Thoresen Thai Agencies (TTA) wants to adjust the revenue mix of its three core businesses - cargo transport, energy and infrastructure - from 50 per cent, 20 per cent and 25 per cent to equal shares by 2013.
ML Chandchutha Chandratat, president and chief executive, said yesterday that growth in dry bulk shipping, part of its transport business, in the rest of this year and next year was expected to slow because of lower demand in China and the glut of vessels.
China's slower imports were the major cause for the downward trend of the Baltic Dry Index (BDI) in the past few months, he said. The company did not expect a strong recovery in Chinese imports.
The oversupply of newbuild vessels is also pulling down the fleet time charter equivalent rate. The TCE rate in the rest of this year to next year is expected to drop to US$12,000 per vessel day from the current $14,600 (Bt457,600).
Over three to five years, 3,000 newbuild vessels are forecast to enter this market on top of 7,700 vessels now.
The significant oversupply as well as the lower TCE rate led TTA to expect dry bulk earnings to remain flat or decline in the coming months compared with the past nine months of its 2010 fiscal year.
"The expected lower fee of the transport business, especially dry bulk shipping, is a reason for diversifying our business portfolio to energy and infrastructure assets. We target the three businesses will generate equal revenue of 33 per cent each in 2013," he said.
The company will unleash an aggressive marketing plan for the energy business, comprising an offshore oil and gas services business, which is operated by its subsidiary Mermaid Maritime.
Recent news highlighting the risk of offshore oil and gas drilling, particularly in the Gulf of Mexico, remains a key focus in its operations. Clients in oil and gas have suspended subsea engineering.
TTA realised a loss of Bt262 million from Mermaid Maritime in the fiscal third quarter ended June 30.
TTA is talking with clients to secure services to maintain revenue from this business. One strategy is to increase the utilisation of subsea engineering services to more than 50 per cent from its critical fleet size of eight vessels, he said.
Subsea engineering is a key indicator of TTA's revenue in the next fiscal year.
The company is not worried about the performance of the infrastructure group, consisting of a coal logistics business and fertiliser and logistics business, Chandchutha said.
The coal logistics business is operated by Unique Mining Services (UMS), while Baconco in Vietnam operates the fertiliser and logistics business.
UMS experienced improvement in coal sales to cement plants and launch of a new highvalue product is expected by yearend.
The company is still putting together the investment budget for the next fiscal year starting October 1, but it will not be as big as the past nine months, when TTA invested Bt6 billion.
Under the draft investment budget, TTA will buy new bulk vessels and invest in drilling services and facility expansion in the Vietnamese firm.
The company is talking with two firms in Asian countries, aiming to acquire shares. The deals are expected to be completed in two to three months.
"As a holding company that continues to invest through the three businesses, we have to prepare cash for investment, so the company has to project an annual net profit margin of 15 per cent," Chandchutha said.
The company has cash flow of Bt6.7 billion.
TTA targets revenue this year at Bt900 million, the same as last year, because of the lower targeted performance of Mermaid and the outlook for dry bulk shipping.
KGI Securities revised down the earnings target of TTA this year by 22 per cent to Bt865 million because of the lower BDI rate. The diversified businesses also could not generate as much profit as TTA had expected.