference on the company’s 2016 plans here yesterday.

Yoong said there was pressure from customers in China to set up new production lines but HeveaBoard planned to stay conservative as such a move would involve major capex against a backdrop of uncertainty in raw materials prices.

“At this point in time, we will only carry out equipment upgrade for our existing line to further improve product quality.

“However, this upgrade will also result in higher capacity of between 10 and 15 per cent by year-end or early next year,” he said.

For the 2015 financial year, HeveaBoard’s pre-tax profit surged 158.06 per cent to RM82.79 million from RM32.08 million in 2014 due to better sales of higher value and value-added products while revenue rose to RM502.6 million from RM422.36 million.

For the RTA furniture segment, Japan, Australia and Europe accounted for 90 per cent of total sales while eighty per cent of the particleboard exported were to China, Japan and India.

Meanwhile, Yoong said HeveaBoard also planned to settle its outstanding term loans, amounting to less than US$7.5 million, by the second half of the year after consistently paying about RM26 million, annually, to service the principal loan.

“Once the loan is fully paid, we will be in a strong position to increase dividend pay out to shareholders,” he added. — Bernama