CCM: Selling Medan Plant

Chemical Company of Malaysia Bhd (CCM) is keeping its options open for its facility in Medan, Indonesia. It has two options for the asset – either to sell it as a going concern or pare it down.

“There are two options. One is to sell it as a going concern, the other option is to sell the assets down. We were in discussions with a few parties, but at the same time, we are working in parallel. We are also going ahead with an asset sale, so whichever happens first,” said Group Managing Director Leonard Ariff Abdul Shatar, on the sidelines of the government-linked companies (GLC) graduation ceremony on Friday.
The facility has been shut down, with an impairment loss of RM36.8mil.
“The factory is still there, but we are now evaluating bringing some of the equipment from Medan back to some of our existing facilities here. And that would clear up the land and we would look for a buyer. But in the meantime, if any person comes in expressing interest, we are open for discussions,” said Leonard.
He said the company’s transformation process involved it writing off its investment in Medan last year. “We had some issues in the past and we are slowly trying to overcome that,” he said.
The company is still in the process of cleaning up a few things, and hopes to emerge stronger this year.
“We are on the right track. From the CCM point of view, the GLC transformation programme was very useful and we will continue with a lot of the practices that were stipulated in the programme,” he said, referring to the 10-year GLC Transformation Programme, which came to an end this year.
As to how it is managing with the depreciating ringgit, Leonard said the company had started hedging some of its capital purchases. He said CCM’s biggest foreign exchange exposure is in its fertiliser and pharmaceutical businesses. However, it has in the last three to four years carried out operational efficiency projects, which have “buffered” the impact.
On the flip side, a lot of CCM’s pharmaceutical devices as well as its fertilisers are exported in US dollars.
CCM reported a net profit of RM3.95mil for the first quarter ended March 31, 2015 compared with RM3.77mil in the same period previously. Revenue was lower at RM270.13mil during the quarter against RM273.77mil.

 /theSTAR 10-08-2015

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