Melamine spun off to Srithai subsidiary
Lower overhead costs for Korat Thai
SET-listed melamine maker Srithai Superware has spun off its melamine business as part of a strategy to focus on profit-making businesses this year and survive the impact of the coronavirus pandemic.
Sanan Angubolkul, the company’s chairman and president, said the board recently authorised Srithai to transfer its melamine business to Korat Thai Tech, a wholly owned subsidiary.
The business transfer will be completed by the end of July. Starting in August, Srithai will focus on developing and making plastics products. Korat Thai Tech will focus on melamine products.
By pursuing this strategy, Korat Thai Tech is hoped to have more flexible business management with lower overhead costs and generate higher profits from the profit-making melamine business.
Mr Sanan said the pandemic has delivered a heavy blow not just to service sectors like tourism, hotels and restaurants, but manufacturers as well.
The company reported first-quarter sales of 2.41 billion baht, a 20% drop from the same period last year.
The company managed to raise gross profit margin in the first quarter to 14.3% from 10.7% in the same period last year.
“Purchase orders of melamine products are likely to decline in the second quarter of this year, but we don’t have any plans to lay off workers,” Mr Sanan said.
The company recently ordered about 250 workers at a melamine factory in Nakhon Ratchasima province to temporarily stop working for three months.
A similar order starting on May 18 was applied for 15 days to 320 workers at the Bang Pu factory, which makes battery cases, and to 51 workers at the Suksawat plant, which makes food packaging and pails.
“With the strong baht and the economic slowdown, 2020 is likely to be the toughest time we have confronted,” Mr Sanan said. “The aftereffects of the pandemic are expected to linger until the end of this year, and it will take time for our sales to be back to the peak level seen in 2018.”
In a bid to maintain liquidity, the company will try to persuade trade receivables to repay debt. Sales promotions will also launch in June for four factories in Bangkok and upcountry to raise cash flow as much as possible.
“We don’t have a new investment domestic market this year, but we will continue our expansion in Vietnam, where the market still has growth potential,” Mr Sanan said.
Srithai reported total revenue of 8.93 billion baht last year, down 9%, with a net loss of 214.99 million baht against a net profit of 76.07 million baht in 2018.
The company forecasts sales to stay at around 7.5 billion baht this year.
SITHAI shares closed yesterday on the Stock Exchange of Thailand at 70 satang, unchanged, in trade worth 682,740 baht.
The after-effects of the pandemic are expected to linger until the end of this year.
SANAN ANGUBOLKUL
Chairman and president, Srithai Superware