MITR PHOL GROUP plans to expand by 7 per cent with investments worth more than Bt18 billion this year, mostly concentrating on its domestic sugar and renewable-energy businesses.
The group says the recent depreciation of the baht led by the lowered policy interest rate has helped exporters with improved foreign-exchange competitiveness.
Thailand is the world’s second-largest sugar producer after Brazil, with exports of 6.5 million tonnes valued at more than US$3.6 billion (Bt120 billion) each year. Mitr Phol is the country’s biggest sugar producer and the second-largest in China through its joint venture with East Asia Sugar.
Thailand produced 106 million tonnes of sugar last year, of which Mitr Phol contributed 20.67 million tonnes. The group made more than Bt87 billion in revenue last year. It has invested about Bt65 billion during past five years.
“The Thai economy has not shown positive signs but we believe that this is a good time to invest, and we still believe in the potential of the country’s economy because of its fundamental strengths,” said Krisda Monthienvichienchai, chief executive officer and president of Mitr Phol Group.
“We are confident because we are investing in our expertise. We expect that our investments this year will help increase economic activity and the circulation of capital within the economic system while increasing employment by more than 400 positions domestically,” he said.
Out of the Bt18-billion investment budget, Mitr Phol plans to spend Bt8.077 billion on the expansion of its sugar business, Bt3.949 billion on the expansion of its renewable-energy business, Bt2.906 on its wood-substitute-materials business, Bt2.744 billion overseas, and Bt159 million on its domestic plantations.
The sugar business accounted for 42.8 per cent of Mitr Phol’s sales and service revenue in 2014. Energy business contributed 17.8 per cent, wood-substitute materials 4.6 per cent, and logistics 1.2 per cent. Its business in China accounted for 27.1 per cent, that in Australia 5.8 per cent, and Asean ventures 0.6 per cent.
Amporn Kanjanakumnerd, the group’s chief operating officer for the Thai sugar business, said the recent depreciation of the baht had helped the export of sugar, since it had previously been much stronger than other trading partners’ currencies, especially Brazil’s, since the beginning of the year.
“The deprecation of the baht really helped because we are an exporting country,” she said. “The future of the sugar business is still looking bright despite the 20-per-cent slump in the global sugar price, since Thailand still has a competitive edge in terms of production costs.
“Our revenue in the sugar business will probably change slightly this year because of the drop in crop prices, but the prices of our value-added products such as bottled syrup have not dropped, and that will support our income this year,” she added.
Krisda said the government’s zoning policy to encourage rice farmers to switch to sugar would increase the supply of sugar cane, which was one of the reasons Mitr Phol is expanding the production capacity of its sugar refineries and power plants.