FIAMMA Holdings Bhd expects to return to profitability on the back of a targeted 15-18 per cent sales growth for financial year ending September 2004, from RM210.9 million sales registered last year.
Fiamma Sdn Bhd general manager (sales and marketing) Terence Lai said over 60 per cent of its total sales will be derived from the sales of electrical appliance brand Elba.
Fiamma posted a group net loss of RM5.7 million for the year ended September 30 2003, against a net profit of RM5.1 million in 2002.
The losses were attributed to operational losses incurred by the manufacturing and assembly subsidiaries, amounting to RM7.6 million; losses from impairment in value of plant and equipment totalling RM4.7 million; and, revaluation deficit on properties totalling RM3.4 million.
In the first quarter ended December 31 2003, Fiamma posted a net profit of RM669,000 on the back of RM46.82 million in revenue.
Apart from Elba, Fiamma also distributes electrical appliances under the brandnames Faber, MEC and Maytah.
Elba’s product range includes cooking, laundry (washing machines, dishwashers), audio visual, refrigerators, air-conditioners and small appliances (which include toasters, blenders and coffee makers).
Elba, which made over RM126 million in sales last year, expects growth in 2004 and 2005 to be spurred by the sale of refrigerators and small appliances.
Refrigerators contributed 25 per cent towards Elba’s sales last year, while small appliances contributed 20 per cent. Elba sells some 15,000 units of small appliances each month.
Lai said that the sales in the laundry and audio visual segment made up 18 per cent and 15 per cent of total Elba sales respectively.
“We also see a lot of room for growth for cooking appliances. It is a compulsory necessity,” he said. “Nowadays, the kitchen is like the lounge, people like to make their kitchen beautiful like they do their house.”
Lai expects growth in the refrigerator segment to come from its high-end models that cost between RM4,000 to RM10,000, aided in part by its accreditation as a Superbrands 2003/2004.
This year, Fiamma has allocated some RM4 million for advertisement and promotions of Elba, up from RM3.3 million budgeted last year.
On new product launches, he said Elba plans to introduce LCD (Liquid Crystal Display) television into the market next year, at a price that is 30 per cent less than current market price of between RM18,000 and RM20,000 a unit.
Lai feels that over the next few years, Malaysian consumers will be focused on the medium and high-end range, as they have become more affluent.
Customers will realise that paying a premium for the product will come with a longer warranty period.
“We will maintain our low-range products (for now) and continue to offer the high-end range. Once the demand for high-end products pick up, we will have a minimum level of low-end goods,” he added.
From emedia.com