Classic Scenic raises 2017 capex to RM3.5m (The edge)
KUALA LUMPUR: Wooden picture frame maker Classic Scenic Bhd has raised its capital expenditure (capex) for 2017 to RM3.5 million from the RM3 million initially set aside to further improve workflow efficiency.
Executive director Simon Lim said RM2.5 million of the amount would be used for the acquisition of a new machine to improve production layout and smoothen production processes.
Of the balance, RM800,000 will go towards a new 33,000 sq ft warehouse with construction expected to be completed by the end of this year, and RM200,000 would be used for IT enhancement work.
The funds will be internally generated, Simon told reporters after the company’s annual general meeting yesterday. Also present was managing director Samuel Lim who explained the need for the new warehouse.
“We have a high level of timber supply sitting on the production floor,” said Samuel. “We will be able to move the stocks into the new warehouse and free up the production space,” he said.
Classic Scenic expects the current financial year ending Dec 31, 2017 (FY17) to be promising on the back of the improving US market outlook. The US is the company’s primary export market, with about 80% of its customers based there.
Simon said the higher minimum wages, stronger housing market and falling unemployment rate in the US are positive indications for the group’s outlook.
Coupled with the appreciation of the US dollar, he said the company is confident of seeing a positive growth in its bottom line and top line for FY17.
“We will grow this year on these positive indications and better currency exchange rate,” said Simon.
“The whole year should be promising [based on the first quarter’s results],” said Samuel, adding that the second and third quarters are the company’s peak season as it will be preparing for Christmas.
On the surge in timber prices, Simon said Classic Scenic is not affected very much as it has about nine months’ supply of timber. The 2% to 5% yearly rise in the price has been factored in.
“The best way to pass the cost to our customers is to develop new products and designs,” said Simon.
In addition, Samuel said the company has gone upstream by purchasing its own logs since April 2016, instead of buying sawn timber. This has reduced its material costs and also lowered its inventory level.
“Based on the statistics from the Malaysia Timber Industry board, we know that we are the largest exporter in terms of ringgit. We have accounted for about 41% of Malaysia’s total exports by manufacturers of wood products,” he added.
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