Ancom expects agrochemicals to drive earnings in 2020


ANCOM Bhd expects its performance for the financial year ending May 31, 2020, to be driven mostly by its agricultural and industrial chemicals division.

The diversified group is involved in various business divisions, namely agricultural and industrial chemicals, polymers, oil and gas, logistics, information technology and media.

Group CEO Lee Cheun Wei (picture) said the group’s wholly-owned unit, Ancom Crop Care Sdn Bhd (ACC), which makes agricultural chemicals, is its most profitable business unit, contributing 38% to total group revenue.

“In this region (South-East Asia), we are the only active ingredient (AI) producer for certain molecules in herbicides. Most other AI producers are from China and India.

“In Malaysia alone, we are the only synthetic molecule producer for some of the herbicides we have in the sugar cane industry,” he said at a media briefing in Kuala Lumpur yesterday.

ACC is the pioneer manufacturer of weed control AI for sugar cane, cotton, palm oil and timber plantations with products ranging from herbicide, insecticides, fungicides and timber preservatives.

The company recorded a net profit of RM34.9 million in the financial year ended May 31, 2019 (FY19), while Ancom’s earnings came in at RM10.33 million.

While ACC’s industrial chemical products are affected by the low price of the solvent and chemicals, the group remains optimistic of its survival in the long run, Lee added.

“Over the longer term, because we are involved in the food chain supply, the risks will always be mitigated and the demand will always be there.

“Last year, industrial chemicals did not contribute a lot, but prior to last year, it contributed quite similarly to crop care so it all depends on the industrial chemicals performances,” he said.

Even major industry players like Petronas Chemicals Group Bhd are “very much affected” by supply and demand, as well as product prices, he added.

ACC currently distributes pro-ducts to over 40 countries, including the US, Mexico, Jamaica, Honduras, Cuba, South Africa, Kenya, Nigeria and Japan, as well as to selective Asean countries through its global distribution networks.

Malaysia is ACC’s highest revenue contributor, accounting for 34% of the pie, while Brazil is its largest foreign contributor at 13%, followed by Australia with 8%.

ACC is also looking to grow its business by looking at new product solutions to be added to its portfolio.

The company plans to add another three to four AI in the next two years.

Herbicides will be manufactured in either one of its two plants located in Shah Alam and Klang in Selangor.

Lee said the group intends to expand one of the plants to between 60,000 sq ft and 70,000 sq ft, in order to house the new products.

The group has allocated a capital expenditure of RM20 million for the expansion of its product portfolio.