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Published on April 17, 2008

Premier Marketing (PM), a distributor of snacks, is negotiating with new partners to expand its distribution of food products with the aim of achieving revenue growth of more than 10 per cent this year.

The move is part of a new plan after the company lists on the Stock Exchange of Thailand next month.

Managing director Somchai Choonharas said the company distributed for nine firms through 30,000 outlets nationwide, covering both modern trade retailers and traditional channels. After considering its network was full, the company decided to seek new clients to generate more revenue.

He said the company was interested in the food business because it had unlimited range.

"Even though negotiations are not completed, we believe we'll get at least two partners this year," he said.

The new partners are Thai manufactures who also export, he said.

Distribution activities represent 50 per cent of total revenue for the company, which comes from Taro and Calbee snacks. Tuna products are operated by a wholly owned subsidiary Premier Canning Industry and they bring 40 per cent.

PM, a subsidiary of the Premier Group, operates as a distributor for five product categories: snacks; foods and beverages; confectionery; lozenges and nutrient foods; and personal care and household products.

The company's revenue comes  mainly from snacks (88 per cent), and the company predicts the snack market will grow 9 per cent this year.

The distribution business operated by PM yields the highest gross margin of 26.7 to 27.6 per cent. The highest contributor to this is snack food which has a gross margin of approximately 25 to 30 per cent.

The company has three subsidiaries in the foods line: Premier Canning Industry, operating canned tuna, pet food, tomato sauce and chilli sauce; PM Foods; and Premier Frozen Products, a producer of frozen foods.

Premier Marketing reported consolidated total revenue of Bt2.8 billion last year for a net profit of Bt189 million.

Somchai predicts the funds raised and the new partners will increase revenue growth to more than 10 per cent in fiscal 2008.

Of the 215 million shares to be offered in the initial public offering (IPO), 150 million are newly issued, and 65 million will be from existing shareholder Premier Pet Products, which owns 15 per cent of Premier Marketing. The company plans to offer 30-50 per cent to institutional investors and the rest to retail investors.

Somchai said the company's IPO share price would be known after the book-building roadshow to be held from April 21-23.

The share sale is aimed at repaying loans to its subsidiary, Taro fish-snack manufacture PM Food (PMF), and expanding business opportunities for the parent and its subsidiaries.

"PMF was in debt by about Bt900 million. We expect the funds raised to halve the debt and reduce interest payments to the creditor. The funds will also add to the company's earnings," Somchai said.

He said the firm's earnings would increase from repaying the loan and  that the company planned to sell the shares in Premier Enterprise that his company purchased from TMB Bank in order to repay the rest of the PMF loan.

The company expects to clear all losses in PMF this year and will pay a dividend equal to 50 per cent of the net profit for fiscal 2008.

Sucheera Pinijparakarn

The Nation