In 2017, the Thai automotive industry started to increasingly show signs of recovery. According to a business overview of the automotive industry in 2017 presented by the Federation of Thai Industries’ automotive group, the domestic sales volume was 871,650 cars, an increase of 13.4%, compared to the year 2016. The total production of vehicles was 1,988,823 cars, an increase of 2.3%, compared to the year 2016, whereby the production volume of one-ton pick-up trucks (including modified pick-up trucks) was 1,130,058 cars, an increase of 2.5%, compared to the year 2016.
The Company and its subsidiary companies generated total sales revenue of 3,927.5 million Baht, an increase of 5.9%, compared to the year 2016. The corporate performance was superior to the industry trends.
Cost of Goods Sold
In 2017, the Company and its subsidiary companies had COGS of 3,157.3 million Baht, whereby the ratio of COGS to sales revenue decreased by 5.7%, compared to the year 2016. This is due to the manufacturing process improvement, and cost reduction program, as well as decreased depreciation resulting from the end of service life of some functional machines.
Selling and Administrative Expenses
In 2017, the Company and its subsidiary companies had selling and administrative expenses of 175.1 million Baht, an increase of 6.2%, compared to the year 2016, due to increased selling activities.
In 2017, the Company and its subsidiary companies had a net profit of 641.5 million Baht, an increase of 67.9%, compared to the year 2016.
On 31 December 2017, the Company had total assets of 5,544.0 million Baht. Current assets rose by 768.4 million Baht from the figure on December 31, 2016. Cash and cash equivalents increased by 435.9 million Baht. Inventories were reduced by 52.1 million Baht in order to be proportionate to sales. Non-current assets decreased by 417.5 million Baht due to the calculation of depreciation.
Total debt on December 31, 2017 was 446.4 million Baht, an increase of 137.3 million Baht from the figure on December 31, 2016. This was mostly due to increased purchases of raw materials in line with increased sales.
Shareholders’ Equity on December 31, 2017 was 5,097.6 million Baht, an increase of 213.4 million Baht from the figure on December 31, 2016.
Cash Flow Analysis
The Company had a net cash flow of 1,497.9 million Baht on December 31, 2017. Cash flow from operating activities was 1,205.8 million Baht. The cash used for investing in new products as well as maintenance and production process development totaled 343.4 million Baht. An amount of 427.0 million Baht was allocated for financing activities. The bulk of this cash was used to pay dividends to shareholders.
On April 28, 2017, the 2017 Annual General Meeting of Shareholders resolved to approve the appointment of 2 new directors, namely, Mr. Koonchorn Raomanachai and Mr. Phon-ake Rungrojkitiyot, resulting in an increase from 9 to 11 directors.
On August 18, 2017, the Company was certified as a member of Thailand's Private Sector Collective Action Coalition against Corruption.
On August 25, 2017, the Company and its 4 subsidiary companies received the Outstanding Organization Award for Labor Relations and Welfare, as well as Standard on Prevention and Solution to Drugs Problems in an Establishment certificate from the Department of Labor Protection and Welfare, Ministry of Labor, for 2 consecutive years.
On September 12, 2017, the Company received an honorable certificate on Good Labor Practices: GLP from the Department of Labor Protection and Welfare, Ministry of Labor, showing the Company’s commitment in applying the good labor practices in labor management.
On October 17, 2017, the Company was notified of the Corporate Governance Report of Thai Listed Companies 2017 by Thai Institute of Directors (IOD) in association with the Stock Exchange of Thailand that the Company achieved “Very Good” recognition level (4 logos), being classified in the top quartile: 3,000-9,999 MB. Market Cap.
On November 8, 2017, the Company was announced by the Stock Exchange of Thailand as one of the listed companies in Thailand Sustainability Investment 2017 (THSI) list for 2 consecutive years.
On November 21, 2017, the Company submitted the letter to the Stock Exchange of Thailand to notify that the Company was selected as a manufacturer of aluminium parts for 2 new projects of electric vehicles. The total value of the projects exceeded 2,000 million Baht.
