NTPM – Investors

The Managing Director's Outlook

January 2008

The Group revenue increased to a record of RM270.73 million compared to RM237.06 million in the preceding financial year. Profits attributable to shareholders, after minority interest, stood at RM32.19 million, 53.9% higher than the preceding financial year – this is a new record for the Group.

This improvement is mainly due to growth in both tissue and personal care sales as well as a successful implementation of various measures to increase and improve our production output and reduce production cost.

The Group marks a growth of 11.7% in tissue products and 36.6% in personal care for the financial year ended 30 April 2007. Tissue sales' growth is attributable to the increase in export sales of 14.6% when the Group introduced a new product, “MG Paper”, which caters to the export segment. The new product has received commendable response from its customers.

For sanitary napkins, strategic marketing campaigns included personal hygiene and educational talks conducted in schools nationwide. Further promotions at numerous hypermarkets also broadened consumer awareness and brand acceptance of our sanitary napkins – “INTIMATE” and “SENORA”.

Following the impressive back-to-back sales growth, the Group plans to shift the existing sanitary napkins manufacturing facilities to a new location in order to facilitate expansion of the Group’s personal care division. The Group has also contracted to purchase two additional production lines for sanitary napkins to complement the existing production lines. These are scheduled to be commissioned at the end of the year.

We believe that the relocation, expansion and implementation of the additional production lines will enable us to further improve on our product qualities and production efficiency to an optimal level.

Quality Management System

The Group continues to re-affirm its commitment to quality management system with NTPM implementing the Hazard Analysis and Critical Control Points “HACCP” systems to its table napkins and serviette segment during the financial year. This implementation ensures that potential hazards to foods safety are recognised, regulated, prevented, monitored and controlled. NTPM was HACCP certified by Moody International Certification on 26 June 2007.

NTPM intends to implement ISO140001:2004 Environmental Management System to its manufacturing environment at the beginning of the year.

Future Challenges

The Group is expected to perform better for the financial year ending 30 April 2008 with the expected increase in demand, nevertheless, the continuous increase in the price of raw materials and the weakening of United States and Singapore Dollars against Ringgit Malaysia may have an impact on the Group’s results for the said financial year.
Although many of these costs cannot be contained by the Group, where possible, the management will still continue to seek improvement to its production facilities and implement efficient methods to reduce production costs to counter and offset the expected higher operating cost.

As a further means to reduce production costs, the management is conducting research and development in the production of pulp fibre from local waste materials. Pulp fiber is the main raw material in the production of tissue paper, the success of this research should significantly help to reduce the cost of raw materials and thus lead to lower production cost.

As part of its strategy to further grow and strengthen its position in the industry, NTHB plans to venture into new areas of related businesses. At the moment, the management is undertaking research and development to salvage waste by-products from its tissue production, to improve production recovery and plans to undertake the production of recycled plastic pallets from waste and compressed paper board from the sludge produced during these tissue production processes.

The above projects are scheduled to commence at the end of the financial year ending 30 April 2008 and as such, are not expected to have any material impact on the earnings or any significant effect on the consolidated net assets of the Group for the said financial year.

Prevailing competition in the market remains keen. However, with its strong brands, quality products and extensive distribution networks, the Group is optimistic that it will be able to generate growth in both the domestic as well as the overseas markets to improve its earnings.