KUCHING: Ceramic tile maker Kim Hin Industry Bhd has ceased its manufacturing operation in Shanghai, China after 30 years.
The company’s executive chairman Chua Seng Huat said with the shutdown of the Shanghai’s manufacturing facility in January, this year, Kim Hin has refocused its Shanghai operations to outsourced products and product development.
Kim Hin ventured into China in 1994 and started a manufacturing plant there to produce ceramic tiles for both the domestic and export markets.
“Under the group’s rationalisation exercise to address the lacklustre sales performance and under-utilisation of production capacity of its manufacturing facilities, the group conducted a review on its product matrix for its Malaysian operations and refocused its Shanghai operations to outsourced products, and has since ceased its manufacturing activity in Shanghai.
The Shanghai plant has been exporting its products to the Australian and North American markets while the Malaysia plants shipped its products to Australia, Middle East, Taiwan and Pakistan.
“As a result of the cessation of its manufacturing activity in Shanghai, the group accrued a one-off termination payment of RM5.3 million and have fully impaired and written off the plant and machinery of its Shanghai’s manufacturing plant,” Chua said in the company’s 2023 annual report.
In Malaysia, Kim Hin group owns and operates two manufacturing plants, in Kuching and Seremban.
The group operates principally in the ceramic tiles industry, and is organised into four operating segments according to geographical location, namely Malaysia, China, Australia and Vietnam. As one of Malaysia’s leading ceramic tiles manufacturers, Kim Hin designs, manufactures and markets tiles under the brands of Kimgres, Durogres, Vitrogres, Johnson and Amber.
In 2016, the group strengthened its foothold and presence in Australian market by acquiring Outset Holdings Pte Ltd. Outset Holdings is the holding company of Amber Group Australia Pty Ltd, which operates a network of retail stores in New South Wales, Queensland, and the Australian Capital Territory under the Amber brand.
Reviewing the group performance in FY2023, Chua said revenue fell by 8.8 per cent to RM310 million (FY2022: RM340 million), and the lower than expected revenue was attributed by all geographical segments in which the group operates amidst the soft property market conditions.
The revenue for the group’s Malaysia operation contracted four per cent in 2023 while the group’s overseas operations registered between 11 per cent to 50 per cent decline in turnover. The overseas operations contributed about 50 per cent (2022: 52%) to the group’s revenue for FY2023.
“In Australia, the rapid rate hike leading to a higher borrowing cost as well as the lack of available property has hampered the recovery of buyers’ demand throughout 2023. China’s real estate sales fell by 6.5% in 2023, thus contributing to a continuing third year slump.
“Most segments of the real estate market in Vietnam experienced a slow recovery due to exacerbation of market conditions arising from new challenges and persistent issues,” said Chua.
He said the group pre-tax loss in FY2023 worsened to RM40 million (FY2022: RM33.1 million) mainly due to declining sale revenue. Higher impairment charges on the group’s intangibles, inventories, property, plant and equipment, investment properties and right-of-use assets amounting to RM16 million (FY2022: RM1.9 million) was recorded.
In 2023, Chua said the group grappled with challenges such as high logistic costs and increased operational expenses driven by rising inflationary pressures, thus requiring the group to adopt prudent cost management strategies to mitigate their impact.
On the prospects for FY2024, Chua said Kim Hin group remains cautiously optimistic about the prospects for sustained growth while remaining vigilant to potential headwinds stemming from global uncertainties and market volatilities.
“Growth in 2024 will be driven by resilient domestic expenditure and improvement in external demand. On the external front, the IMF (International Monetary Fund) is projecting rebound in global trade growth from 0.4% in 2023 to 3.3% in 2024.
“Investment activity will be underpinned by further progress of multi-year projects, by both the private and public sectors as well as the implementation of catalytic initiatives under various national master plans. However, the growth outlook remains subject to downside risks stemming from weaker-than-expected external demand and larger decline in commodity production. Furthermore, evolving regulatory frameworks and shifting consumer preferences necessitate agile responses and proactive risk management strategies.
“In response, Kim Hin remains committed to leveraging its operational resilience, strategic agility and unwavering commitment to sustainability to navigate uncertainties and capitalise on emerging opportunities in the year ahead,” added Chua.
