TUF banks on flexible exchange management

The company recently reported to the Stock Exchange of Thailand that its book value had dropped to a record low of Bt15.55 per share in June, after reaching a historically high level of Bt20.10 in March.

The drop was mainly caused by uncontrolled factors such as oil prices and anti-dumping charges in the United States.

Management aims to ensure that TUF achieves annual revenue of US$3 billion (Bt101 bil-lion) over the next four years as well as sales growth of 15 per cent every year.

President Thiraphong Chansiri said flexible exchange management had been implemented, under which 50 per cent of US dollar trade had been fixed and the remainder floated.

"In the past, the baht was on an upward trend and we were unable to predict its highest level. But now we see it is more balanced," Thiraphong said.

TUF has formed a joint venture with its two Philippines partners to set up a tuna plant |in Papua New Guinea. The investment of $30 million is being shared equally by the three partners.

The company's annual capital expenditure is set to reach Bt1.2 billion and will hit Bt2 billion if it has to purchase a fishing vessel. As Thailand's leading seafood exporter, the company is looking for opportunities worldwide, par-ticularly relating to shrimp and tuna.

Thiraphong said the company would have to focus more on currency management as 90 per cent of its revenue is booked in US dollars.

He said it was a good time for the company to focus on expansion during the global economic slowdown affecting all countries.

Manufacturers have had to shoulder rising costs since early this year as prices of raw materials have jumped by one to two times in line with oil prices.

The European Union accounts for 23 per cent of TUF's sales, followed by the US (11 per cent), Japan (10 per cent), the Middle East (7 per cent), Asia (5 per cent) and South America (3 per cent).

The company plans to access more of the Russian, Middle East and EU markets.

Thiraphong said zero tariffs under free-trade agreements would boost the export of seafood products. The Japan-Thailand Economic Partnership will eliminate import tariffs by 2012.

Without tariffs, Thai seafood exports are expected to increase by 30 per cent.

Bilateral free trade with the US and EU will also increase the sales of Thai seafood products, which currently are subject to import tariffs of 12 per cent in the US and 24 per cent in the EU.