Date: March 19, 2024
After becoming one of Singapore’s largest reinforcing steel fabricators through an acquisition, BRC Asia plans to extend its reach to other markets. Its chief executive officer Seah Kiin Peng shares its strategy.
For Singapore-based steel supplier BRC Asia, buying its rival the Lee Metal Group in 2018 has been one of its most consequential moves since it was founded in 1938. In one fell swoop, the company became one of Singapore’s largest reinforcing steel fabricators.
Seah Kiin Peng, its chief executive officer, adds that the acquisition unlocked many economies of scale, from procurement and sales to credit control, logistics and production. “Beyond the anticipated synergies, there have been other, unanticipated upsides too, stemming from the fact that we became the biggest purchaser of steel in Singapore.”
It has been able to develop both a wholesale business, selling steel to other steel fabricators in Singapore, and an international trading business, using its relationships with mills to source steel for end-users outside of Singapore. Both are new growth avenues that will empower it to expand more quickly overseas.
“Together with the marketing and public relations work that we have done, I think there is a lot more awareness now of our brand, what it stands for, and that we are an old, proud and traditional brand. In fact, I think we are probably now as renowned in our industry as Xerox is in the printing space, where the name is used interchangeably with the sector and product.”
To get to this enviable position, however, it had to navigate some working culture differences between BRC Asia and Lee Metal Group after the acquisition, and survive the great disruption of the Covid-19 pandemic. Seah shares of the former: “Our two firms had different ways of managing people, so there were some adjustments.”
“We took the opportunity to learn from Lee Metal Group and retain some of their character. At the same time, BRC Asia has a more formula- and KPI-driven system for rewarding staff, so employees from Lee Metal Group had to get used to that too. It took a bit of time, but I think everyone is happier and at a better place now.”
Working together to survive Covid-19
The Covid-19 pandemic, on the other hand, was a challenge of a different order. Seah explains: “I think the word ‘unprecedented’ is overused, but that’s what it was. If you looked around, every nation dealt with Covid-19 differently, but Singapore may be the only one that totally shut down its construction sector, the biggest user of steel, apart from a few, very minor projects.”
With BRC Asia operating three dormitories, it had to scramble to isolate the facilities and protect their 600 residents from the coronavirus. “Even as we sent food, fruits and other resources in, we decided from day one of the lockdown that no external personnel, even management, would be allowed to set foot into the dorms to reduce the potential spread of the virus.”
Concurrently, it had to figure out how to tide over the construction shutdown. Seah says: “The experience really brought me back to my army days, when you had to mobilise and work together to carry out a mission in a situation that you had never been in before. The difference was, in this case, that there was no precedent that we could refer to for help.”
The firm’s human resources department maintained constant communications with the Ministry of Manpower to keep up with and implement the latest guidelines, while its salespeople reached out to clients to collect payments to strengthen its cash reserves.
“The pandemic was a huge test for us, but we pulled through because of our team. Particularly for our management team, after the acquisition it was still all the same leaders from BRC Asia and all old colleagues, so we knew how to get things done effectively.”
Seah believes that BRC Asia has become stronger after the pressure and struggles of the Covid-19 years. “They say crisis brings people together, and I think that’s very true of the pandemic. It brought about a new level of engagement among our staff and the people who work with and for us, and reinforced friendships and camaraderie at and across all levels.”
New paths into overseas markets
With the company putting the Covid-19 crisis behind it – its revenue and net profit increased by 17 per cent and 46.5 per cent respectively for the quarter ended 31 December 2023, compared to the quarter ended 31 December 2022 – Seah aims to continue its upward trajectory that was interrupted by the pandemic.
For example, it plans to use its new international trading business to ease its way into more overseas markets. “Our shareholders, stakeholders and the public at large can look forward to our growth through entrenching or extending our trading into stocking, and then eventually fabrication, in countries outside of Singapore, other than the places we are in right now.”
BRC Asia has factories in Singapore, Malaysia and China, sells steel to end-users across South-east Asia, and has trademarks for several products in countries ranging from Australia to Cambodia to Indonesia. Seah notes that using its international trading business as a wedge into new markets is necessary because of the nature of the construction sector.
“Construction is a very local industry in almost every country. Trading with companies in other countries, getting a better understanding of their supply chains and then going downstream from there will give us our best chance of moving effectively into those countries,” he elaborates.
While Singapore’s steel demand is robust due to its practice of intensifying land use through rebuilding, the volume pales in comparison to those of larger nations. “Despite having limited land for construction, we have maintained a steel demand of about two million tonnes for many years. In contrast, China’s construction steel demand is in the region of 500 million tonnes, for example.”
Seah concludes: “Almost any country we enter will have a much larger market than Singapore. The revenues from our trading business are already sizeable even though we are only doing very little trading compared to the big boys. The potential for us to scale outside of Singapore is massive, so we will seek appropriate opportunities for growth in more international markets.”
About BRC Asia
Incorporated in 1938, BRC Asia Limited (“BRC”) is a leading Pan-Asia prefabricated reinforcing steel solutions provider headquartered in Singapore and listed on the Singapore Stock Exchange. BRC offers a full suite of reinforcing steel products and services that include standard length rebar, cut and bend services, prefabrication services as well as standard and customised welded wire mesh for the building and construction industry.
The company’s website is https://www.brc.com.sg
First published on SGX website on 8 Mar 2024
About kopi-C: the Company brew
kopi-C is a regular column by SGX Research in collaboration with Beansprout (https://growbeansprout.com), a MAS-licensed investment advisory platform, that features C-level executives of leading companies listed on SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. Written by Feng Zengkun.
