Daibochi to spend RM60mil on 13 new production lines
22 Jun 2020
Daibochi Bhd is allocating RM60 million capital expenditure to install 13 new lines for its printing, lamination, and bagging processes.
The lines were expected to be operationalised over the next six months, Daibochi said in a statement today.
The flexible packaging manufacturer said the investment wants to enhance capabilities and services to customers in line with its long-term growth strategies, on the back of resilient business performance and outlook.
Executive Director Low Jin Wei said Daibochi’s resilient performance was buoyed largely by sustained orders for flexible packaging from the food and beverage (F&B) and fast-moving consumer goods sectors, despite the various lockdown measures implemented across the region.
“With the positive outlook, we are continuing to expand our capacity and capabilities. We believe that this strengthened position will enable us capture more growth opportunities in Southeast Asia and Oceania,” Low said in the statement.
The company may also need a larger workforce to support its operations, while working with the relevant authorities to prioritise the hiring of Malaysians to grow its talent pool.
“We are cognisant of the challenging economic scenario in Malaysia and rising unemployment rate,” he said.
Low said Daibochi would consider plans to buy eight more lines, while maintaining its net gearing below 0.5 times.
As at 30 April 2020, group net gearing stood at 0.23 times.
Being part of the essential services category in supporting the F&B sector, he said Daibochi continued its manufacturing operations and supply to customers, with standard operation procedures in place to ensure employee safety.
“We are seeing continual interest from our multinational clients for sustainable flexible packaging solutions, as they progressively implement sustainability targets across their global operations,” he said.
Daibochi posted a net profit of RM10.8 million on RM152.0 million revenue in third quarter ended April 30, 2020.
For the nine-month period, it posted RM463.5 million in revenue, while net profit stood at RM36.4 million.
Daibochi said there was no comparison to the previous corresponding period due to the change in financial year end from December 31 to July 31.
It declared an interim dividend of 2.0 sen for the year ending July 31, 2020, payable on July 17.
The dividend payout will involve RM6.5 million, representing 18.0 per cent of net profit for the nine months.