Nippon Paint Malaysia Sdn Bhd expects slow growth for the Malaysian construction sector in 2023 as labour supply issues and increased cost of operations stemming from the effects of the Covid-19 pandemic and global economic uncertainty continue to affect profitability.
According to the World Bank, unless supply disruptions and labour market pressures subside, economic pressure, especially rising inflation and interest rates globally, is unavoidable, and is feared to lead to a global economic slowdown.
On that note, Kenanga Today said the tightened financial conditions, global economic slowdown and rising cost of living may exert downward pressure on sales activity in the next few months.
Despite these challenges, Nippon Paint Malaysia continues to fortify its position as the leading brand for coating and construction through its Total Coating and Constructions Solutions (TCCS) initiative and foresees that the construction and property industry will be mainly focused on maintenance while there will be less private infrastructure development to spur earnings.
“As it is imperative for companies to adapt, we suggest market players consider all options for a smooth-sailing year. We must always be on our toes and be alert to changes in consumer patterns,” says Yaw Seng Heng, group managing director of Nippon Paint Malaysia.
In line with that, Nippon Paint has set a target to increase its market share in the business-to-consumer (B2C) and business-to-business (B2B) segments to 46% and 42% respectively, despite the ongoing labour shortage, delayed real estate development and significant price hikes in raw materials.
“While there might be challenges, we foresee opportunities in providing services to people’s housing and ongoing infrastructure works by the government. The focus shifted to services due to the supply chain issues that we have been dealing with last year and the expected economic downturn this year.
“Meanwhile, for the B2B market, we aim to widen our footprint in providing refurbishment solutions for residential, industrial and commercial use, as this is one of the ways to increase our revenue. Regardless of the market outlook, building refurbishment will not be affected as sinking funds will be collected by joint management bodies and management committees for future expenditure such as large-scale maintenance of buildings,” Yaw adds.
The Department of Statistics Malaysia (DOSM) says the value of construction work done in the third quarter of 2022 (3Q2022) surged 23.2% compared to the previous corresponding quarter’s RM30.5 billion. The expansion was driven by the non-residential building (37.7%), special trades (32.2%), residential buildings (17.8%) and civil engineering (14.6%) subsectors.
Nevertheless, with TCCS, Nippon Paint is poised to help the workmanship of newly built or refurbishment projects while giving homeowners and developers the assurance of a high-quality finishing as it is a one-stop solution that will lead to time and cost saving, as well as effective manpower utilisation for better productivity.
Concurrently, as Nippon Paint is expanding its product offerings through Selleys, a brand that has pioneered the home improvement category for over 80 years. It foresees that the DIY home improvement segment will be expanded due to increased efforts in homeowner education as well as rising cost of professional work.
The DIY segment under its Selleys arm contributed 1% to the company’s overall revenue in 2021 and 2022 but, with the rising interest in the arena, Nippon Paint aims to increase this to 4% in 2023.
“The DIY segment has grown tremendously in line with rising costs as well as the flexibility and personal satisfaction of fixing and decorating our own home. Besides serving the market segment, we hope that the DIY product range can widen its market footprint in Malaysia,” says Yaw.
For more information about Nippon Paint and TCCS, please visit www.professional.nipponpaint.com.my.