Lower demand, higher cost concerns for Scientex

PETALING JAYA: Scientex Bhd expects the global packaging market to continue facing headwinds, highlighted by soft demand and elevated costs that could impact operational costs.

However, Scientex chairman and director Tan Sri Mohd Sheriff Mohd Kassim said the group’s packaging division views the situation as an opportunity to build resilience through innovation, efficiency and sustainability

“Leveraging our extensive innovation capabilities and close working relationships with our customers, we are focusing on creating value-added, sustainable packaging solutions that cater to shifting consumer preferences, while improving operational efficiency and cost management.

“Our renewable energy initiatives will also help reduce energy costs and embed sustainability into our long-term strategy,” he said in the company’s annual report.

Scientex’s businesses are in plastic packaging manufacturing and property development.

Looking ahead, Mohd Sheriff said the outlook for packaging demand remains positive, adding that the group remains confident in the long-term prospects of this business.

“Similarly, cost pressures persist in Malaysia’s property sector due to the rise in material and construction costs.

“While this puts pressure on developers to raise prices to offset these rising costs, our property division has refined its operational strategies to manage costs, ensuring our homes remain as affordable as possible.”

To this end, Mohd Sheriff said demand for affordable homes remains robust, supported by improving economic conditions and government incentives aimed at increasing home ownership for the middle-to-lower income population.

“Looking ahead, while we anticipate strong potential across our developments nationwide, we see particular promise in our traditional stronghold of Johor, where projects like the Rapid Transit System link to Singapore and the proposed Johor-Singapore Special Economic Zone are expected to drive sustained long-term demand.”

Separately, Mohd Sheriff said investments made by Scientex into expansion and infrastructure, such as the acquisition of Scientex Packaging (Kajang) Sdn Bhd and the commissioning of our state-of-the-art Robotic Stretch Film Plant in Shah Alam, continue to support and secure its position in the packaging industry.

This, he said, will enable the group to expand its capabilities and broaden the company’s offerings in high-demand segments.

“Looking ahead, we remain committed to improving the sustainability of our packaging solutions, leveraging our internal synergies and competences to deliver innovative, high-quality products that meet both established and emerging market demand.”

On the property front, Mohd Sheriff said Scientex’s proactive land acquisition efforts have been critical in supporting the completion of a growing number of affordable homes each year.

“In the financial year 2024 (FY24), we completed 6,017 new affordable homes, marking a 62.5% increase over the previous year’s output.

“Our land-banking efforts remain vigorous and we have expanded our acquisition team to identify and secure suitable land to support our long-term ambitions.”

In FY24, Mohd Sheriff said Scientex acquired 842 acres of land in Johor and Selangor, increasing the group’s total land bank to 7,299 acres as of July 31, 2024.

“With an additional 2,978 acres of strategic land acquisitions in progress, we are set to exceed 10,000 acres by the next financial year. This positions us well to achieve our target of completing 50,000 affordable homes by 2028 and we will continue to build upon our ‘Cross Border Development Strategy’ to strengthen our presence.”