Bangkok--16 Feb--Master Mind Communications
POLYPLEX FORAYS INTO PET THICK FILMS WITH BOARD APPROVING AN INVESTMENT OF BT 2.3 BILLION ON THE BACK OF RECORD PROFITS
Polyplex (Thailand) Plc, one of the country’s leading packaging companies, said that its board of directors has approved the investment in a PET thick film line, a new product line that would help the firm broad base its product offerings and also diversify the risk of dependency on packaging segment.
“This is a move by the company to tap the new and fast growing segments, where competition is limited compared to the traditional packaging segment and margins are comparatively higher and more stable, which would benefit PTL in the long term,” Rohit Vashistha, Managing Director of PTL said.
PTL, which has been enjoying a robust growth in the industry in the last 6-9 months, thanks to the surge in prices of its products, yesterday reported a net profit for its third quarter operations which saw a surge of 452.9% year-on-year. The company reported a net profit of Baht 1,436.5 million in the quarter ended 31 December 2010 (the company’s year ends on March 31), which was a significant increase in net profit from the 259.81 million baht it has reported during the same period last year.
Sales revenue of the company has increased to Baht 3,186.4 million from Baht 1,803.5 million, an increase of Baht 1,382.9 million or 76.7%. Increase in revenues was mainly on account of significant increase in selling prices due to the favorable market situation, and also due to higher sales volumes.
PTL’s earnings for the three quarters ending December 2010 stood at 2.611 billion baht or an EPS of 3.26 baht against 691.31 million baht or EPS of 0.86 baht it had seen for the same period in 2009.
“We still think that the market would continue to be tight in the PET thin film industry and that the prices would continue to remain at healthy levels for another few quarters,” Mr. Vashistha said, although he also added that there were some challenges being faced in terms of the raw material prices being quite volatile and on the higher side in current quarter, besides expected capacity additions in Asia from 2011 onwards.
“The decision to invest in the new thick film line is a long-term repositioning strategy of the firm, a move to diversify its base from the competitive commodity segments in packaging and ensure wider product offering for better access to key markets such as Japan, South Korea and Taiwan,” he said. He further added that the company has invested significantly over the past 2-3 years in new products like Extrusion coated films and CPP films and with the expected commissioning of its silicon coated film line later this year, the proportion of value added products has been continuously increasing.
The new investment would help PTL tap into a whole array of industrial applications requiring thick PET film which would be the focus segments for the company’s new investment in the initial years. In the longer run, the company could move into higher end applications in electrical & electronics, which amongst others includes end uses such as LCD/ LED/ Touch screen panels and industrial uses such as Photovoltaic/ solar panels, which are witnessing very high growth rates in demand with limited capacity additions.
Commenting on the concerns about ban imposed by the Government of India on the usage of plastic films in packaging of foodstuffs, Mr. Vashistha clarified this is not actually a ban on packaging of all kinds of foodstuffs but only on a specific type of chewing tobacco and such other related products which are harmful to public health. He also added that the company is not impacted from the ban as it does not cater to the Indian market from its various operations both in Thailand and in Turkey. Further, he opined that in a large market such as India, with its robust and continuous growth, alternative usages for PET films are continuously being developed and should help absorb the shrinkage in demand caused by this ban.