Stronger-ringgit winners

Monday April 25, 2011
By DAVID TAN
davidtan@thestar.com.my


Consumer goods retailers, manufacturers are benefiting from the impact

GEORGE TOWN: The strong ringgit has positive impact on local consumer products retailers and brand-name manufacturers' earnings and sales both directly and indirectly.

Pensonic managing director Dixon Chew told StarBiz that a strong ringgit meant that the cost of importing raw materials was reduced, which helped offset the rising price of raw materials.

“Thus, we are able to manufacture more cost effectively and at the same time maintain the competitive pricing of our products without adversely affecting our margins.

Chew said this could be one of the reasons why its electronic and electrical kitchen appliances' sales continued to be strong after the Chinese New Year.

Star Electronics managing director Joseph Hon said the company's margins had improved due to the promotions and incentives given by the manufacturers of consumer electronic and electrical products.


“Since they are now able to lower their production cost due to stronger ringgit, we also have been getting more attractive incentives and promotions which translate into improved margins. For the first three months of this year, our net profit improved by about 15% compared with same corresponding period a year ago.

Hon said the company would establish three more outlets in the northern region to strengthen its market share in the second half of 2011, which would increase the number of outlets in the north to 22 from 19 at present.

The recently released Business Monitor International Malaysia Retail Report forecasts that total retail sales will grow from RM168.72bil (US$47.90bil) in 2011 to RM284bil (US$80.63bil) by 2015. In 2010, the total retail sales in Malaysia was RM153.76bil.

Courts MalaysiaSdn Bhd country director Chris Yong said the company planned to spend about RM11mil this year on store expansion and refurbishment.

The Germany-based GFK report had forecast a 7% growth for the Malaysia retail segment this year, but Courts anticipated a much faster rate.

OCBC Bank (Malaysia) Bhd emerging business head Wong Chee Seng said for the first quarter of 2011, the bank achieved a high double-digit percentage growth in small and medium enterprises (SMEs) loans against the previous corresponding period.

“Retail businesses are more likely to be affected by domestic market developmentssuch as the gradual uplifting ofgovernment subsidies onoil pricesand other commodities, and costlier financing due torising interest ratesduring the course of 2011,” he said.

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