Tipco Asphalt to buyout partner in Vietnam and Indonesia

Corporate November 17, 2015 01:00

By KWANCHAI RUNGFAPAISARN
THE NA

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TIPCO ASPHALT, Thailand's leading manufacturer and trader of asphalt products, yesterday announced its board's approval to take over local manufacturing and logistics facilities in Vietnam and Indonesia from shareholder Colas SA at a cost of US$61.8 milli



The acquisition is in line with the company’s 2020 vision to become one of the world’s leaders in the integrated supply of asphalt and petroleum-related products. Under the vision, Tipco Asphalt expects to significantly increase its total supply of asphalt and petroleum-related products to approximately 6 million tonnes and to be distributed both in Thailand and exported to five major territories – Asia, Australia, Africa, Europe and America.
The company will allocate an annual investment of about Bt1.7 billion over the next five years, approximately Bt8.5 billion of total investment over the next five years.
Tipco Asphalt achieved total sales volume of 2 million tonnes of asphalt last year. The company expected to increase its sales of asphalt by between 10 per cent and 15 per cent this year to about 2.2 million to 2.3 million tonnes.
Chaiwat Srivalwat, managing director of Tipco Asphalt, said the company has approached Colas SA for acquiring its asphalt manufacturing and logistics facilities in Vietnam and Indonesia. 
Colas SA is a major shareholder, owning 32-per-cent stake in Tipco Asphalt.
“Our stakeholder Colas SA has withdrawn itself from the supply of asphalt to the road construction sector. It is part of their strategy to reshuffle the business portfolio in Southeast Asia,” said Chaiwat.
He said that with the acquisition, Tipco Asphalt will be able to share knowhow and technology with local operations in both Vietnam and Indonesia in order to increase their product value.
Chaiwat said that the company will also invest another US$100 million in the three-year expansion of its asphalt refinery plant in Kemaman, Malaysia. The expansion will start in 2017.
Under the expansion, the plant will raise its annual capacity from currently 1.2 million tonnes of asphalt to more than 2 million tonnes in 2019.
Chaiwat said that Tipco Asphalt posted total sales volume of 600,000 tonnes of asphalt in the third quarter alone this year.
“Our gross profit reached Bt2.05 billion in the third quarter this year, with net profit at Bt1.45 billion, up from Bt1.3 billion in the second quarter this year,” said Chaiwat.
He added that accumulated sales volume in the first nine months of this year reached 1.68 million tonnes.
“Our greater performance in the third quarter is driven by the price of crude oil in the world market, which significantly decreased from US$60 per barrel at the beginning of the quarter to approximately US$50 per barrel at the end of the quarter. We were able to maintain the selling price of asphalt and |that resulted in our capability to make higher profits in the third quarter of this year,” said Chaiwat.
He said that the government in May this year approved a Bt40-billion budget to invest in local infrastructure to stimulate the domestic economy. About Bt25 billion will be allocated to the Department of Highways in road constructions. Such government expenditure on local investment projects have started from October onwards.
“We believe our domestic sales volume on asphalt will increase significantly from 325,000 tonnes to about 500,000 tonnes this year. Meanwhile, our export volume of asphalt, mainly supplied by our refinery plant in Malaysia, will be around 1.7 million tonnes this year, representing about 80 per cent of our total sales,” said Chaiwat.
 

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