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Malaysian leather upholstery supplier Pecca Group is to finalise seat cover sales agreements with local airlines and says it aims to expand its monthly car seat production capacity to 17,000 seats by April 2018.
Michael Tan, CEO, Pecca Leather, told local media the Company aims to boost its margins in the aircraft seat cover segment, which is roughly 50% higher than in the car segment. The supplier is currently in talks with local carriers, and there is a focus on technical explanations. "We are in the final stage of discussion”, he said.
In 2016, through its Pecca Leather Aviation Services division, the Group secured a specific leather upholstery licence for the aviation industry from the Department of Civil Aviation. The division is 60% owned by Pecca and the remaining 40% is held by partner Wohlstand Jet Solution.
According to Hong Leong Investment Bank, Malaysia-based airlines hold a total fleet of 362 aircrafts, representing an estimated 68,000 seat capacity. Budget carrier AirAsia is said to be adding another 600 aircraft in the next ten years, while Malaysia Airlines signed a deal in September for 16 planes.
In the automotive segment, Pecca aims to maintain around 12% pre-tax profit margin in the current financial year driven by new car launches, Tan told local media. Perodua, a unit of Malaysian industrial conglomerate UMW Holdings, currently is the company's main client. The car manufacturer is said to be targeting an average monthly sale of 6,000 units for its new mass-market Myvi car model in the first three months of its launch.
As reported by ILM, the market share for Malaysian cars has showed a recent upward trend, increasing from 46.7% in 2014 to 48.8% in 2017. Pecca Group, is expected to benefit from the increasing proportion of cars equipped with leather upholstery, especially in the A and B segments as more entry-level segment cars are expected to adopt leather programmes as their basic package.
Up to now, Pecca had six production lines for a capacity output of 12,000 seats each month. The Company says it has recently invested to expand production capacity to 17,000 seats per month by end of March 2018.
For the fiscal year ended June 30, 2017, Pecca Group's net profit stood at US$3.52 million (+1%), attributes to a better sales mix. However, revenue dropped 3.3% due to lower sales to key customers.
Source: Asia Nikkei