GEORGE TOWN: SLP Resources Bhd is set to report robust double-digit growth for the financial year ended Dec 31, 2021 (FY21) on improved orders.

       The group had registered a net profit of RM13.8mil for the first nine months ended Sept 30, 2021 on the back of RM123.7mil in revenue.

       Note that SLP had posted net profit of RM16.3mil and revenue of RM147mil for FY20.

       Group managing director Kelvin Khaw told StarBiz that based on the nine-month results and customers’ orders and feedback, the group expects to see a 20% growth in its top- and bottomline.

       “Soaring resin prices and higher average selling prices account for the robust performance. Resin prices are now at US$1,300 (RM5,429) per tonne versus US$700 (RM2,923) per tonne in May 2020.

       “Current flexible packaging material pricing hovers around US$2,200 (RM9,188.30) per tonne compared with US$1,750 (RM7,308.88) per tonne a year ago. Our customers are absorbing the higher cost,” Khaw said.

       For the 2021 financial year, SLP shipped out about 14,000 tonnes of flexible packaging materials to Japan, Australia, New Zealand, and the Asean region.

       SLP Resources Kulim

       “The retail and food and beverage sectors in the region are opening up, driving the demand for shopping bags and food wrappers. Our flexible packaging products are primarily used in these industries.

       “Our key Japanese customers, Askul and Mitsubishi, are ordering for 2022.

       “The growth trend should continue into the first half of 2022.

       “Japan contributes an average of about 40% of our annual revenue. We expect the Japanese domestic market to grow this year,” he said.

       According to the Japan-based public broadcaster NHK, the Japanese government is considering raising its economic growth forecast for fiscal year 2022 to take into account the effects of its record US$490bil (RM2.05 trillion) stimulus package.

       “In a mid-year review in July, the government projected real gross domestic product (GDP) growth of about 2.2% for the fiscal year starting in April 2022.

       “With the spending package aimed at helping businesses and households weather the pain of the Covid-19 pandemic, it now estimates a tailwind of about 5.6% for real GDP from this fiscal year to next,” according to NHK.

       Khaw pointed out that the global prospects for flexible packaging materials looked good.

       “Flexible plastic, paper and foil packaging will continue to see a steady rise in demand across the next five years, even as the industry simultaneously reacts to the supply chain disruption of Covid-19 and the ongoing demand for greater sustainability in pack designs,” he said.

       According to the Ohio-based research house Smithers, worldwide consumption of flexible packaging would reach a projected 31.5 million tonnes in 2021, following a 5.5% drop in overall value in 2020, as several end-users dropped demand in response to the global pandemic.

       Smithers forecasts that the global consumption of flexible packaging materials will reach 37.5 million tonnes in 2026.

       “Consumer packaging applications remain the bright spot, led by food packaging, which represents s75% of consumption and has previously shown itself resilient in times of economic downturn.

       “Flexible plastics will remain the largest segment of the market and will see the fastest growth,” Smithers said.