President Thiraphong Chansiri yesterday predicted the company's bottom line would be boosted by sales growth of 8-10 per cent in US-dollar terms - assuming the baht averaged 35.50 against the greenback - and a likely improvement in its gross margin to just under 16 per cent, from 15.3 per cent last year.

TUF shares closed yesterday at Bt23, down 2.13 per cent.

This year, the company will also not incur expenses for mergers and acquisitions abroad like it did last year, when it recorded Bt100 million worth of such charges. Continuing declines in interest rates will lower interest expenses after they doubled to Bt200 million last year. Cost-saving, efficiency improvement and inventory management will also help slash total expenses and fatten the bottom line, he said.

The company plans to expand into non-US markets in Europe, Africa and the Middle East and launch more products to expand margins and market share. The US and Japan accounted for 66 per cent of last year's total sales. Tuna accounted 50 per cent of total sales, followed by frozen shrimp at 20 per cent.

"I have an increasingly upbeat view this year and expect sales to grow 8-10 per cent in dollar terms. We focus mainly on making a profit this year. I believe net-profit growth will be higher than revenue growth," Thiraphong said.

The strong baht remains a big concern, along with rising oil prices and the tight labour market. The baht gained 17 per cent last year, but the company could raise its prices only 3-5 per cent, due to strong competition from China, Vietnam, Indonesia, India, Bangladesh and the Philippines, whose currencies appreciated less than the baht.

The Indonesian rupiah was stronger by 8 per cent, the Philippine peso by 7 per cent and other regional currencies by 3 per cent.

Last year, TUF's sales grew 10 per cent in dollar terms but only 3 per cent in baht terms, to about Bt55 billion on revenues of Bt55.4 billion.

Earnings per share was Bt2.25, compared with Bt2.40 in 2005.

But Thiraphong was quite satisfied with the company's net profit shrinking only 6 per cent last year, because a 20-per-cent decline had been forecast at the beginning of the year. Excluding mergers and acquisitions expenses, the net profit slipped only 0.7 per cent from 2005.

"I have never experienced as strong a baht as I did last year. As a result, the company has tried to work harder to counter the soaring baht. The currency is now at an acceptable level but still strong. It's unlikely the baht will depreciate, so the point is how to maintain it at the current level," he said.

TUF has hedged the dollar with various instruments and natural hedging, because 90 per cent of its revenues and 65 per cent of its expenses are in dollars.

Anoma Srisukkasem

The Nation