KUALA LUMPUR: Malaysian food packaging firm Tomypak Holdings is aiming to grow its revenue by at least 20% this year on the back of capacity expansion although a stronger ringgit weighs on profit margin, its executive director said. The company’s new production lines are expected to start operations this year and handle additional volume of 6,000 tons on top of the current capacity 19,000 tons, Tan See Yin told Nikkei Markets. Tomypak may invest over 20 million ringgit to add capacity this year, he said. We are in talks to get more contract from an existing Japanese client, who is aggressively expanding overseas and require more packaging supply for their products,” Tan said. Tomypak’s expansion drive comes amid a rise in demand for fresh foods and higher consumption of processed food across the world. The company gets about 90% of its revenue from the food and beverage sector.
Global advanced packaging market is expected to exceed $31 billion by 2019, growing at a compounded annual growth rate of 8%, according to research firm Technavio.
“We are still considering whether to invest in gravure or flexo machines depending on our clients; needs,” Tan said. A gravure line could cost more than 20 million ringgit, while a flexo machine will cost about 10 million ringgit, he said. Profit margin at Tomypak, which gets more than half of its revenue from exports, could face a squeeze if the ringgit continues to strengthen, Tan said. We are not fully naturally hedged,” he said. “Still, we are trying to reduce our input cost to mitigate negative impact from a stronger ringgit. In its most recent quarter, net profit declined 11% from a year earlier to 3.10 million ringgit although revenue grew 2.2% to 52.68 million ringgit. For its first nine months, net profit rose 11% to 13.43 million ringgit, while revenue slipped 0.5% to 158.91 million ringgit from the same period last year.
