BGC uses M&A to beef up glass value chain

Renewable energy helps spread risk

BG Container Glass (BGC), Thailand’s largest glass container packaging manufacturer by capacity, has allocated 3 billion baht to acquire three firms in the glass container packaging chain and another three renewable energy firms.

Silparat Watthanakasetr, the managing director, said BGC is conducting a feasibility study to be completed this year for the merger and acquisition (M&A) of three firms related to lids, labels and boxes for glass containers.

He said the company is also conducting feasibility studies for M&A of another three firms related to renewable energy generation. Discussions may be finalised within this year, but he declined to name the firms in any of the deals.

Mr Silparat said over the last two years BGC has completed capacity expansion at its glass furnace in Ratchaburi worth 2.6 billion baht, commencing operation last year, giving it a combined 11 units of glass furnaces and a capacity of 1 million tonnes per year.

“We decided to expand our business through M&As with related container businesses because we want to add value to our merchandise. We will not expand capacity for glass container production,” he said. “Although all units have been running at full capacity since early this year, we prefer outsourcing our manufacturers if we have additional purchase orders.”

In the coming year if BGC plans to expand capacity, existing factories may be reconfigured to enhance productivity or packaging redesigned to be lighter, which would require less glass, said Mr Silparat.

This year BGC plans to offer a wider range of services to let clients design and create packaging with a lid, label and box, accompanied by glass containers.

The company expects revenue this year to grow 5-10% to 13 billion baht, up from 11.3 billion last year.

To diversify purchase orders from clients over the past few years, BGC approached new clients that are not involved with shareholders Boon Rawd Group, Red Bull, Green Spot and Thai Namthip Group.

Exports are expected to make up 15% of sales this year, up from 11% last year.

He said in the coming years, many Western countries and Australia will ban single-use plastics and glass is seen as an attractive replacement.

BGC also wants to diversify into renewable energy after installing solar rooftops at its factory and warehouse 10 years ago, then acquiring Solar Power Management Thailand and another company in Vietnam last year with a combined capacity of 120 megawatts.

“If the talks go smoothly and the results match our needs, we want to expand our power generation capacity to 400MW in five years,” Mr Silparat said.

He said revenue from the power business is expected to make up 15% of total revenue by 2024, up from 5% last year.

Mr Silparat said BGC is allocating another 500 million baht this year for capital expenditures, including cost reduction by increasing the utilisation and efficiency rates with new technology and information systems.

‘‘ We want to expand power generation capacity to 400MW in five years. SILPARAT WATTHANAKASETR

Managing director, BGC