PTG sets up cost-cutting price cap protection
SET-listed fuel retailer PTG Energy Plc has announced a cost-cutting programme in a bid to lessen the damage from price caps imposed by policymakers.
Thailand’s fourth-largest fuel retailer has signalled lower expected margins, and will revise investment and expansion plans to address this.
President and chief executive Pitak Ratchakitprakarn said diesel prices are likely to exceed 30 baht per litre, but this fuel type is generally capped at 30 baht by officials, resulting in lower margins for retailers.
PTG has also revised its 2018 revenue growth forecast down to 18% from 25% as a result of the price cap.
The expansion of petrol stations was also revised down to 1,900 locations by 2018 from 2,000 expected earlier.
PTG will focus on expanding in Bangkok and surrounding provinces that have higher traffic density than other areas, even though PTG is competitive in the provincial diesel segment.
PTG’s debentures issuing plan, worth almost 1 billion baht, will soon be scraped because of this leaning programme.
“PTG’s investment must gain higher margins and more efficient revenue generation,” Mr Pitak said.
He said the budget for the fuel retail business will be reappropriated to non-oil units for higher margins.
As of June, PTG had 1,803 petrol stations nationwide.
PTG also reported the revenue in the first half stood at 51.8 billion baht, up by 22% from the same period last year and a net profit for the period rose slightly 0.2% to 447 million baht.
The fuel retail business still made up 97% of total revenue, while just 3% was from non-oil businesses such as convenience stores, car care, and food and drink.
But net profit from the non-oil segment represented 10% of the total during January to June, up from 6% last year.
“This means the non-oil segment is crucial for PTG, with a gross margin around 15-20%,” Mr Pitak said.
He said PTG has also revised up the expansion of its non-oil business, raising Punthai Coffee from 165 to 185 shops, Max Mart from 140 to 170 shops and Autobacs from 7 to 10 shops in 2018.
PTG shares closed yesterday on the Stock Exchange of Thailand at 12.40 baht, down 40 satang, in trade worth 249 million baht.