BANGKOK (July 19, 1:15 p.m. ET) — The excess capacity from new film plants, mostly in Asia, will not last forever, assured Polyplex (Thailand) Public Co. Ltd. Chairman Manu Leopairote.
As anticipated, the polyester film industry retraced from historical highs of the previous year with margins recalibrated to normalized levels, he pointed out in the company's 2011-2012 annual report.
Leopairote said Polyplex would remain upbeat about the plastic film industry. The company believes that the steps taken to diversify risks associated with cyclical nature of polyester industry would contribute to maintaining the growth tempo as well as a reasonable bottom line, he wrote in the report.
Backed by a strong and liquid balance sheet, Polyplex would continue to grow the business.
The new thin polyester film line in the United States was the continuation of the company's policy to have a geographically diversified manufacturing base, he said.
He said Polyplex was fully committed to the expansion projects announced in the last 18 months despite the sharp downturn in margins and a challenging outlook for the current year. Polyplex has committed more than US$200 million on these projects, which would double the asset base in next 12 months.
All the projects were progressing satisfactorily and were expected to commence commercial operations on time, he added.
Notwithstanding the comparison with previous year profitability, the Polyplex numbers for the fiscal year were quite respectable.
After-tax profit fell 65 percent to Baht 1.36 billion (US$42.92 million) but the company still had a reasonable net margin on sales of 13.27 percent.
Sales were down 9.3 percent on the year at Bt10.14 billion (US$320 million), reflecting the compression in selling prices despite higher volumes.