George Town: Despite the soft market, Thong Guan Industries Bhd
’s 2024 revenue is expected to improve over 2023.
Group executive director Alvin Ang said the improvement was achievable as in the six months of the financial year 2024 (FY24), its top line had already shown improvement over last year’s corresponding period.
The group posted RM64.8mil in after-tax profit on the back of RM647.8mil turnover compared with RM64.1mil and RM604mil in 2023.
Ang said the demand for the group’s stretch film and industrial packaging products from the US market remained steady.
“The North American markets should generate close to 10% of our 2024 revenue. The global south, particularly the markets in Australia, New Zealand and Africa, is experiencing robust growth. The global south should generate healthy orders for our products.
“We should see a similar trend in South Korea and Japan, where our key customers are based,” he told StarBiz.
Europe and the rest of the world are expected to contribute significantly to the group’s 2024 revenue.
“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 invested RM70mil over the past two years to install four high-capacity production lines comprising blown film and stretch film lines imported from Europe to raise the group’s production capacity to 265,000 tonnes annually from 220,000 in 2022.
“We haven’t been able to ramp production yet because Tenaga Nasional Bhd hasn’t been able to supply our new plant with sufficient electricity despite a one-year delay,” he added.
Ang said the world’s economic conditions were expected to continue to be challenging.
“The management will continue to take precautionary measures amidst these global changes.
“The group will take precautions to build on its market position and capture new growth areas locally and internationally for all its product lines.
“Barring any unforeseen circumstances, we expect all of the group’s business divisions will continue to be on an upward trajectory,” he said.
Ang added Thong Guan would continue to work to reduce costs, manage operational waste and increase productivity and efficiency.
According to Technavio, a leading market research firm, the stretch and shrink film market size is forecast to increase by US$3.57bil at a 4.5% compounded annual growth rate between 2023 and 2028.
Technavio stated that the retail sector, rising disposable incomes, robust demand for food and beverage products, and changing consumer preferences would drive the market.
“One key challenge to the market’s growth is the volatility in raw material prices.
“The prices of the raw materials used to manufacture these films are highly unpredictable due to their high dependence on crude oil prices,” it said.
The report stated the price volatility of petroleum-based raw materials and the increasing demand for stretch and shrink film products in emerging economies would hinder market growth.
