Thai TPI Polene expects sales growth in 2005

Thai TPI Polene expects sales growth in 2005
Published: 18 January 2005

Thai cement producer TPI Polene PCL expects its sales this year to grow by 10-15 per cent on year, thanks to growing domestic demand and also higher cement production, a company executive said Tuesday.  In 2004, the company posted sales of THB20.84 billion.  The company plans to start in February a new mortar production line, said Prasert Ittimakin, senior vice president for finance and accounting.  The new line will increase mortar production by 1.5Mt, up from the current 750,000tpa.  TPI Polene’s domestic cement sales this year is expected to be more than 7Mt, while exports will likely be around 1Mt, he added. 

TPI Polene Chief Executive Prachai Leophairatana said he expects total domestic cement consumption in 2005 to rise by 10% on year to around 35 million tons. 

Also, the continued rising prices of its core petrochemical product - low-density polyethylene, or LDPE - will help TPI Polene’s bottomline, said Prasert.  LDPE accounted for around 30% of the company’s total sales last year, while the rest came from cement sales. LDPE contributed to 15 per cent of its net profit, while cement made up for the rest.  The average gross margin for the two products is estimated to be around 30 per cent this year, Prasert said. 

The company is still in talks with creditors for a THB6 billion financing loan to resume construction of its new cement plant next year.  Plans for the plant, which would be the company’s fourth and would have a 3Mta capacity, have been stalled since the Asian financial crisis in 1997.  "If the creditors agree with our plan, production at the plant will start by end-2006," Prasert said.  He added that the company is also negotiating with creditors to bring down interest rate cost of its debt from the 4.97 per cent recorded last year. 

The company is open to debt refinancing as it wants to reduce its foreign exchange exposure and seek better loan conditions.  Currently, the company has $670m in debts, most of which are dollar-denominated.