Daibochi allocates RM60m for expansion amid strong F&B, FMCG demand

by ASILA JALIL/ pic credit: daibochi.com

FLEXIBLE packaging solutions provider Daibochi Bhd is setting aside RM60 million to expand capacity as the Covid-19 pandemic continues to drive demand in the group’s key operating segments of food and beverages (F&B) and fast-moving consumer goods (FMCG).

The RM60 million expansion is in line with its long-term growth strategies and involves the purchase of 13 new lines for printing, lamination and bagging processes, which are expected to come on stream over the next six months.

“Daibochi’s resilient performance is buoyed largely by sustained orders for flexible packaging from the F&B and FMCG 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 to capture more growth opportunities in South-East Asia and Oceania,” Daibochi ED Low Jin Wei said in a statement yesterday.

The group posted a net profit of RM10.84 million in its third quarter ended April 30, 2020 (3Q20), supported by sustained orders for flexible packaging from the F&B and consumer goods sectors.

Quarterly revenue stood at RM151.98 million as the group was granted government approval to continue operations during Malaysia’s Movement Control Order in accordance with guidelines set by the authorities.

Comparison with the previous corresponding period was not provided as the group changed its financial year end from Dec 31 to July 31 effective April last year, the firm said in a Bursa Malaysia filing yesterday.

It declared an interim dividend of two sen, payable on July 17, 2020. The domestic market made up RM82.38 million or 54.2% of group revenue during 3Q20, while exports constituted RM69.6 million or 45.8%.

For the nine months ended April 30, the group registered a net profit of RM36.45 million, while revenue amounted to RM463.5 million.

The domestic market made up RM254.53 million or 54.91% of group revenue during the period, while exports amounted to RM208.97 million or 45.09% of total turnover.

The group is also continuing its joint research and development with Scientex Bhd to develop innovations for sustainable flexible packaging solutions, in line with the strategic direction of its clients who are also adopting sustainable solutions in their global supply chains.

“We are seeing continual interest from our multinational clients for sustainable flexible packaging solutions, as they progressively implement sustainability targets across their global operations,” Low said.

The group has also collaborated with its customers to roll out new sustainable solutions such as mono-material laminates, and is expecting more product commercialisation in the near term.

Daibochi’s clientele includes Nestle (M) Bhd, Mondelez International Inc, PepsiCo (M) Sdn Bhd and Mars Food (M) Sdn Bhd.

“Going forward, while economic headwinds may linger in the near term, our ongoing strategies would allow us to build a resilient market position, enabling us to capture growth opportunities of the long term trend in demand growth for sustainable flexible packaging solutions globally,” it added.