28 February 2006
PETALING JAYA: NWP Holdings Bhd has ventured into the logging business to ensure continuous supply of raw material for its core business of interior renovation.
Executive director Wong See Ming said the company's venture was not merely for profit, but to enable NWP to gain greater access to raw materials for its finished products.
“We are logging contractors with the opportunity to buy back the raw materials,” he said after the company AGM here yesterday.
Wong said the timber business had slowed down due to lower supply of raw materials globally.
To ensure steady supply of raw materials, he said the company had an agreement with landowners to log in 101,000ha of forest in Sabah.
“The land is sub-divided into several parcels and would be logged in a sustainable and responsible manner,' Wong said.
NWP, via subsidiary NWP Industries Sdn Bhd (NWPI), was awarded the Chain of Custody (COC) certificate by the Forest Stewardship Council (FSC) last August.
The COC certification ensures the company's timber-based products are derived from timber logged in a sustainable manner that meets environmental concerns.
Wong said the certification would enable NWPI to tap markets that only accepted COC-certified wood-based products.
“We see this market growing which is why certification is important,” he said, adding that the company would use the accreditation to actively promote its products.
Currently, about 80% of NWP's revenue is derived from overseas markets such as North America, Japan, Britain and the Netherlands.
Wong said the certification provided a competitive edge that could increase the company's exports, especially to Britain and Germany with the FSC stamp on NWP products.
“We do not see the new business making a big impact on our bottom line this fiscal year but possibly the following year,” he said, adding that it took a while for the company to be recognised as a COC-certified local wood-based manufacturer.
For the financial year ended Aug 31, 2005 the group posted a lower pre-tax profit of RM1.98mil from RM4.09mil in 2004. Revenue also declined to RM39mil from RM49.8mil previously.
According to Wong, the lower earnings are due to sharp increases in costs of raw materials compounded by rising fuel prices, which have a direct on operating costs.
He said the company had to go upstream because of market competition, especially from lower cost-producing countries like Indonesia, which had penetrated the same market segment.
NWP (5025) - NWP: Logging to help secure raw materials
http://www.thestar.com.my/business/business-news/2006/02/28/nwp-logging-to-help-secure-raw-materials/
