Thai Optical eyeing sales growth but coup concerns linger
May 26, 2014 00:00 By PICHAYA CHANGSORN THE NATION 3,298 Viewed
THAI OPTICAL GROUP (TOG) expects its sales to grow 8 per cent to Bt1.8 billion this year.
However, Thai Optical managing director Wirach Pracharktam said that Thailand’s largest publicly traded maker of optical glasses might book a lower profit margin this year, although that could be offset by the baht depreciation.
Although TOG earns 95 per cent of its revenue from exports, Wirach said foreign customers might cut their orders in the wake of last week’s military coup if they were not confident the company could deliver lenses to them on time.
In an exclusive interview with The Nation, he said: “Many overseas customers make inquiries. If they aren’t confident, orders won’t come because they can switch the orders elsewhere.”
To enhance the confidence of its buyers, Wirach said that TOG would create a larger inventory for some lens products and for some products that couldn’t be stored, it would develop a contingency plan with the cooperation of logistic companies.
TOG has three major product categories: standard lenses, premium lenses (such as progressive, photochromic and high-impact resistant lenses) and RX prescription lenses.
For prescription lenses, the company applies an online system that connects to eyewear stores in Australia and New Zealand and allows real-time ordering from end-customers, including for custom-made lenses, with delivery within 5-7 days.
“Since we are at the middle of the supply chain, we have no control on demand,” Wirach said.
“We manufacture our products based on our demand forecasts to ensure the most efficient production. Because of this, supply chain communications are very important for us.”
TOG is largely an original equipment manufacturer that sells its lenses to lens distributors, labs, retailer and other lens manufacturers in many countries including Specsavers, an international optical chain operator that has a 25 per cent share of the company.
However, Wirach said domestic sales, which had shrun dramatically since the fourth quarter last year, might improve during the rest of this year.
In the domestic market, TOG sells some lenses to a local distributor that resells them to Better Vision, an eyewear chain.
Both the local distributor and Better Vision are wholly owned by the Pracharktam family, which has more than a 50 per cent share of TOG.
Wirach said there was a possibility of “vertical integration” but it was not included in the current plan.
TOG has set a modest target to grow 5-7 per cent over the coming years. However, growth can be increased if the company can develop new value-added products, Wirach said.
He said the company achieved a big jump in net profit during the first quarter due to baht depreciation and a cost-efficiency improvement programme. A consultant hired by the firm had found a lot of room to improve efficiency.
“We can increase production capacity by 30 per cent without having to invest significant money and reduce costs by 8 per cent this year, provided we can find outlets for the additional outputs,” he said.
The firm will have to work more aggressively to expand its overseas customer base, he said.
From January to March, TOG booked total sales revenue of Bt484.7 million, up 27.69 per cent from a year ago, and net operating income of Bt66.9 million, an increase of 295.29 per cent.