Marketing to weigh on Supermax’s lens ops
KUALA LUMPUR: Heightened marketing costs may keep profits at Supermax Corp Bhd’s latest contact lenses business at bay for the time being.
According to the company’s founder and president Datuk Seri Stanley Thai, the original timeframe for this business division is to report a profit in 2019.
“But if I am planning to go to 165 countries, I will need to spend quite a bit of money on advertising and promotion.
“The original plan is to allocate 60% for original equipment manufacturing, 25% for original brand manufacturing and 15% for global e-commerce,” Thai said at a briefing.
“That is the original planned model but nothing is cast in stone now. If e-commerce grows exponentially, I will have to spend my gross margins there (for marketing),” he added.
However, he said the contact lenses division is already cashflow positive and it technically could “report a profit at anytime.”
“To break even is very easy. We are already at cashflow positive but the revenue we earn is being ploughed back to advertising and promotion where we are spending about RM15mil a year.
“This is being spent for particularly the promotion of the brand in countries with offices,” Thai said. “It is kind of a short-term pain for longer-term gain,” he added.
The company is exporting its contact lenses to 65 countries now. It had launched its own in-house contact lenses yesterday named Aveo, which is made in a Malaysian facility.
The facility has an annual capacity of 70 million at present and Thai said Supermax would like to grow this figure to add another 150 million lenses per year in two to three years.
“To manufacture this contact lenses, we have so far used up capital expenditure (capex) of over RM100mil now while we are planning to spend an additional RM150mil on another facility,” Thai said.
He said the contact lens division is expected to be the prime mover of growth for Supermax in the longer term.
“This division is now still very small as rubber gloves is still the main component but we think it will see an exponential growth in five to 10 years as it is growing from a small base,” he said.