TPI projects sales to grow 10% this year

Thai Petrochemical Industry Plc (TPI) expects sales to grow by up to 10% this year on the back of the steadily high oil prices, according to TPI rehabilitation planner Pala Sukhavech. He said TPI sales and profit were forecast to grow by 5-10% this year from last year, thanks in part to the company's cost-reduction programme, starting last year. For 2004, TPI projected total sales of 152 billion baht, up 86% from that of the previous year. The company's earnings before interest, tax, depreciation and amortisation (EBITDA) were estimated to have risen by 155% to 22.58 billion baht from 8.87 billion baht in 2003. Mr Pala noted that the company's sales and EBITDA last year were better than expected, fuelled by the skyrocketing prices of petrochemical products, as well as higher margins, especially naphta. Currently, the price of naphtha is around US$400-500 per tonne while the ethylene price is between $900 and $1,100 a tonne, resulting in a spread as high as $600-$700 per tonne. In the past, the margin between the prices of naphtha and ethylene during the cyclical upward trend was only around $200-250 per tonne, said Mr Pala. TPI projected the up cycle of the petrochemical industry would last until next year before starting to decline in the following years. Mr Pala added TPI's average production output remained unchanged from last year, at 180,000 barrels per day, although TPI founder Prachai Leophairatana had demanded that the company operate at its full capacity of 215,000 barrels per day. ``The current production output is the optimal level. TPI is unable to run at full capacity consistently unless we throw in hundreds of million baht to revamp its production units,'' he said. TPI's outstanding debts stand at $1.8 billion on the completion of the planned debt-restructuring process drafted by planners appointed by the Finance Ministry. The Central Bankruptcy Court yesterday postponed the mediation process between the TPI planner and Mr Prachai in the dispute over the swap of shares in the petrochemical business between TPI and TPI Polene, a TPI subsidiary and the country's third largest cement producer, of which Mr Prachai is the plan administrator. Mr Prachai asked TPI's planner to swap shares in TPI Polene's petrochemical unit manufacturing low-density polyethylene (LDPE) for the 49% stake in TPI Polene held by TPI, after the latter's restructuring plan is completed. But TPI's planner has not agreed yet with the proposal and the court has sent the dispute to its mediation process. TPI shares closed yesterday on the Stock Exchange of Thailand at 8.65 baht, unchanged, in trade worth 106.6 million baht.