Salee May Be Forced to Cut Revenue Target

By Ploy Chitsomboon, Bangkok Post, Thailand

Mar. 31–The plastics producer Salee Industry projects revenue growth of 30 percent to 500 million baht for 2006, driven by expansion in the auto and electronics industries.

However, company executives warned that revenues could fall short of targets if political tensions continued and affected market growth.

Salee reported 2005 net profits of 29 million baht, down 34 percent from 2004.

Supoj Soontarinka, division manager for investor relations, said profit declines last year stemmed from higher logistics costs related to its new factory and higher power, interest and sales costs.

“For this year, if the situation drags on for over three months, we might probably have to cut our revenue target from the previous estimate of 30 percent growth. But for now, our company has not yet been affected [by the uncertainties],” he told investors at a briefing yesterday at the Stock Exchange of Thailand.

Mr Supoj said Salee projected exports to account for 12-15 percent of total revenues this year, with sales of 30 million to 40 million baht. Exports last year accounted for 5 percent of total revenues.

“We expect to see greater export exposure to the European and US markets. Domestic sales, as a proportion of total sales, will fall to 90 percent from 95 percent now,” he said.

First-quarter revenues were projected to come in higher than last year, Mr Supoj added, with the company now close to finalising several orders with European buyers.

Salee also plans to invest 20 million baht in six new molding and injection machines this year.

“We haven’t set an exact figure for new investment this year, as this will depend on our client order book. But new investment should range from 50 million to 100 million baht,” Mr Supoj said.

Gross profit margins this year are expected to be on par with the 33 percent booked last year, with better cost controls and more stability in raw-material costs potentially helping the bottom line.

Shares of Salee closed yesterday on the SET at 2.70 baht, unchanged, in trade worth 224,000 baht.

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