Latitud ... May10

Furniture maker Latitude Tree Bhd expects revenue from its Vietnam operations to grow by 10% to 20% this year, while its Malaysian business is expected to grow by 10%, on the back of slowing competition from China.

Chinese exports, especially to the United States, were slowing as China shifted its focus to catering for growing domestic demand.

Latitude Tree produces wooden bedroom, living and dining room sets for the export market. Some 90% of its products are sold in the US and the remaining 10% in Europe and the Middle East.

Its Vietnam and Malaysian operations would also benefit from negatives affecting Chinese furniture makers such as anti-dumping duties imposed on their bedroom sets in the US, import duties and rising labour costs.

In 2008, a lot of factories in China closed down which reduced capacity, but in May 2009 orders come back and worked to replenish its inventory. To date, orders are still good with around US$11 million (RM35.86 million) a month.

This was not pent-up demand returning, but merely a stock replenishing exercise.

For the first half ended Dec 31, 2009, Latitude Tree posted a cumulative net profit of RM22.57 million compared with RM6.08 million a year earlier. Its revenue rose 18.1% to RM262.03 million from RM221.9 million while earnings per share stood at 34.83 sen from 9.35 sen previously.

The company’s Vietnamese operations contributed 68.3% or RM192.45 million in total revenue, while Malaysia contributed 27.2% or RM76.63 million for the same six-month period. Its Thai operations contributed 4.6% or RM12.89 million in total revenue for the period.

Latitude Tree’s main customers in the US include JC Penney, Ashley Furniture, RiversEdge Furniture, Broyhill Furniture and Embassy International.