Global stationer sees potential in South American market as it focuses on Brazil, Peru, Chile and Ecuador.
The Star Online reports that stationery manufacturer Pelikan International Corp Bhd, parent company of industry company Prime Printing Solutions, is looking to strengthen its foothold and gain higher revenue in South America by penetrating the markets in Brazil, Peru, Chile and Ecuador, as Loo Hooi Keat, President and CEO of the company said that sales in Latin America have been growing between 10 percent and 15 percent annually.
Keat added that the company already has a strong presence in Mexico, Columbia and Argentina which contributed 12.3 percent to last year’s revenue, an increase from the 9.5 percent it contributed in the previous year. “Brazil and Argentina are under the same (trading) bloc, so being in Argentina allows us to move to Brazil, which is a big market,” Keat explained.
He went on to explain that “it only makes sense for us to set up entities in these market when we reach a certain critical volume, around $6 million (€4.6 million) to $10 million (€7.7 million)”; adding that the company’s expansion plan would not be too costly as it would collaborate with companies with distribution networks that would be able to sell its products into the new markets.
The company reportedly expects to spend a further RM10 million ($3.1 million/€2.4 million) to RM20 million ($6.2 million/€4.8 million) on restructuring on top of the RM80 million ($25.1 million/€19.2 million) it has already spent to “turn the business around”, which saw the company streamline its products and outsource to third-party manufacturers “if the product did not provide the economies of scale”.
Keat noted that the first quarter loss experienced by Pelikan International decreased to RM7.9 million ($2.5 million/€1.9 million) from the previous quarter’s RM58.8 million ($18.5 million/€14.1 million), partly caused by restructuring costs. He added that the company “expect[s] to break even this year and return to the black in 2014”.
The Recycler reported earlier this month that Pelikan International claimed it is “in no hurry” to get investment after reporting poor financial results during its restructuring period.