Bangkok--15 Jun--TRIS Rating TRIS Rating Co., Ltd. has assigned the company rating of “A+” with “stable” outlook to Berli Jucker PLC (BJC). The rating reflects BJC’s solid market positions in key operating segments with a portfolio of strong brand names, cost competitiveness due to economies of scale in glass container and tissue paper manufacturing, and an experienced and capable management team. The rating also takes into consideration the company’s diversified business portfolio and strong relationships with suppliers and clients. These factors are partially offset by the highly competitive operating environment, especially in the consumer products sector, exposure to certain commodity price fluctuations, and regulatory concerns in the alcoholic beverage consumption, which might impact the sales of BJC’s glass bottles. The “stable” outlook reflects the expectations that BJC will continue to maintain its competitive strengths through economies of scale, product innovation, and ability to secure substantial orders of glass bottles from Thai Beverage PLC, one of the companies owned by the Sirivadhanabhakdi family. BJC is also expected to sustain its profit margins in the intermediate term and expand conservatively. TRIS Rating reported that BJC has been in business in Thailand since being established primarily as a trading company more than 100 years ago. In 2001, TCC Holding Co., Ltd. (TCC), an investment holding company whose businesses range from brewing to real estate, took control of BJC from First Pacific Co., Ltd., a Hong Kong-based conglomerate. During 2002-2003, BJC underwent a major organizational restructuring. Today, its portfolio is divided into six segments: packaging, consumer products, technical and industrial products, construction and engineering, logistics, and information technology. In 2006, BJC’s total sales were Bt15,173 million, growing by an average of 6% per annum since 2002. Main sources of revenues are from the packaging segment, representing 34% of total sales, with consumer products at 39%, and technical and industrial products at 23%. TRIS Rating said, one of BJC’s major strengths is its leading position in the glass bottle industry, a position it has held for decades. BJC ranks one of the top two largest glass bottle producers in Thailand, granting it with benefits from economies of scale. The customer base of this industry is solid and diverse. About 40% of BJC’s glass bottles were sold to TCC Group; the rest is used by a wide array of segments, such as food, energy drinks, and soft drinks. Most of the major clients have been with the company for more than 10 years. BJC’s strong business profile is also supported by its strong brand equity in tissue and snack food products. The company manufactures and markets toilet and facial tissue products under various own brand names, including Cellox, Dion, Zilk, Belle, Melona, and Yori. BJC is one of the largest tissue producers in Thailand. In the snack market, the company is the second-largest manufacturer. Its snack brands include Tasto, Party, Campus, and Dozo. The company’s key competitive edge in the technical and industrial product segment is its solid connections with suppliers and customers. BJC’s financial profile is strong with stable cash flows. Aggressive capacity additions in glass and tissue production during 2004-2005 resulted in a moderate level of leverage. Cash flow protection, as measured by the ratio of funds from operations as a percentage of total debt, ranged between 66%-73% during the last three years, which is considered strong. The ratio of operating income before interest, taxes, depreciation and amortization to sales remained in the range of 11%-14% during 2004-2006. Operating margins continue to be pressured by intense competition, rising raw material costs, and higher fuel prices. Total debt to capitalization ratio was 23%-27% for the last three years, but is expected to be weakened in the intermediate term with new borrowing to support future business expansions, said TRIS Rating.