Performance
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The manufacturing segment, which also includes furniture making, trading and quarry, improved its results for the year ended 31 December 1998. It registered an increase in turnover from RM 167 million in 1997 to RM 170 million in 1998. In 1997, it incurred a total loss of RM 10 million, but for the year ended 31 December 1998, the improved performance resulted in a reduced loss of RM5 million.
Most of the manufacturing operations managed to 'improve their performance, with some operations turning into profitability. This was evident in the case of latex examination glove manufacturing, which had registered a profit of RM419,000 in 1998 compared with a loss of RM7,599,000 in 1997. The Group's Medium-Density Fibreboard (MDF) operation also turned around, registering a profit of RM5.5 million before exceptional items, compared with a loss of RM6 million before exceptional items in 1997. The processing of rubber wood, for sale and for components in furniture making, also showed better results in 1998. It managed to reduce its loss of RM7.3 million in 1997 to a loss of RM4.2 million in 1998.
Operations
The Group's MDF operations in Kulim, Kedah increased its production in 1998. This was the result of better planning, and also the successful eliminating of start-up bottlenecks. A total of 1 14,800 M3 of MDF boards were produced in 1998, compared with a production of 77,600 m3 in 1997. A new process to produce MDF printed boards was also introduced in the third quarter of 199& This process, which produced value added MDF products, was another milestone achieved by Guthrie MDF Sdn. Berhad.
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A furniture making operation was a new venture injected in the fourth quarter of 1998 into Guthrie Wood Products Sdn. Berhad, which is also based in Kulim, Kedah. Currently, the operation is producing baby cots and other related products for the export market. The marketing of furniture products is undertaken by Guthrie Furniture Sdn. Berhad.
Guthrie Industries Malaysia Sdn, Berhad (GIM) achieved a new milestone when it began the construction of the Group's palm oil mill in Sabah in 1998.This is the first palm oil mill to be built by GIM, which has always specialised in rubber factory construction in the past. GIM also built the second rubber factory for Muang Mai Guthrie Co. Ltd., in Surat Thani, Thailand.
1998 was a good year, as far as the latex examination gloves were concerned, Almost 90% of the total gloves produced were exported, and the high exchange rate of the US Dollar to the Ringgit worked in its favour. A total number of 5 12 million gloves were produced in 1998 compared with a total of 266 million gloves produced in 1997 and more powder free gloves were also produced in 1998.
Guthrie Dimensional Stones Sdn. Berhad commissioned its marble factory in Sungai Siput, Perak in the third quarter of 1998, and the processing of own marble blocks, as well as outside marble blocks, is now underway.
The reduction in profit from RM8 million in 1997 to RM4 million in 1998 registered by Guthrie Furniture Sdn. Berhad was the result of the reduced orders received from the Government sector.
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Prospects
The weakening of the Ringgit in 1998 resulted in MDF board prices weakening considerably in US Dollar terms. However, prices have started to increase in US Dollar terms, and this will improve the earnings of Guthrie MDF Sdn. Berhad (GMDF) in 1999. GMDF also plans to produce in 1999 more differentiated
products which are value added products, such as high-density fibreboards (HDF), high-moisturise resistance fibreboards (HMR) and single-sided and double-sided printed boards.
Guthrie Wood Products Sdn. Berhad (GWP) has taken a drastic step to improve its earnings in 1999. It has recently appointed an outside party to operate its sawmill, and the introduction of a few more furniture products lines will further boost its earnings capabilities.
Guthrie Industries Malaysia Sdn. Berhad (GIM) will concentrate its efforts in building palm oil mills, both for the Group as well as for outside parties. GIM has been awarded the contract to build a mill in Padang, Indonesia which will be built on a build, operate and transfer (BOT) concept. GIM also continues to support the Group's mechanisation drive in its plantations, as well as the improvement in the Group's mill processing through FFB pre-treatment plants, by producing the equipment and machineries required.
The Group's rubber glove factories are taking steps to produce 100% powderfree gloves by June 1999, and this move is made possible by the investment in new chlorination facilities.
The processing of outside marble blocks will further enhance the utilisation of the Group's marble factory. The first marble blocks from Iran have been imported, to be processed and cut to size for export.
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Guthrie Furniture Sdn. Berhad is intensifying its efforts to secure more orders from the private sector to lessen its dependence on the Government sector. The export market is also being explored aggressively. For the rest of the manufacturing operations, namely the quarry, brick manufacturing and polymer manufacturing operations, efforts will be concentrated on reducing costs and finding new markets. A new brick manufacturing plant is being built in Tanah Merah, Negeri Sembilan and once completed, the current factory in Batu Caves, Selangor will be closed down permanently. The new factory will eliminate the current storage problem faced in Batu Caves, as well as increase the production capacity.