KUALA LUMPUR, June 23 (Bernama) -- KNM Group Bhd has embarked on the manufacture of high-end products for the oil, gas and petrochemical industries, at its plant in Kuantan, Pahang, which is expected to contribute to group earnings next year.

The high-end products are currently only manufactured by its Berlin-based subsidiary Borsig GmbH which would contiue with its operations to cater for the European market.

Its Group Managing Director Lee Swee Eng said the manufacture of the products in Malaysia would not only cater for the local market but also place itself on the path to profitability and reposition the company in terms of competition.

'The competition in Asia for low and middle range products that we manufacture now is very stiff,' he said, adding that the company's financial performance suffered a setback last year.

Speaking after the company's annual general meeting, Lee said by producing high-end products locally, it enabled the company to benefit from the tax incentive granted by the government and focus on repositioning the company.

'The manufacturing process has begun in Malaysia and we are already marketing these products to our customers as it will be available six months down the line. We also also save on logistics and manufacturing cost,' Lee added.

Going forward, he said KNM would phase out low and middle range products gradually and involve itself in other businesses.

Speaking on the company's order book, he said KNM hoped the order book would improve this year given the signs of improvement which was emerging in the Middle East and Australia.

'In other non-conventional markets, like Canada, we are beginning to receive some orders.

'I don't think the performance this year would be extremely fantastic but we are hoping it would be better as we are inheriting last year's order book market. This year is a recovery year for KNM,' Lee explained.

KNM's current order backlog stood at RM2.1 billion which was enough to keep the company going for the next one-and-a-half years.