NIBONG TEBAL: Astino Bhdwill produce new building materials to capture new markets and boost its growth in the 2018 financial year, which is projected to be very challenging for the building materials and construction sectors.

Group executive chairman Ng Back Teng told StarBiz that the new products are necessary as there are fresh opportunities in local and overseas markets to tap into.

“Furthermore the global economy is expected to grow moderately in tandem with the ongoing slowdown in China, as well as the modest and uneven recovery in the advanced economies.

“The local steel industries are expected to face a squeeze in profit margins due to the weak domestic demand, high production costs and foreign currency volatility.

“To meet these challenges, it is necessary to produce new building materials.

“The plan is to manufacture a new range of roofing tiles and roof truss products soon, which we hope will raise our yearly output in 2018,” he said.

In the 2017 financial year ended July 31, the output was 114,000 tonnes, comprising building materials, roofing products, and agro-house multi systems.

On the new RM60mil plant now being constructed in Nibong Tebal, Ng said its completion in 2019 will boost production by 10% from 120,000 tonnes per annum currently.

“With the additional capacity, the company could plan to increase the contribution of its export sales to Asean countries.

“Astino’s exports to the Philippines, Indonesia and Vietnam generate about 10% of the group’s annual revenue,” he added.

According to Ng, the new plant will enhance the group’s competitive edge in the northern region, thus enabling it to capture new market share.

To date, the Astino group has six production facilities in Penang, Selangor, Melaka and Pahang.

Ng added that the central region is still the key market in the country.

“Renovation projects in the private sector are generating the most demand for building materials,” he said.

For the 2017 financial year ended July 31, Astino posted RM34.4mil in net profit on the back of a RM500mil turnover, compared with RM30.3mil and RM472.7mil respectively achieved in 2016.

Meanwhile, the Penang Master Builders and Building Materials Dealers Association’s (PMBBMDA) immediate past president Datuk Lim Kai Seng said about 40% to 50% of the RM200bil projected to be spent on construction jobs in the country would be for building materials.

“The amount is more or less the same as what was spent on building materials in 2016.

“From January to June 2017, about RM40bil worth of construction jobs were awarded in the country, of which about RM12bil were generated by residential projects, according to the latest Construction Industry Development Board (CIDB) report.

In Penang, Lim said the association was forecasting about RM8bil worth of jobs to be given out in 2017, of which around RM3bil to RM4bil would be spent on building materials, about the same as what was spent in 2016.

“The demand for building materials in Penang this year would be driven by residential and non-residential projects,” he added.

According to Transparency Market Research’s (TMR) report on the “Roofing Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2016-2024”, the global roofing market is projected to reach US$124.5bil by 2024 from US$71.23bil in 2015.

It will also expand at a compounded annual growth rate of 6.4% between 2016 and 2024.

The report said Asia-Pacific was the largest roofing market globally in 2015.

It said the growth of the region is primarily ascribed to the expansion of the construction industry due to the increase in residential, non-residential and commercial construction activities.

“In terms of volume, Asia-Pacific held more than a 40% share of the global roofing market in 2015.

“It is also projected to be the fastest-growing market for roofing during the forecast period.

“Demand for roofing in the region is estimated to be primarily driven by an increase in construction activities and urbanisation, thereby leading to the construction of medical centres, educational institutions, commercial buildings, office spaces, hotels, etc in China, India and Japan,” said the report.

TMR is a global market intelligence company which provides business information reports and services.