Written by Max Koh
Tuesday, 14 June 2011 11:05
KUALA LUMPUR: Auto parts supplier Delloyd Ventures Bhd expects to see brisk sales in its auto parts division as orders are rising to pre-crisis levels sooner than expected.
Deputy managing director Datuk Leon Tee Wee Leng said the supply chain disruption caused by the disaster in Japan was not as bad as expected.
“When the earthquake hit Japan in March, our production capacity fell to 40% of our usual volume,” Tee told The Edge Financial Daily.
“Orders in April were badly hit with volume from Perusahaan Otomobil Kedua Sdn Bhd (Perodua) shrinking to about 1,000 units at that time. However, we are seeing orders recovering: to 5,000 units in April and 7,000 units this month. We are expecting to reach 8,000 next month,” he added.
Delloyd Ventures is a leading original equipment manufacturer (OEM) for carmakers such as Proton, Perodua and Toyota. For FY11 ended March 31, its auto division derived 34% of its revenue from Proton, 18% from Toyota and 12% from Perodua.
“We expected the (supply chain) problem to last until the second half of the year. However, things are definitely looking up. Perodua is currently operating at 90% of its total capacity while Toyota has reached 80%. We expect production to resume pre-crisis levels next month as orders are returning,” said Tee.
According to Tee, the improving production is due to priority given by carmakers in Japan to supply parts to the Southeast Asian market.
“The Japanese think it prudent to transport their parts here as there is demand locally compared to their homeland. Some OEM makers in Japan appear to have recovered sooner than expected as well,” he said.
Tee: We expect production to resume pre-crisis levels next month.
As such, Tee is confident its auto division will continue to grow in FY11 although its quarterly results for the April to June period will be affected.
“Earnings will no doubt be affected for 1QFY11 ending June 30. Regardless, we anticipate good demand for the new Myvi replacement model. Besides, Perodua is maintaining its annual sales target of 195,000 units for 2011, which certainly bodes well for us,” said Tee.
He added that Perodua and its OEM suppliers could easily make up for the slow production in April by ramping up capacity to 9,000 units a month.
On its plantation division, Delloyd Ventures is also looking at acquiring 10,000ha to 15,000ha of plantations in Palembang, Indonesia this year.
“Prior to this, we were looking at land surrounding our current plantations in Pulau Belintung but we faced a lot of obstacles in terms of social issues. As such, we are now considering Palembang as it is friendlier to foreign investors,” said Tee.
Delloyd Ventures currently has 1,449ha and 14,422ha in Sungai Rambai and Pulau Belintung respectively.
“We are looking at about US$500 per ha, which translates to around US$4.5 million (RM13.7 million) for the total land acquisition. We hope to secure this land within this financial year,” said Tee.
The group saw total fresh fruit bunch production more than triple to 135,000 tonnes in FY11 from 44,524 tonnes in FY06. Tee said another 1,000ha of plantation in Pulau Belintung would mature this year and it plans to plant 500ha more. As at March this year, about 77% of the Pulau Belintung estates have been planted and 40% has reached maturity.
For FY11 (15-month period) ended March 31, Delloyd Ventures posted a net profit of RM59.2 million on the back of RM510.31 million in revenue.
Its auto division continues to be the main earner, contributing 57% or RM48.8 million to the group’s total pre-tax profit. Meanwhile, contributions from its plantations increased 41% to RM34.7 million from RM7.9 million for FY09.
Tee said contribution from its plantations is expected to grow to 50% or more of its total net profits for FY12 on higher yield and strong CPO prices.
“We have an internal guidance of about 20% top line and bottom line growth for FY12 compared with the 12-month period ended Dec 31, 2010. We think this will be possible as the auto industry recovers and CPO prices continue to grow,” said Tee.
