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PTT Plc Planning to Go Multinational: Petrochemicals, Oil, Gas Key Growth Areas

Posted on: Friday, 17 March 2006, 12:00 CST

By Bangkok Post, Thailand

Mar. 17--Revenues paid to the state from PTT Plc through taxes and dividends will total around 300 billion baht over the next five years, or an average of 60 billion a year compared with 50 billion baht currently, due to investment expansion throughout PTT and its subsidiaries, according to PTT president Prasert Bunsumpun.

He said PTT had earmarked 600 billion baht of investment capital over the next five years, as part of its strategy to become a multinational firm.

Key investments will be made in petrochemical manufacturing facilities, oil refinery capacity expansion, and gas separation plants.

Of the total 600-billion-baht investment budget, 240 billion baht would be directly invested in PTT. Mr Prasert said the petrochemical business was a crucial investment area as market sales contributed around 700 billion baht, or 12 percent of the entire group's market value of 5.7 trillion baht.

PTT and its subsidiaries' sales revenue last year rose 44 percent, to 929.72 billion baht. Earnings before interest, tax, depreciation, and amortisation (EBITDA) also grew by 44 percent to 114.05 billion baht, and net profit increased by 28 percent to 80.1 billion baht, or 28.63 baht per share.

About 30 percent of net profit will be paid to the shareholders as a dividend payment.

Anti-Thaksin Shinawatra and anti-privatisation groups have alleged that huge benefits in the form of capital gains and dividends from PTT stock had gone to a handful of major shareholders, who happen to be related to politicians of the Thai Rak Thai Party.

PTT insists it is still a state enterprise with 50 percent of its shares owned by the Finance Ministry and about 25 percent owned by state funds. The remaining shares are owned by investors and traded on the Stock Exchange of Thailand.

Mr Prasert said that in view of the current globalisation trend, corporate organisations that wanted to survive in business would have to make strategic changes and adopt new ways of thinking. Samsung, for example, was quickly overtaking Sony in many product segments due to successful attempts to strengthen its place in the market.

In another development, he said PTT would monitor global oil prices for another day before making a decision on whether local retail fuel prices should be further raised on Friday. The global oil price has continued to rise recently, with the crude price in Dubai reaching US$58 per barrel.

In Singapore, the refined gasoline price is as high as $70 per barrel, and diesel remains at $73.

Consequently, the profit margin made by local oil traders has dropped to only 40 satang per litre. An ideal margin would be 1.50 baht per litre.

Mr Prasert added that the company would make a final conclusion on listing its subsidiary Rayong Refinery Plc on the Stock Exchange of Thailand by the end of the week.

However, he believed the financial status of its subsidiary would not be affected if the listing plan was postponed.

It is expected that the initial public offering of shares will take place in May.

In a related development, the credit rating of debentures of PTT Exploration and Production Plc, a PTT subsidiary, has been upgraded to AAA, the highest rating attained by any company in Thailand, from AA+ assigned by Tris Rating.

Tris said the upgrade reflected the strengthened financial position of the company and its ability to achieve growth without weakening financial strength.

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Copyright (c) 2006, Bangkok Post, Thailand

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Source: Bangkok Post

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