Raw material costs hit toa paint's profit

TOA Paint (Thailand) managing director Jatuphat Tangkaravakoon presents Super Shield Duraclean, which contains the anti-bacterial agent Microban. The company expects the new product to help boost sales to Bt8.8 billion this year.

TOA Paint (Thailand) has said its net profit this year will be 10 per cent lower than last year following the rise in raw material costs, although sales growth is up 10 per cent.

Managing director Jatuphat Tangkaravakoon yesterday said that although the company increased the price of its solvent-base paint by 7 per cent this month, this did not cover the increase of 7 to 10 per cent in the company's raw material costs from January through to June.

As a result, TOA Paint's net profit this year will be lower than last year to the tune of nearly 10 per cent, although sales will grow 10 per cent from Bt8 billion last year to Bt8.8 billion. Bt7.04 billion of this will come from house paints and the remainder from the hardware and heavy-duty market.

"We believe our sales will reach the target, although the country's economic slowdown has caused a number of customers to change their mind about buying a new house or renovating their old one," he said.

Meanwhile, TOA Paint recorded sales of Bt4.3 billion in the first half of the year - up 10 per cent from the same period last year - with 33 per cent coming from ultra-premium and premium products, and the remaining 67 per cent from the standard market.

To drive sales in the second half, the company is introducing its latest innovative interior paint under the brand name Super Shield Duraclean with Microban, which acts against bacteria on walls. The new product is priced at Bt2,800 for a 5-gallon (23 litre) tin, Bt1,400 for 2.5 gallons and Bt560 for 1 gallon.

The company expects Bt300 million in sales of the product this year.

"We tried to develop an innovative product that will increase our sales from ultra-premium and premium products from 33 per cent of total sales at present to nearly 50 per cent in the next three to five years," Jatuphat said.

TOA Paint is the market leader for house paints, with an estimated 50 per cent of the market value of Bt14 billion this year, up five percentage points from last year.