ANNUAL REPORT 2014
5
PRESIDENT’S
STATEMENT
Year 2014 had been a challenging yet fruitful year for the
Group as it extended its geographical reach to reduce
reliance on its domestic front. The Group completed
the acquisition of the coach and rail seating business,
McConnell Seats Australia, a well-known seating brand
in Australia and New Zealand. In Indonesia, a second
new manufacturing plant which commenced construction
in 2014 would be ready for the production of leaf springs
by end of 2015. On the domestic front, the Group
expanded its foothold into the northern region with the
purchase of a piece of land in Kulim for the setting up
of an interior and plastic plant to better serve an Original
Equipment Manufacturing (OEM) customer.
Development of new products and systems by
our research and development company further
strengthened our core engineering capabilities. The
Group continues to transform by extending its regional
reach and focus on state-of-the art technology in pursuit
of growth and sustainable performance.
Review of Financial Performance
In spite of a slower growth since the third quarter of
2014, Group revenue continued to exceed the RM1
billion milestone at RM1,228 million, a drop of 2.5% from
RM1,259 million recorded the previous year. The decline
was due to the lower off take from OEM customers as
evidenced by the drop in Total Industry Production
volume of 0.8% to reach a total of 596,418 vehicle
units compared to 601,407 in 2013 (Source : Malaysian
Automotive Association).
Price pressures from OEM customers coupled with
increase in raw material prices and labour costs, as well
as expenses incurred for intensified engineering and
research activities and for overseas investments as the
Group expanded its business outside Malaysia resulted
in the decline in the Group’s profit before tax from
RM182 million (restated) to RM145 million.
However, the Group’s balance sheet position remained
strong with shareholders’ funds at RM1,144 million, cash
and cash equivalents and other investments of RM358
million and net cash position of RM321 million as at
31 December 2014. The Group undertook a property
revaluation exercise to reflect the current market value
of its properties during the year resulting in an additional
RM170 million in net assets.
As a result of the stronger position, net assets per
share increased 16% to a healthy RM5.84 from RM5.05
(restated) in 2013.
The Suspension Division has grown to be a
reputable manufacturer of suspension products
globally accepted for quality and reliability.
The Division had consistently maintained stable
growth in revenue over the past three years despite
the challenging environment. Revenue grew 2% to
RM245.7 million compared to RM240.5 million in
2013. Profit before tax increased substantially from
RM11.5 million to RM21.7 million.
To stay competitive, upgrading aging equipment,
streamlining processes and enhancing testing
facilities are amongst many projects undertaken in
managing operating costs and improving quality.
Suspension Division, Malaysia
* McConnell Seats Australia office building.
