In 2016, Thailand automotive industry had experienced a continuous slowdown because of the first-car tax rebate policy and declines in agricultural commodity prices. The Federation of Thai Industries’ automotive group revealed the domestic sales volume was 768,788 cars represents a decrease of 3.86% when compared to the year 2015. The total production of vehicles was 1.94 million cars represents an increase of 1.64% when compared to the year 2015, whereby the production volume of one-ton pick-up trucks, including pickup based passenger vehicles, was 1.1 million cars represents a decrease of 1.17% when compared to the year 2015.
In 2016, the Company and its subsidiaries generated total sales of 3,707.2 million Baht represents a decrease of 9.4% when compared to the year 2015, due to the negative economic factors and the expiration of the project on exporting parts to Brazil.
Cost of Goods Sold and Net Profit of the Year 2014
In 2016, the Company and its subsidiaries had COGS of 3,192.8 million Baht, whereby the ratio of COGS to sales increased by 2.54% when compared to the year 2015, due to the declining of sales and the rising expenses from unusually deteriorated furnace walls and broken aluminium injection machine during the 2nd – 3rd quarter.
- In July 2016, the Company fully commenced the project to generate and supply electricity from 5 MWdc solar panels on the rooftop, which could reduce the electricity cost by approximately 20-25 million Baht per year.
- In August 2016, the Company and its 3 subsidiaries received the Outstanding Organization Award for Labour Relations and Welfare from the Department of Labour Protection and Welfare, Ministry of Labour.
- In October 2016, the Board of Directors resolved to acknowledge the resignation from directorship of Mr. Koonchorn Roumanachai, and approve the appointment of Mr. Thibet Rungrotkitiyot as a new director.
- In October 2016, the Company was notified of the Corporate Governance Report of Thai Listed Companies 2016 by Thai Institute of Directors (IOD) in association with the Stock Exchange of Thailand that the Company achieved “Very Good” recognition level (4 logos).
- In November 2016, the Company was announced by the Stock Exchange of Thailand as one of the listed companies in Thailand Sustainability Investment 2016 (THSI) list.
- In November 2016, the Company’s structure of major shareholders was changed as Mrs. Wanna Raomanachai sold shares to Mr. Thibet Rungrotkitiyot (her son) on the stock market, totaling 230 million shares, representing 15.08% of voting stocks minus treasury stocks.
The Company has devised the strategy to diversify its product portfolio continuously. We gained trust from our customers to manufacture and deliver new parts for several projects in 2016 as follows:
- Pressure Plate project: The project values over 90 million Baht is for Passenger Car manufacturer and distributer from Japan. The project was implemented in Q2 of the year 2016.
- Duct EGR and Bracket Converter project: The project values over 12 million Baht is for Big Truck manufacturer and distributer from Japan. The project was implemented in Q4 of the year 2016.
- Crank Case project: The project values over 200 million Baht is for Big Bike manufacturer and distributer. The project was implemented in Q4 of the year 2016.
Corporate Social Responsibility (CSR)
The Company adheres to sustainability principles in carrying out business operations. We have conducted various kinds of activities beneficial to the economy, society, and environment. Moreover, taking a role as a good citizen, we are committed to fully complying with related laws and regulations, as well as taking part in Thailand's Private Sector Collective Action Coalition against Corruption. The Company is determined to develop and promote the quality of life of the society and community, especially our nearby community, so that they achieve better quality of life simultaneously with the Company’s growth. Therefore, the Company was announced by the Stock Exchange of Thailand as one of 51 firms in Thailand Sustainability Investment 2016 (THSI) list.
(Chief Executive Officer )
The Society, Nearby Communities, and Public Authorities
The Company put emphasis on taking part in the community and social development. In 2016, we provided supports for the following activities:
- To contribute to local employment at a ratio of 86%.
- To support the project on developing personnel for the industry in collaboration with Nakhonratchasima Technical College and Suranaree University of Technology through the Dual Vocational Training Program. The program was initially started in the academic year 2016. There are totally 72 students participating in the program, and these students are expected to complete the program in April 2017.
- To contribute to developing and expanding educational excellence by allowing students to visit the Company’s production line, totaling 5 groups, comprising 313 students from 3 educational institutes.
- To join traditional and cultural activities, as well as environmental conservation programs with the local administrative organization in Kokgroad Sub-district, totaling 5 activities, including Children’s Day, Songkran Festival, Reforestation, Clean and Beautiful Canal, and engage in fostering Buddhism by offering Buddhist Lent candles to temples in Kokgroad Sub-district under the merit bank project.
- To continue implementing the computer for students project for the third consecutive year by providing 30 computers to 4 schools in Nakhon Ratchasima Province.
