After turnaround, IRPC boss confident of remaining profitable this year

Published มกราคม 13, 2016 by SoClaimon

ศาสตร์เกษตรดินปุ๋ย : ขอบคุณแหล่งข้อมูล : หนังสือพิมพ์ The Nation–30276645.html

AFTER steering a turnaround of IRPC into a profitable concern last year, its president Sukrit Surabotsopon continues to see bright prospects for the integrated oil refiner and petrochemical company, even with the current slowdown of the Chinese economy.

Speaking at a seminar held for media and local investors in Phuket last weekend, the IRPC boss said the company was well on track for no decline in profits this year from its full-year results for 2015, which are due to be reported to the Stock Exchange of Thailand next month.

IRPC marked a turnaround with a net profit of Bt8.95 billion for the first nine months of last year. It booked a net loss of Bt5.2 billion in 2014, chiefly due to unrealised inventory losses as oil prices fell remarkably.

Sukrit said that although IRPC would undergo a 30-day scheduled maintenance shutdown of its refinery in November and December, and oil prices continued to slide, which might result in another stock loss, he was confident of this year’s results because refining margins and petrochemical spreads were expected to continue to be good for the next couple of years.

Furthermore, IRPC is also expected to reap a US$100-million (Bt3.6 billion) gain this year from its business transformation programme dubbed the “Everest” project, which it launched with a leading global consulting firm in November. Under the scheme, the company targets $300 million of incremental profit annually from 2020, using 2015 as its base year.

“We have found a gap of $300 million per year against the world’s top-quartile petroleum and petrochemical companies,” he said.

To come on par with the top-quartile producers, IRPC will also need to boost its return on invested capital (ROIC) to 14 per cent, from 8 per cent at present, and to increase its earnings before interest, tax, depreciation and amortisation (EBITDA) from Bt18 billion to Bt29 billion annually by 2020.

Sukrit said IRPC had so far been able to find other markets, mainly in Asean, to substitute to a good degree for the Chinese market. Last year, China accounted for 40 per cent of IRPC’s total petrochemical exports, down from 60 per cent in the past. The firm exported 45 per cent of its total petrochemical output in 2015.

Sukrit said IRPC, which had invested several billions of dollars over the past couple of years in many projects to expand its production capacity, had shifted its focus to invest more in knowledge, such as the Everest project, to make more money out of its already-invested assets.

The company also aims to increase its research and development spending from 0.2 per cent of total revenue to 1 per cent this year and to 2-3 per cent by 2020.

Meanwhile, Sukrit said IRPC expected its subsidiary Thai ABS to double its sales within five years as its Japanese partner Nippon A&L had agreed to expand the market coverage for the firm to otherAsean markets. Nippon A&L is also seeking to increase its shareholding in Thai ABS from 35 per cent to 49 per cent.

Doubling the sales and profit of IRPC Polyol is also targeted, thanks to closer collaboration with its foreign partner in the polyol marketing joint venture PCC Rokita SA, which is also seeking a stake in its polyol factory.

Avin Sony, vice president for institutional sales at Asia Plus Securities, said he believed that IRPC’s Everest project was achievable, although it was never a certainty for companies operating in a commodity business like IRPC to ensure profitability.

“Nevertheless, being efficient is important, since it will make it perform better [than] others in good times,” he commented.

Sony said his main concern was the continuity of the top leadership at IRPC, since it had undergone quite frequent changes in the past.


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