Chemical firm expands into glue, rubber
Global Connections Plc (GC) expects to boost its earnings in the special-product segment to 50 per cent of total revenues within three to five years, from 25 per cent now, due to higher margins and a slowdown in commodity polymers, says president Somchai Kulimakin.
"We'll focus more on special products, because commodity polymers seem to be having a slight downturn this year. It is also predicted to fall sharply in 2009, due to global oversupply," he said. Because its suppliers include top international companies like ExxonMobil, DuPont, Ciba and Eastman, the company can expand its business to other petrochemical products, not only plastics. Somchai said his company was recently appointed a distributor of glue and rubber in Thailand, thanks to global petrochemical company ExxonMobil. "We decided to expand into the rubber and glue market, which are categorised as high-margin special products. This also conforms to our restructuring plan," he said. GC now has three business units: commodity polymers, speciality and engineering polymers and speciality chemical products like glue. The first unit generated 75 per cent of total revenues and 50 per cent of the company's profit. The speciality engineering products generate 20 per cent of its revenues and 35 per cent of its profit. The remaining 5 per cent of revenues and 15 per cent of profit come from speciality chemical products. This year, GC has targeted revenues of Bt3.6 billion, up 12.5 per cent from last year's Bt3.2 billion. The company's profit last year was Bt37 million, while its profit in the first half of this year was Bt32 million. He said the company would make a considerable profit this year, because it would pay 25-per-cent corporate tax, compared with 30 per cent last year. It also gained Bt1.5 million from the baht appreciation, while it lost Bt12 million from the exchange rate last year. Moreover, the price of commodity plastics has shown little volatility this year. The company's restructuring has caused it to suffer a decrease in revenue growth, from 25 per cent on year previously to 8-10 per cent. However, it believes the restructuring plan will sustain its business in the long-term. GC has about 20 per cent free-float shares. The company paid a dividend of 10 satang per share for its first-half performance this year, accounting for about 3.8 per cent of the company's share value of Bt2.64. It expected to pay higher than 10 satang apiece for the second half. "We hope the high dividend yield will attract more investors to the company," said Somchai.
Chalida Ekvitthayavechnukul The Nation
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