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Baht/$ 33.56/59
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Cost cuts to help raise revenue this year
CHADAMAS CHINMANEEVONG
Thai Vegetable Oil Plc (TVO), a soybean oil producer, projects its revenue will increase by 30% to 23.99 billion baht this year by focusing on cost management and utilising production capacity. Sethasan Sethakarun, the company's executive director, said it had already proved that effective cost management and capacity utilisation were the right direction to grow revenues.
The company's first-quarter performance improved with a net profit of 584 million on revenue of 5.87 billion baht, compared to a profit of 159 million baht and revenue of 3.62 billion baht in the same period in 2007.
TVO is now investing 2.2 billion baht in its new plant, which is under construction and scheduled to operate within the second quarter of 2010. The new plant would bring its daily production capacity to 6,000 tonnes from 4,000 tonnes currently. Soybean meal is a byproduct of soyabeans.
''Our new production facility will help Thailand reduce imports of soybean meals, which are estimated around 1.8 million tonnes this year,'' said Mr Sethasan.
TVO supplies 28% of soybean meal consumed in the country with 11% produced at other mills and the majority of mean still imported.
Mr Sethasan said the company planned to allocate 50 million ordinary shares with a par value of one baht each in its public offering. It would file the issue with the Securities and Exchange Commission (SEC) and expects a conclusion within the next three months.
Existing shareholders would receive one warrant for every five shares they subscribe and the exercise price is 8.90 baht per shares when the warrants are converted into shares in the future. Funds raised from the capital increase would be used to invest in the new plant and working capital.
TVO would also ask the Commerce Ministry to increase the retail price of soybean oil by 8.50 baht for a one-litre bottle because raw material costs have increased from $540 to $600 per tonne.
''If the ministry won't approve our proposal, we will be severely hurt. We may expand other distribution channels to sell our products including direct sales and export. Currently, global soybean oil prices are higher than local prices by 5-6 baht per litre,'' he said.
He forecast that soybean meal prices in the global market would rise in the next two months because of less supply as some soybean plants were damaged from disasters during the last year.
The A-Ngoon brand of TVO holds a 57% market share in the local soybean oil market, followed by Cook at 15%, Morakot at 10% and others account for 10%.
TVO shares closed unchanged yesterday at 24.60 baht, in trade worth 35.9 million baht.
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