MESSAGE TO SHAREHOLDERS
2022 has been a stimulating year amidst an increasingly volatile and uncertain global business environment. In the first half of 2022, we benefited from higher customer orders and demand from the gradual recovery of economies despite contending shipping delays due to supply chain disruptions. This was followed by effects of the Russia-Ukraine war which caused inflation to soar, reducing consumers’ spending power and dampening demand. The situation was further aggravated by rising interest rates as central banks tightened monetary policy to curb inflation. Nonetheless, we have stayed vigilant and agile in navigating the volatile business landscape and focused on growing the top line and enhancing efficiency in our operations.
THE YEAR IN REVIEW
We are pleased to report that despite the challenging operating environment, we delivered a commendable set of results in the financial year ended 31 December 2022 (“FY2022”). The Group’s net profit attributable to shareholders rose by 63.9% to S$3.5 million on the back of an 8.6% increase in revenue to S$106.3 million, boosted by the surge in apparel orders placed by customers in the United Kingdom (“UK”) and Canada. The geographical revenues for both UK and Canada grew by S$15.1 million and S$9.5 million respectively. In FY2022, the Group’s gross profit margin increased 1.3 percentage points from 13.9% in FY2021 to 15.2% thanks to cost savings arising from the improved economies of scale that resulted in labour costs and factory overhead savings.
KTMG’s strong performance is a testament to the Group’s sound business strategies and commitment to execution excellence. In the past year, we continued working towards upgrading our machineries and improving our manufacturing processes for maximum operational efficiency. One of the initiatives includes the implementation of lean manufacturing to eliminate waste and inefficiency in our apparel manufacturing process to reduce cycle time and increase productivity. We also invested in General Sewing Data (GSD) software, a computerised data management system that helps us to establish and quantify method-time-cost benchmarks for each step in our apparel manufacturing process. In addition, we relocated selected production lines from our factory in Malaysia to Cambodia during the year to streamline and consolidate our apparel manufacturing operations further.
We kept abreast with the latest fashion trends while constantly looking for ways to produce innovative and quality products to adapt to market demands and deliver better value to our customers. We believe our continued focus on product development and innovation held us in good stead as we drove our performance to stay ahead of the competition.
We are pleased to report that we continued to enjoy a steadily growing customer base in our key markets. Through referrals and recommendations from our existing customers and other industry contacts, we successfully secured more international retailers to add to our client base, strengthening the Group’s revenue during the year.
OUTLOOK AND GROWTH STRATEGY
Moving ahead, we anticipate the global economic environment to remain challenging, with inflation and interest rates likely to stay elevated, thus weakening consumer spending. Despite this outlook, we are cautiously optimistic and expect consumer demand to return to its pre-pandemic level in 2023. We will remain focused on sharpening our competitive edge by building capabilities, enhancing production efficiency, and developing new innovative products to position the Group to capture growth opportunities.
By leveraging our strong reputation, proven track record, and integrated capabilities, we plan to secure more renowned and recognised international apparel brands to strengthen our customer base. We will work ever closer with our network of customers to deepen our relationships while, at the same time, reaching out to new potential customers in our existing and new geographical markets to seek out new business opportunities.
In the year ahead, we plan to continue upgrading our textile manufacturing facility in Malaysia by investing in advanced equipment for fabric knitting, dyeing, finishing and storage to support the Group’s apparel manufacturing business and enhance upstream margins. We also intend to invest in additional new production lines for our apparel manufacturing facilities in Cambodia. These enhancements will allow us to further increase production capacity, optimise our operations, and grow our apparel manufacturing business.
Additionally, in November 2022, we set up a subsidiary in Vietnam to explore potential opportunities in the Vietnam market. We plan to explore collaboration with local apparel manufacturers given the competitive costs and sound supporting industries and infrastructure in Vietnam.
With rising cost pressures, we will remain diligent in exercising financial prudence and managing our operating costs efficiently. Looking forward, we expect the Group’s business to remain resilient and will continue to invest for growth in a disciplined manner to create greater value and deliver sustainable returns for our shareholders.
On behalf of our Board, we would like to extend our deepest appreciation to the management team and staff for their dedication and commitment to driving the Company forward. We would also like to thank our fellow Board members for their guidance and invaluable advice as we position the Group for the future.
Finally, we would also like to express our gratitude to all our shareholders, business partners, and customers for their continued support and faith in us. We look forward to a better 2023 and the opportunities the new year will bring.
Lim Siau Hing
Damien Lim Vhe Kai
Chief Executive Officer