George Town: Thong Guan Industries Bhd
’s new production lines will commence operations in January.
“We spent more than RM70mil to install the four high-capacity production lines over the past two years, comprising blown film and stretch film lines imported from Europe.
“The four lines would raise the group’s production capacity to 265,000 tonnes annually from 220,000 in 2022,” group executive director Alvin Ang told StarBiz.
The group is targeting to grow in 2024 in the premium sales market of Europe and North America.
“The US market was hot in the first half of the year but shows signs of slowing down. If it maintains interest rates, we can still expect growth in North America.
“We plan to sell more than 30% of our stretch film products to the European and US markets. We are still growing in the European market,” he said.
The group has recently set up two warehouses in California and North Carolina to distribute its high-end stretch films and other products.
Thong Guan expects a 20% decline in its sales for the financial year ending Dec 31, 2023.
“This is mainly due to the overall global slowdown in the demand for consumer and industrial goods,” Ang added.
Thong Guan has recently established another research and development centre in Suzhou, China, mainly to analyse, optimise, provide solutions and innovate load stability and transportation safety concepts besides yielding cost savings and sustainability points to its customers.
He said the outlook for 2024 remained challenging with high inflation and interest rates, rising energy, labour and other operating costs as well as increased geopolitical tensions in the Middle East and eastern Europe.
As the softer global market demand continues, the group will continue reducing costs by managing operational costs, increasing productivity, and reducing production wastages, according to Ang.
The group has also expanded its market share in the advanced economies of Europe and the United States with innovative marketing strategies. For the nine months of FY23, the group posted net profit of RM63mil on the back of an RM921mil turnover compared with RM81mil and RM1bil in the same period of 2022.
According to the Market Research Future report, the stretch and shrink film market will grow from US$16.8bil in 2022 to US$24.4bil by 2030, registering a 5.5% compound annual growth rate.The report added that the demand for lightweight materials for industrial packaging expansion would fuel the growth of the worldwide stretch and shrink film market.“Due to the robust food and beverage industry, notably in China and India, the region is predicted to dominate.
“Over the projected period, rising consumer disposable income and packaged food demand are anticipated to drive the demand for flexible packaging,” it said.