- To give scholarships to the industrial library project in collaboration with the Federation of Thai Industries and the Federation of Thai Industries Nakhonratchasima Chapter, as well as provide sportswear to youth players of Central Ratchasi FC.
- To cooperate with Nakhon Ratchasima Provincial Industry Office, Nakhon Ratchasima Provincial Office of Labour Protection and Welfare, and the Community Enterprise of Ubon Ratchathani Province in giving 16.5 tons of rice to customers and employees.
- To reserve a space in the Company for farmers to sell rice to employees.
- To provide supports for the handmade silk shawl weavers in Ban Lung Pradu, Huai Thalaeng District, and the silk necktie weavers in Pak Thong Chai District by giving these handicrafts to customers on various occasions.
Employees are one of the Company’s key success factors and the most valuable resources. The Company encourages employees to develop themselves for their own security and advancement, while having potential to perform professional development. Moreover, employees are also urged to become the committee members responsible for creating activities under the concept of Happy Work Place to ensure the work-life balance. In addition, employees can involve in regularly conducting CSR activities of the Company.
Moreover, the Company provides supports for a football team of employees by entering the team into a 7-player football competition titled “Friendship Cup”. There is a total of 24 teams from leading organizations in Nakhon Ratchasima Province joining the competition. The Company’s football team could win the championship.
Natural Resources and Environmental Development
Daily consumption of electricity for the Company’s production line is over 80,000 KWh. We have consistently carried out electricity saving activities. In 2016, the Company managed to install the 5 MWdc solar panels to generate electricity on the rooftop of 8 buildings at P.C.S. Precision Works Co., Ltd. for internal use. The project covers more than 29,000 square meters, and its daily capacity is over 21,000 KWh. The operation started in July 2016. The electricity cost is estimated to be reduced by over 20-25 million Baht per year. Moreover, the Company provides the opportunities for interested people from both public and private sector to experience the project field trip. In 2016, the Company welcomed a total of 152 visitors from 10 groups.
The Company would like to convey our sincere appreciation to all stakeholders, as well as the management team and all employees for their contribution to making the Company’s mission successful. The Company is determined to operate business in a transparent manner based on the standards of corporate governance to create sustainable growth and maximize benefits for all stakeholders in the years ahead.
On 31st December 2016, the Company had total assets of 5,193.2 million Baht, a decrease of 177.9 million Baht from the figure on 31st December 2015. Current assets rose by 188.4 million Baht. Non-current assets decreased by 366.4 million Baht due to the calculation of depreciation.
Total debt on 31st December 2016 was 309.1 million Baht, a decrease of 187.1 million Baht from the figure on 31st December 2015. This was mostly due to decreased purchases of raw materials and machinery.
Shareholders’ Equity on 31st December 2016 was 4,884.1 million Baht, an increase of 9.2 million Baht from the figure on 31st December 2015.
Cash Flow Analysis
The Company had a net cash flow of 1,062.0 million Baht on 31st December 2016. Cash flow from operating activities was 878.0 million Baht. The cash used for investing in new products as well as maintenance and production process development totaled 203.5 million Baht. An amount of 366.0 million Baht was allocated for financing activities. The bulk of this cash was used to pay dividends to shareholders.
Prospects of the Automotive Industry in 2017
According to the former first-car tax rebate policy of the government, the buyers must own the vehicle for at least 5 years. As such condition will be due in the 4th quarter of 2016, it is estimated that Thailand’s automotive industry will gradually see improvement in 2017. Based on the announcement of the Federation of Thai Industries’ automotive group, the total production of all types of vehicles in 2017 was targeted at 2.0 million cars, an increase of 2.86%, compared to the year 2016. In this regard, the production for domestic sales was 800,000 cars, representing 40% of the total production, and the production for export sales was 1.2 million cars, representing 60% of the total production.
Directions of the Company in 2017
The Company and its subsidiary companies continue its focus on the strategy to retain market share for one-ton pick-up trucks, while also expanding its business to non-one-ton pick-up truck sectors, such as Big Bikes, Big Trucks, and Passenger Cars. There are also opportunities to expand the Company’s business into non-automotive parts, such as Agricultural Machinery and Home Appliances, to diversify the Company’s business bases. In 2017, the Company and its subsidiary companies also put emphasis on extending the opportunities in the overseas markets, possibly through the direct export or foreign investment as deemed appropriate. This is meant to diversify risks and contribute to the stable and sustainable growth of the Company and its subsidiary companies, being known as “The Manufacturer of Choice for Customers with World Class Quality”, that maximize returns to all stakeholders.
(Chief Executive Officer)