Thai Rung swings into black

Thai Rung Union Car (TRU) expects more than 50% revenue growth this year and 20% next year thanks to the global economic recovery and domestic eco-car programme.

Managing director Sompong Phaoenchoke said the firm would spend 600 million baht between now and the end of next year to expand operations.

Some 400 million baht will go to expanding TRU’s auto parts plant in Rayong province, which is now running at 70% capacity. Another 200 million baht will go towards a new car-paint facility.

TRU posted first-half revenue of 840 million baht, up by 31% year-on-year. Quarterly revenue also rose by 31% year-on-year to 430 million baht.

Net profit swung back into the black with 61 million baht recorded for the second quarter against a loss of 30.9 million the year before. First-half profit totalled 84.2 million baht against a loss of 80 million last year.

Mr Sompong told investors at a briefing yesterday that the launch of Thailand’s eco-car programme would help boost activity across the supply chain. Nissan has already announced its March eco-car, while Honda will spend 6.7 billion baht to build its own small concept car at its Ayutthaya plant this year.

Mitsubishi hopes to produce 107,000 eco-cars in Chon Buri province from 2012, while Toyota is projecting 100,000 units in annual sales from its 4.64-billion-baht investment in Chachoengsao. Suzuki is also investing 7.5 billion baht in its own programme.

Authorities hope eco-cars, a new classification of small-engine compact passenger cars, will become a new product champion for the Thai auto industry to complement the sector’s existing strengths in the light pickup category.

Thai auto production is on track to set a new record this year, with more than 1.57 million units projected, including exports of 894,000.

Nearly half of TRU’s revenue comes from original-equipment manufacturing (OEM) deals for parts and tooling sales for firms such as General Motors (GM), Aapico Hitech, Emerson, Triumph and Kawasaki.

Revenue from contract assembly accounts for another 29% of the total, including clients such as Isuzu, GM and Tata.

Mr Sompong said the company posted net losses over the past three years due to the global crisis and high market competition.

But he believes the company looks set to pay a dividend this year and that the consolidated net profit will remain relatively strong at 1.04 billion baht.

Mr Sompong said TRU would continue to focus on the OEM market for the next several years, eventually expanding into the turnkey auto market, with one contract already in place for a Chinese client and another in negotiation for an Indian customer.

Shares of TRU on the Stock Exchange of Thailand closed yesterday at 4.92 baht, down 4 satang, in trade worth 8.73 million baht.

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