NSM cuts sales goal after missing target
Nakornthai Strip Mill has slashed its sales target this year from Bt20 billion to Bt12 billion as first-quarter sales failed to reach their goal, NSM's chairman, Sawasdi Horrungruang, said yesterday.
"Our sales this year will be below Bt20 billion," he said. "I estimate they should be Bt12 billion because sales in the first quarter did not meet our target. Steel prices declined significantly in the first two months of this year. But prices started to recover in late March."He said nearly 60 per cent of the company's orders were booked at a price of US$420 (Bt16,000) per tonne - well below the current price of between $480 and $500 per tonne. An $80 per tonne increase in the cost of raw materials in the first quarter, on top of a $220 rise last year, is blamed for the disappointing first-quarter results, Sawasdi said. "The increase in raw material costs of near $100 per tonne [in the first quarter] narrowed our margin," he said, adding that while the company's earnings in the first three months this year will be mired in the red, its earnings in this quarter will improve. Sawasdi said the hot-rolled coil maker will not feel much of a pinch from appreciation of the baht against the dollar because it exports 30 per cent of its output while imported raw materials account for 70 per cent of total costs. In 2005, the company's sales amounted to Bt13.99 billion, compared to Bt9.73 billion the previous year due to expansion of Nakornthai's production capacity. However, its 2005 gross profit dropped from Bt1.24 billion to Bt505 million due to higher raw material prices and lower product prices. Sawasdi dismissed a rumour that India-based Tata Steel is planning to acquire a sizeable stake in Nakornthai Strip Mill. However, he said speculation is that Tata Steel will buy a stake in Nakornthai Strip Mill following its acquisition of Millennium Steel Plc, to integrate the two steel producers. Earlier, there were reports that "an investor" would participate in bidding for NSM's stock, to be conducted by the Thai Asset Management Corporation (TAMC) and the Hong Kong and Shanghai Banking Corp. "No one has approached me so far," Sawasdi said. "I admit that Tata Steel, as well as Chinese and Japanese investors, have contacted me over the past six or seven years because the company's price was relatively cheap. However, interested parties will have to buy from creditors rather than me, as I now only hold 1 per cent." Nakornthai Strip Mill's shareholders are the TAMC, with a 20-per-cent stake, TMB Bank with 10 per cent, the Government Savings Bank with between 4 per cent and 5 per cent, and foreign creditors with a combined 40-per-cent holding. TAMC president Somjate Moosirilert said he had not been approached by investors interested in Nakornthai Strip Mill stock. The corporation had no plans to sell NSM's shares.
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