GPA expects to return to the black in FY16

KUALA LUMPUR: Automotive battery firm GPA Holdings Bhd, which is shutting down its manufacturing operations by the end of this year, expects to return to the black for the financial year ended March 31, 2016 (FY16), with the reduction of its working capital and improved cash flow.
GPA decided to cease operations of its three loss-making subsidiaries – GP Autobat Sdn Bhd, GPA Plastic Industries Sdn Bhd and GPA Technologies Sdn Bhd – following years of losses and weak prospects ahead.
"We will be shutting down the manufacturing operations, so that will help us to reduce our working capital," its chairman Tan Han Chuan told reporters after its AGM yesterday.
"With the additional cash flow, we expect that in the coming financial year (FY16), we will be able to return to the black," he added, noting the cessation is estimated to cost the group RM12.5 million.
For the first quarter ended June 30, 2015, GPA widened its net loss to RM1.78 million, from RM881,000 in the previous corresponding quarter, as a result of higher production cost and import price for its maintenance-free batteries due to raw material cost and exchange rate fluctuations.
Revenue, however, was up 14% to RM44.35 million, compared with RM39 million previously, mainly due to the increase of sales volume of imported maintenance-free batteries.
Commenting on the impact of the slowdown in vehicle sales on its business, Tan said the group would not be affected significantly, as the group acts as a secondary market that supplies automotive batteries and component.
"The only issue that we face currently is US dollar (against the ringgit), which is fluctuating at the moment," Tan said, adding that he expects the foreign exchange fluctuations to continue to affect its overall production costs.
Going forward, he said, the group will focus on expanding its business in the distribution and trading of imported maintenance-free automotive batteries, using its own brands.
"By focusing on our own brands, we have the opportunity to increase our market share."
Tan said the group has a 12% market share in the local automotive industry.
"We will also look at other (business) areas which can complement our existing business, but our current focus is to consolidate and go into distribution in a bigger way," he said, noting it has close to 200 dealers currently.