CYL eyes similar or better performance

PETALING JAYA: Plastic products manufacturer CYL Corp Bhd expects a similar or better performance for the financial year ending Jan 31, 2016 (FY16) compared with FY15, amid the volatility of raw material prices and the weakening ringgit.
Managing director Chen Yat Lee said the pricing of raw materials is a major cost and will inevitably affect the group's profit. The group imports the majority of its raw materials from Singapore and pays in US dollars, hence it is impacted by the fluctuation of the ringgit.
"Depending on the ringgit fluctuation, if it improves, we gain a little bit. We have the credit term over 1.5 months, which sometimes helps. We may gain a little because of the strengthening of the ringgit (in the next 1.5 months) so we normally can't hedge during the short period of time," he told a press conference after its AGM here.
Chen said with the volatility in raw material prices, it has a monthly or quarterly agreement with its customers on the pricing of its products, where it will pass on some of the costs to customers should raw material prices increase.
CYL posted a higher net profit of RM4.55 million in FY15 and RM73.36 million in revenue.
For the first quarter of FY16, CYL reported a jump in net profit to RM2.19 million from RM1 million a year ago due to the softening of raw material prices in the quarter. But Chen said the decrease in raw material prices will only last for a limited time.
"We estimate FY16 (performance) is more or less (the same as FY15) but can be better. With the volatility (in raw material prices) and GST (Goods and Services Tax), I have reservations. The first quarter results were okay but the (remaining) quarters depend on the cost of materials and the ringgit," added Chen.
He said there is no drastic impact on the group's business with the implementation of the GST and at this stage, business is still there.
"We have some gains and some losses but the majority is okay and the impact is not there yet and I don't think (it will be a big) impact later on. We will monitor this closely."
The group will continue to focus on improving production efficiency, productivity and processes to ensure a satisfactory financial result for the remainder of the current financial year. Chen said it will also look for new business ventures to widen its customer base to increase its production volume.
The group has allocated a capital expenditure (capex) of RM8 million for FY16, mainly for machinery and maintenance, compared with RM3.6 million in FY15.
It plans to invest in new technology, if the need arises, to cater for certain businesses.
"The cost of machinery is always increasing. We look at the need to expand (into more high technology machinery) to reduce cost, reduce workforce, increase productivity and to stay above competition," said Chen.