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Sunningdale challenged by rising Chinese labor costs

By: Gurdip Singh

March 2, 2012

SINGAPORE (March 2, 1:15 p.m. ET) — Sunningdale Tech Ltd. recorded a net loss of S$11.42m (US$9.13 million) last year, citing challenges of managing production costs while bearing price pressure from customers.

Overall 2011 was a challenging year for the Singapore-based injection molder and toolmaker, with tremendous pressure on margins from price pressure from customers and rising labor costs in China.

Sales, thanks to gains from the Healthcare and Mold Fabrication businesses, increased 5.8 percent to S$426.11 million (US$340.61 million). The company had a net profit of S$13.8 million (US$11 million) a year ago.

Sunningdale Tech also took in foreign exchange losses from the weakening of U.S. dollar, Hong Kong dollar and euro against operating costs denominated primarily in Singapore dollars, Malaysia ringgit and Chinese renminbi.

The Automotive business in 2011 was flat. “While the group remains a leader in bezels, we are also trying to expand horizontally into other automotive plastic parts, penetrate into new customers and seek opportunities in emerging markets,” the company said.

“We have consolidated our automotive parts manufacturing into the Johor plant [in Malaysia] so as to improve productivity and efficiency, while scaling down the Bintan plant [on an Indonesian island],” the company added in a filing with the Singapore Exchange.

Sales for the Consumer/IT business in 2011 also remained flat as one major customer changed supply strategy. But this was compensated by orders from new customers which would start mass production in the second half of this year.

Healthcare business expanded its customer base and secured new programs that will start mass production in the second half of this year.

The tooling facilities were extremely busy with strong orders last year with the momentum expected to carry into this year.

“We continue to add capabilities to address market needs across the regions,” the company said.

However, the uncertain economic outlook would make 2012 challenging, Sunningdale Tech cautioned.