Hong Kong-based plastics molder Karrie International Holdings Ltd. plans to develop its own brand of household products and diversify into medical manufacturing.
The moves are aimed at reversing falling sales and profit in its most recent fiscal year.
The company, which has 180 injection molding machines in factories in mainland China, said it was looking for new markets to turn around sales in its manufacturing unit that dropped 11 percent, to HK$2.38 billion (US$307.1 million).
It said business slowed in its core office equipment and server casings markets, but pointed to what it said were positive signs in its plastic molding business.
“Turnover from the industrial business illustrated a downward trend… however, the molding business witnessed relatively significant growth, as a result of the commencement of development of new models of Fullhouse World household products series, servers and POS machines,” it said, adding that that would “lay a firm foundation for the robust operations of the group’s industrial business in the next three years.”
The company said it expects the Fullhouse household products to become a main growth driver for its industrial business and help it transition from an industrial OEM to a brand-based creative enterprise. The household product line will also help utilize the extra capacity in Karrie's plastics manufacturing.
“The group will utilize spare capacities on plastic and molds to swiftly set up a team responsible for product design, project development, production and marketing of Fullhouse World household products,” it said.
Karrie is also "looking into the possibility of tapping into the areas of medical and healthcare equipment/instrument." It said in a June 27 financial report to the Hong Kong Stock Exchange that “a clean plastic injection production workshop will be set up to create an environment required for production of plastic containers and medical equipment.”
That would be on top of HK$106.4 million (US$13.7 million) in capital expenditures in the fiscal year ending March 31, including for a new metal components manufacturing facility in Guangdong province that is slated to open by March.
The company said profit in its manufacturing unit fell about 6 percent, to HK$99.8 million (US$12.9 million), but it said a concerted program of automation and cost cutting limited the damage. It said it was satisfied with the unit’s performance.
Karrie also disclosed that its new consumer and service businesses lost money. The company has opened wedding photography stores in Hong Kong and Fullhouse themed restaurants there and in mainland China and is trying to develop a hotel business.
“The performance of the consumer and services business segment was disappointing, with turnover aggregating HK$23,790,000 (US$3.07 million)… still failing to break-even and posting an operating loss of approximately HK$52,705,000 (US$6.8 million),” the company said.