By Emmanuel Samarathisa
ONE of the bright spots for businesses coping with the Covid-19 outbreak is the increasing demand for healthcare products. For some companies, such as agrochemicals specialist Ancom Bhd, that pivot comes naturally.
Ancom CEO Lee Cheun Wei (pic) told FocusM that the manufacturing of sanitisers was a “very natural addition” to the group’s portfolio.
This is because Ancom has a subsidiary in pest control and the hygiene business, Entopest Environmental Services Sdn Bhd, as well as a subsidiary, Fermpro Sdn Bhd, that manufactures ethanol.
“The sanitiser production is a result of our expertise in pest and hygiene management, coupled with our manufacturing capabilities,” he said.
Lee added that the overall margins for sanitisers were “pretty healthy, around 25% to as high as above 40% for some with economies of scale.”
He is also expecting that the demand for sanitisation products and services would continue to grow “as the world lives differently with higher awareness for cleanliness and sterilisation of spaces.”
But the core business of Ancom, which is agrochemicals, has remained intact, Lee said. He acknowledged that the overall business of the group has not been spared the effects of the Covid-19 pandemic which has wreaked havoc in the public health sector and the economy.
“Global demand is very much dampened at this juncture. Some of our key products such as agrochemicals are part of the food supply chain, hence production is still ongoing. So long as the world population continues to drive food demand, agrochemicals will have their place in the market,” he said.
Lee added that some of the group’s subsidiaries are experiencing “robust demand” such as Fermpro, which manufactures ethanol, an active ingredient in sanitisers, as well as Entopest, which provides space sanitation services.
“This (demand) helps mitigate some of the adverse effects due to Covid19,” he said.
Moving forward, Lee said the overall business strategy for Ancom remained. Among others, the group is seeking to reduce debt through possible monetisation of non-income generating assets as well as the restructuring of assets within the group.
These measures, according to Lee, would help Ancom improve cost efficiency and continue developing newer and niche products in the agrochemicals sector.
Ancom’s shares closed unchanged at 53 sen today. — April 2, 2020
