15th August 1997
FIRST PACIFIC'S BERLI JUCKER SEES 13% RISE IN FIRST HALF PROFIT
Berli Jucker Public Company Limited announced today that net income for the first six months of the year was THB235.3 million. Net income for the second quarter was reduced by a provision of THB87.9 million in respect of foreign exchange fluctuations associated with the flotation of the baht. Excluding this provision, net income for the half year grew by 13 per cent to THB323.2 million, as strong contributions from the Group's consumer products and engineering businesses more than compensated for a slower first half for the packaging business.
Consolidated total revenue increased 4.1 per cent to THB5.2 billion while earnings per share declined 17.4 per cent to THB4.08 from THB4.94 due to the provision for foreign exchange fluctuations.
Dr Adul Amatavivadhana, Berli Jucker's President, said: "Our results continue to demonstrate the strength of the Group's four core businesses, but overall performance was below expectations. Earnings momentum, excluding foreign exchange fluctuations, slowed amid the deterioration of the Thai economy, as net income growth fell to 11 per cent in the second quarter from 16 per cent in the first quarter."
Sales of consumer products in the first half increased by 14 per cent, with a commensurate increase in profit contribution, due to continued strong demand for the Group's paper products, snack foods, personal care products and wine ranges.
The technical products group achieved 5 per cent growth in sales led by pharmaceuticals and basic hospital supplies. Profit contribution from this group, which imports most of its products, was down from a year earlier reflecting provisions for foreign-exchange fluctuations.
Packaging activities saw improved momentum in the second quarter at the Group's Thai Glass Industries subsidiary but continued to suffer from reduced demand for bottles from spirits producers and soft drink manufacturers. Sales declined 7 per cent on the half. Profit declined 18 per cent due partly to foreign exchange losses. Berli Prospack, in which a 50.1 per cent stake was acquired in June, will not make a significant contribution until the second half.
The engineering group increased sales 56 per cent, reflecting increased productivity at Thai-Scandic Steel and substantial sales growth in materials-handling systems and industrial weighing scales. Despite a substantial foreign exchange provision, Thai-Scandic Steel cut its loss 55 per cent from a year earlier. This, together with the increased profitability of the Company's own Engineering division, resulted in a 67 per cent reduction in the group's loss on the half. No contribution was made by Siemens Limited.
Regarding foreign exchange issues, David Nicol, Berli Jucker's Chief Financial Officer, said that while the company's US$95 million in foreign currency term loans had been swapped during the first half, as had a proportion of such loans at Thai Glass, other exposures related to accounts-payable and working capital had not been hedged.
"The baht's flotation on 2nd July prevented these liabilities from being settled at exchange rates even approximating those at the end of the first half," Mr Nicol said. "Accordingly, we have booked a provision for the resulting foreign exchange translation loss as a post balance sheet adjusting event in our second quarter results, based on closing exchange rates on 3rd July. The Group's foreign-exchange exposures have since been further reduced through forward foreign-exchange contracts.
"The Group's operational foreign-exchange exposures are mainly in respect of steel imports to Thai-Scandic Steel, energy and maintenance costs at Thai Glass, pulp purchases by Cellox Paper, and the importation of medical products and photographic and electronic imaging products by the Company."
Looking ahead, Dr Adul expressed a cautious outlook for the rest of 1997.
"The critical issues for the remainder of the year are the extent to which sales, and possibly margins, are affected by the impending VAT increase, and the degree to which we succeed in recovering cost increases resulting from the baht's de facto devaluation. It is too early to arrive at reliable estimates of these issues, but I am still anticipating a healthy overall results and an acceptable return on equity for the full year. The Group will not, however, be able to its 1996 level of profitability."
For further information, please contact:
| Berli Jucker Public Company Limited: | |
| Dr Adul Amatavivadhana President |
Tel: (662) 367 1012 |
| David Nicol Executive Vice President & C.F.O. |
Tel: (662) 367 1024 E-Mail: davidnicol@berlijucker.co.th |
| First Pacific Company Limited: | |
| Paul Wallace Group Financial Controller |
Tel: (852) 2842 4225 |
Company information can also be accessed on:
Internet: irasia.com/listco/hk/firstpac
E-mail: info@firstpac.com.hk
Net income for the Group and the Company in the second quarter of 1997 was 46% below the same period in 1996. This is due to booking a baht 88 million provision for foreign exchange losses associated with the flotation of the baht as a post balance sheet adjusting event in the second quarter results based on closing exchange rates on 3rd July 1997. Excluding this provision, net income for the second quarter and half year increased by 11% and 13%, respectively.
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