Leowood to raise prices if baht falls

"We must increase our production price if the baht weakens, because 100 per cent of our wood raw material is imported from abroad," he said.

The company's selling price is now Bt600 to Bt700 a square meter for laminated wood and Bt2,000 to Bt3,500 a square meter for solid wood. It sells of 20,000 square meters a month.

Smarnchai said the company must accept high raw-material costs resulting from a weaker baht, which caused its net profit to drop from nearly 10 per cent last year to 4-5 per cent so far in this year's first half.

To maintain sales and build net profit growth to 6 per cent, the company will launch an innovative solid-wood anti-termite floor under the LeoDura brand in the second half. The company expects LeoDura to expand this year's sales to Bt650 million, up 30 per cent from last year's Bt500 million.

Smarnchai said LeoDura would replace solid wood in the market, as the company offers both a quality product and after-sales service to compete with traditional wood producers.

After launching LeoDura, the company expects its sales from solid wooden floors to increase from 15 per cent of total sales last year to 50 per cent next year, he said. At present, 60 per cent of sales come from laminated wood, 25 per cent from engineered wood and 15 per cent from solid wood.

The company has earmarked Bt40 million to promote its new product this year, and in addition to this year's sales target of Bt650 million, the new product is expected to help drive sales to Bt1 billion next year.

"If our sales reach our target of Bt1 billion next year, our market share in the wood market will increase from 16 per cent to 25 per cent," he said. The total market volume of wood is now 4 million square meters a year on average, worth Bt4 billion.