Siam sanitary ware’s latest products on display in the Cotto Bathroom Service Centre on Vibhavadi-Rangsit Road.

Siam Sanitary Ware Industry, a manufacturer of bathroom products under the Cotto and Toto brands, is reducing production 10 per cent following a drop in consumer confidence brought about by the country's economic slow-down.

The strategy will allow the company to achieve 80 per cent of its total production capacity of 2.8 million pieces this year.

Managing director Nibhondh Theeranartsin said the drop in production would not entail staff lay-offs.

"We are not reducing our staff. Instead, we're reducing working hours, which will help us reduce production costs," he said.

Nibhondh said the political uncertainty had had a negative effect on the country's economy, with consumers' purchasing power falling compared with last year.

The market trend meant the company had to reduce its production costs to match falling demand, he said.

In the first quarter, sales reached only Bt760 million - near last year's figure but lower than the company's target of Bt800 million.

Siam Sanitary Ware is targeting sales growth of 5 per cent to Bt3.2 billion this year, with average quarterly sales of Bt800 million. It sells 70 per cent of its products to the domestic market and the remainder abroad.

Nibhondh said the company had not adjusted its sales target this year, because it believed sales in the second half would be better than in the first half, especially exports.

The company plans to boost its exports to new markets, such as India, Australia, Japan and within Asean. This will make up for a shortfall in the US market, which has started to drop following a slump in the property sector there.

Nibhondh said the baht's appreciation had negatively affected the value of the company's exports in terms of that currency.

The company had to expand its export market in order to meet the sales target, although this year's net profit may be lower than last year's in baht terms.

Last year, Siam Sanitary Ware experienced a foreign-exchange loss of Bt100 million from exports after the baht appreciated from 40 to the US dollar to 35. It also recorded a foreign-exchange loss of Bt20 million in this year's first quarter.

Nibhondh said his company could not adjust its export prices because of the strong baht, as the market had high competition. However, it would develop and launch new products on the market at an average of one per quarter.

"When we introduce our new collection of designs, their prices will increase by an average of 10-20 per cent compared with existing products. That will help our sales meet our revenue target this year," he said.

Meanwhile, the company has launched four new Cotto Bathroom Service Centres at four locations in Bangkok this year - Sukhaphibal 3 Road, Vibhavadi-Rangsit Road, Soi Asoke and Rattanathibet Road - at a cost of Bt18 million. The investment is intended to drive its domestic sales.

Nibhondh said the new centres would provide customers with a one-stop service and shopping experience that included design, consultation, cost estimation, bathroom check-up, repairs and installation.

The company expects to generate at least 200 customers with a sales value of Bt25 million from this service this year.

"Our new service will create added value for our products and improved service for our customers that will help to drive our company to be more expert and the market leader," Nibhondh said.

To achieve its goal, the company has earmarked a Bt200-million marketing budget to promote its brand and new service this year. Of that, Bt150 million will be used for marketing events and Bt50 million for advertising.

"We believe our marketing strategy for both the domestic and the export markets will increase sales 5 per cent to meet our target this year," Nibhondh said.

Somluck Srimalee

The Nation