November 18, 2016
Tata Steel Thailand shows a sign of bright future in FY17
Tata Steel Thailand confidents that total sale volume will grow by 10 percent to 1.25 million tonnes as planned due to robust performance in the first half of the year and high domestic demand. The company had an outstanding performance on rebar, and value added products market and effective control on cost. However, wire rod sale performance still affected by the overwhelming Chinese products.
Overall Thai Economy
The Thai economy in the second quarter of the calendar year 2016 expanded by 3.5 percent, higher than 3.2 percent growth in the previous quarter. Sequentially, GDP grew at a 0.8 percent q-o-q, which is the average over the past 8 quarters.
The expenditure side was supported by acceleration in private consumption. Export of services and public investment also grew favourably. Meanwhile, exports of goods contracted due to the economic deceleration in key trading partners.
Moreover, there are still downside risks to growth in the second half of the year, in particular stemming from weak global growth outlook, sluggish recovery of private investment and constraints on private consumption such as high household debt and weak wage growth.
Tata Steel Thailand performance in Q2 FY17
TSTH delivery crossed 100 (‘000 tonnes) for consecutive 5 months, with the total sales volume at 314(‘000 tonnes) for second quarter FY17. The Net sales were at 4,623 Million Baht, grew from Qtr1 FY17 and second quarter FY16 by 1 percent and 10 percent respectively. The reasons for the positive performance were mainly due to the improvement in Rebar market especially in regional area and effective control on cost though the decline in selling price as long products prices globally continued to fall through most of September due to sluggish demand and ongoing import competition.
In the first half of the fiscal year (April to September 2016), The Company’s net sales was 9,219 Million Baht from the sales volume of 615 (‘000 tonnes) (7 percent higher when compared to first half performance in the last year).
The profit before tax in second quarter was at 255 Million Baht dropped from Qtr1 by 35 percent due to the declining prices globally. However, the performance was better than the same period of last year because the better in sales volume by 14 percent.
The EBITDA and PAT at 394 MB (increased by 58 percent when compared to the same period of last year) and 192 MB (increased by 300 percent when compared to the same period last year) respectively.
During the quarter the company also repaid the last instalment of term loan of 100 MB.
Rajiv Mangal, president and CEO, Tata Steel Thailand, stated that the outstanding performance in second quarter and the first half of the year caused by the dedications of all employees and effective cost control which is the Company’s key strategy to mitigate damages from Chinese wire rods. In addition, the Ministry of Commerce is planning to revise anti-dumping duties on High Carbon Wire Rod and Low Carbon Wire Rod to help the domestic steel makers recently.
Domestic Steel Market is still the company priority as Thai Government constantly invests in infrastructure projects while the export market will be mainly focus in neighbour countries and India.
Tata Steel Thailand held a quarterly press conference at headquarter on 17th November 2016. 23 Locals and multinational news agencies such as Bloomberg, Bangkok Post, Nation TV and Spring News TV attended the event.