TPI reports decline in profits

TPI reports decline in profits
Published: 03 March 2006

TPI Polene Plc projects consolidated sales growth of between 15% and 20% this year from 21.4 billion baht in 2005, according to senior vice-president Prasert Ittimekin.  Thailand’s third largest cement producer projects overall growth in cement consumption of 7.5% to 8% this year, assuming economic growth of 5%.  Delays in the government’s infrastructure megaproject programme would have only a minimal impact on cement sales, Mr Prasert told investors at a briefing at the Stock Exchange of Thailand yesterday.  He said profit last year of 1.52 billion baht was down considerably from the 2004 figure of 4.1 billion, which was inflated by a 1.3-billion-baht extraordinary gain from debt restructuring. 
Cement prices at the end of 2005 stood at just 1500 to 1600 baht per tonne, with heavy competition putting pressure on local prices.  But Mr Prasert said prices in January and February had risen by 70 baht per tonne, and expected continued modest gains throughout the year.  "We want to see an increase by 150 baht per tonne this year, although competition remains heavy," he said. 
Coal, a major raw material expense for TPIPL, should fall in price this year, which would boost overall margins. TPIPL projects gross margins to rise slightly in 2006 from the 27% booked last year.  Interest expenses are also expected to fall this year due to reductions in the company’s overall debt. Outstanding debt now stands at $603.55 million, with $72 million due this year and the rest in 2007.  "We are negotiating with a number of financial institutions to refinance our obligations to cut our interest expenses further," Mr Prasert said.  
Under TPIPL’s restructuring plan, the company is obliged to pay a penalty rate of 0.5% to 1% each time payments are extended under the restructuring plan. TPIPL, which has already extended payments twice, currently pays interest on its foreign obligations at three percentage points over Libor  with baht-denominated loans charged at 1.5 points over minimum lending rates.   He added that the company had suspended a US$150m expansion plan to boost cement production to 12Mtaq from a current 9Mta. (original report from Bangkok Post)