KUALA LUMPUR: Automotive leather upholstery maker Pecca Group Bhd (PGB) delivered a positive first-quarter net profit in the July-September 2022 period, catapulted by its original equipment manufacturer (OEM) upholstery car seat covers segment, where sales surged by almost four-folds.
PGB, which also saw a double-digit net profit margin of 15.2 per cent in the first quarter (Q1) of the financial year 2023 (FY23), expects its growth momentum to continue in upcoming quarters.
With its major automotive clients, including Perodua, Proton, Nissan, Toyota, Peugeot, and Volkswagen, seeing robust car sale orders, Pecca will remain a key beneficiary of the strong demand.
In Q1 FY23, the company's net profit surged by over 16 times to RM8.35 million, compared to RM503,000 in the previous quarter.
Revenue also rose by 140.7 per cent year-on-year (YoY) to RM54.86 million in Q1.
The increase in revenue and profits were mainly contributed by higher sales volume in the automotive segment compared to a shortened operating period in the same quarter last year due to Movement Control Order 3.0.
The OEM upholstery car seat covers segment, which contributed about 84 per cent of the total revenue for car seat covers, saw its revenue grow to RM37.3 million in Q1 FY23 as compared to RM9.35 million a year earlier.
In terms of geographical markets, PGB's Malaysian market recorded major growth after its sales more than doubled to RM52.54 million, contributing almost 96 per cent of the company's overall revenue.
Chief executive officer Foo Ken Nee despite concerns of an economic slowdown, the company has continued to deliver a positive performance in the July-September 2022 period.
"Moving forward, PGB will continue to build on its '4 Pillars' strategy for more sustainable business growth," he said in a statement.
Foo explained that under Pillar 1, or the OEM business, PGB aims to capture additional orders for new models from existing customers.
"We will also expand OEM sales by focusing on the localisation of luxury brands through our partnership with the Malaysia Automotive Robotics and IoT Institute (MARii)," he said.
Under Pillar 2, or the Replacement and Maintenance (REM) segment, PGB intends to expand its overseas presence into the US, Australia, New Zealand, the Middle East, Singapore, and Europe. As for local expansion, the company is looking at setting up retail outlets.
As for the Aviation segment (Pillar 3), the company is targeting to provide upholstery and refurbishment parts for domestic and overseas registered commercial aircraft.
PGB is currently working on obtaining certification from the European Aviation Safety Agency (EASA) for these services, and the first half of FY23 should complete this process.
Finally, under Pillar 4, PGB is exploring new business opportunities, including in the Electric Vehicle (EV) space. Pillar 4 will be key in elevating the company into the next growth stage.
As part of the Pillar 4 initiatives, PGB is working towards transforming itself into a Tier-1 player that manufactures the entire seat rather than just the cover.
It is also expanding its production capacity to about 40,000 seats per month by the end of 2023, as compared to 20,000 to 22,000 seats currently, upon completion of its second manufacturing facility in Serendah.
On 31 October 2022, PGB will be making its physical debut in Indonesia, one of Southeast Asia's biggest automotive markets.
The company is acquiring an 80 per cent stake in PT Gemilang Maju Kencana, a company associated with Indonesia's MPI Group of Companies.
This acquisition would further boost PGB's future sales and diversify its operational markets.