Polyplex upbeat for the year despite profit drop

Foreign subsidiaries should lift revenue

PLOY CHITSOMBOON

Polyplex (Thailand) plc expects improved revenue for the second half despite a drop in net profit in the second quarter.

The company posted a second-quarter net profit of 31 million baht, an 84% drop from the same period last year. Consolidated revenue rose by 25.4% year-on-year to 1.068 billion baht.

General manager Manish Gupta said the drop in net profit was a result of a downturn of the business cycle in the petrochemical industry. Other reasons include soaring costs of materials such as purified terephthalate acid and monoethylene glycol, and a surplus of polyethylene terephthalate film (PET).

Negative factors pushed down the company's gross profit margin to 14.45% from 18.2% in the previous quarter.

Despite the drop in profits, the firm said it would continue a dividend pay-out policy of at least 40%.

Meanwhile, it sees a more promising outlook for the second half and in 2007, saying its subsidiaries in Turkey and the US should be able to generate better revenue and profitability.

"The situation will be better in the longer run, but it is hard to predict how revenue is going to turn out. The volume and profitability generated from the Turkey plant should help," Mr. Gupta said.

The factory in Turkey has already reached 90% of its capacity and began to contribute revenue during the first quarter.

Polyplex is planning a new project aimed at widening its product range and improving existing products with two new production lines. It will cost an estimated US$5 million per line.

Analysts said, however, the 2006 revenue target was a challenge due to a dramatic oversupply of PET film.

KElive Research said that on average, total PET production had increased by 7.61% in the past five years, while demand for PET film had grown by only 5.78%.

Polyplex makes and exports biaxially-oriented polyester for packaging and other industrial applications. It has PET-film plants in Uttaranchal, India, and Rayong province, operated by its wholly owned subsidiary Polyplex (Thailand) Plc (PTL).

Shares of PTL closed on Friday at 3.24 baht, up six satang, in trade worth 35.92 million baht.

August 21, 2006, Bangkok Post