KUALA LUMPUR (April 26): D&O Green Technologies Bhd, which mainly makes automotive light-emitting diodes (LEDs), is optimistic of at least 10% revenue growth this year and plans to build another facility in anticipation of “significant growth” over the next decade.

The third plant, spanning one million square feet, is expected to generate annual revenue of RM2.0 billion once it’s fully operational, D&O said in its annual report released on Friday. Construction is slated to begin in 2024 for completion in two years at a cost of RM200 million, it noted.

“We see good growth prospects in tandem with the rise in global car sales and the growing intensity of the number of LEDs in new car designs, driven by the pursuit of enhanced safety features, aesthetic appeal, and comfort. The outlook for the automotive LED industry is positive,” D&O said. "The management is optimistic of achieving double-digit revenue growth in 2024."

D&O reported in February a 79% increase in net profit to RM24.32 million for the fourth quarter of financial year 2023 (4QFY2023) while revenue surged 25% to RM309.97 million, propelled by higher global car sales.

Full-year revenue crossed RM1 billion for the first time in its history, inching up 3.4% year-on-year to RM1.02 billion, though net profit fell 41% to RM44.14 million. The company blamed a combination of lower gross profit and higher overall overhead expenses from the capacity expansion for the decline in profits.

The company had invested RM91.1 million in 2023 for floor space expansion, new equipment, and upgrading of equipment and renovations at its Plant 1 and Plant 2. The renovation for the Plant 2 production area was completed and is currently in the testing and commissioning phase.

Once Plant 2 is operational, both plants are expected to generate an annual revenue of RM2.0 billion to RM2.5 billion, depending on the production mix, D&O noted.

Nevertheless, D&O said it broke even with 65% plant utilisation rate, thanks to cost control, and added the company “is well-positioned to support the expected growth in customer demand in 2024”.