SHAH ALAM: Southern Acids (M) Bhd is looking for new markets to expand its oleochemical business as the business is expected to remain challenging on the back of the escalating trade dispute between the US and China.
Managing director Dr Nick Low Kok Thye said Southern Acids currently exports more than 80 per cent of its oleochemical products to China, Japan and Europe, among others.
“We expect the prospects for the oleochemical segment to remain challenging in an increasingly tough operating environment and increasing competition, brought on in part by the uncertainty and decreased trade flows stemming from the US-China trade war.
“So we are looking at markets that we have not explored yet,” he told the New Straits Times after its extraordinary general meeting here on Tuesday.
However, he did not disclose details of the potential overseas markets venture.
Low said the company would also be focusing on upgrading and expanding its oleochemical plant in Kapar as the plant is now running at an almost full-capacity.
“The plant has been running at almost 100 per cent capacity now and we are looking into the machineries as well, as the plant is already been operating for more than 30 years.
“The group remains focused on increasing production efficiency and we are looking at all options including expansion or upgrading the oleochemical plant,” said Low.
According to its 2019 annual report, the company was focusing progressively on upgrading its oleochemical plant through process automation, as well as provide value-added services such as product customisation to its long-term customers. This is in order for the group to improve efficiencies and compete more effectively in the market.
Meanwhile, Southern Acids registered a lower net profit of RM12.87 million during the six months ended September 30, 2019 from RM15.52 million recorded in the same period a year ago.
Revenue eased marginally to RM309.35 million from RM310.99 million previously.