PETALING JAYA: MSM Malaysia Holdings Bhd has identified new market penetration as one of its mitigation measures, to overcome the risk of excess supply of refined sugar.
The group’s chairman Datuk Wira Azhar Abdul Hamid highlighted that the issuance of new approved permits (AP) and the liberalisation of the local market has resulted in stiff competition, which took a toll on MSM’s financial performance in 2019.
As a result, MSM’s reported a net loss of RM299.77 million for FY2019 compared to a profit of RM35.66 million a year ago.
He pointed out both of the nation’s sugar players experienced overcapacity in production levels as a result of new entrants flooding the local market.
“As running plants at an optimum level would have led to a stock build-up and an unnecessary tie-up of working capital, MSM focused on enhancing its business platform by seeking a strategic balance in the export market,” Azhar said in his statement in the group’s annual report.
“This will also help to secure a more sustainable future for the group going ahead.”
He revealed that the new operating challenges resulted in the development of value-added products such as premix and liquid sugar by MSM Johor in the second half of last year.
The chairman commented that such development extends the group’s capabilities, increases its product offerings and opens up new markets for growth.
“To this end, the sales team is aggressively working on penetrating new markets, optimising product segmentation and at the same time focusing on serving the existing market better,” said Azhar.
For the year ahead, he stated that the group’s strategic direction revolves around the implementation of its transformation plans through diversification into downstream segments. potential greenfield investments or mergers and acquisitions in food based businesses.
Azhar stated that these strategic initiatives are expected to gradually bear fruit from 2020 onwards.
Additionally, the groups is also working on new products, which are expected to be launched in the second quarter of the year.
“On the operational front, as growth opportunities in the near future are primarily linked to MSM Johor’s capacity for expansion of value added products, the intention moving ahead is to rationalise group-wide capacity through consolidation of production in MSM Johor,” said Azhar.
source https://www.thesundaily.my/business/msm-malaysia-aims-to-penetrate-new-markets-MF2340790
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