On December 12, 2017, the Company submitted the letter to the Stock Exchange of Thailand to notify the asset acquisition that P.C.S. Machine Group Holding GmbH and P.C.S. Precision Works Germany GmbH which are subsidiary companies established under German law, as well as a subsidiary company to be established under Hungarian law would purchase assets from H.J. Küpper Metallbearbeitung GmbH (HJK), H.J. Küpper System & Modultechnik GmbH (SMT), Zelter GmbH (ZEL), and Küpper Hungaria (KHU), being collectively called Küpper Group, in an amount of 26.5 million Euros.
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 2017 as follows:
- The following parts were delivered and the revenue was recognized in Q1 of the year 2017 under the 5-8 year project in a total amount of 1,200 million Baht:
- 1 part for passenger cars
- 3 parts for non-automotive sector
- • The following parts were delivered and the revenue was recognized in Q2 of the year 2017 under the 4-6 year project in a total amount of 300 million Baht:
- 1 part for one-ton pick-up truck
- 1 part for passenger cars
- 2 parts for non-automotive sector
- The following parts were delivered and the revenue was recognized in Q3 of the year 2017 under the 4-year project in a total amount of 100 million Baht:
- 3 parts for passenger cars
- The following parts were delivered and the revenue was recognized in Q4 of the year 2017 under the 4-5 year project in a total amount of 100 million Baht:
- 4 parts for passenger cars
(Chief Executive Officer )
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. 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. As a consequence, the Company was announced by the Stock Exchange of Thailand as one of 65 firms in Thailand Sustainability Investment 2017 (THSI) list.
Society, Communities, and Public Authorities
- To contribute to local employment at a ratio of 86% of all employees.
- To support the project on developing personnel for the industry in collaboration with Nakhonratchasima Technical College, Suranaree University of Technology, and Mahasarakham Technical College through the Dual Vocational Training Program. There are totally 72 students participating in the program, and these students completed the program in April 2017.
- To contribute to developing and expanding educational excellence by allowing students to visit the Company’s production line, comprising 204 students from 3 educational institutes.
- To welcome a group led by Mr. Uttama Sawanayon, Minister of the Ministry of Industry, including other groups of public authorities, minor shareholders, and investors who visited the Company in 2017, totaling 10 groups, comprising 180 visitors.
- To give medical equipment, consisting of the craniotomy surgical instrument set and mobile water purification unit for dialysis machine, in a total amount of 2,090,000 Baht to Debaratana Nakhonratchasima Hospital, Nakhon Ratchasima Province.
- To join traditional and cultural activities, as well as environmental conservation programs with the local administrative organization in Kokgroad Sub-district, totaling 4 activities, including Children’s Day, Songkran Festival, Reforestation, and engage in fostering Buddhism by offering three garments of Buddhist monks on Buddhist Lent Day to temples in Kokgroad Sub-district.
- To continue implementing the computer for students project for 4 consecutive years by providing 10 computers to Nikhom Sang Ton Eng Phimai 6 School in Phimai District, Nakhon Ratchasima Province.
- To join activities of doing good deeds with a pure heart in cooperation with Nakhon Ratchasima Red Cross Chapter, i.e., to give food and drinking water to relatives of patients at Maharat Nakhon Ratchasima Hospital every month.
- To collaborate with the Thai Red Cross Society in carrying out blood donation activities for 4 consecutive years under the blood donation project in dedication to His Majesty the Late King Bhumibol Adulyadej, totaling 224,000 cc. of donated blood.
The Company put emphasis on taking part in the community and social development. In 2017, we provided supports for the following activities:
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 are allowed to involve in regularly conducting CSR activities of the Company as reflected in the Outstanding Organization Award for Labor Relations and Welfare given to the Company and its 4 subsidiary companies for 2 consecutive years.
Natural Resources and Environmental Development
The Company is determined to conduct business with consideration on environmental preservation, pollution prevention, and environmental impact reduction. Therefore, the Company initiated the project on the 5 MWdc solar panels to generate electricity on the rooftop at P.C.S. Precision Works Co., Ltd. for internal use. In 2017, the Company is able to produce electricity of up to 6,736,876 KWh, contributing to reducing CO2 emissions by 3,788.82 metric tons, and the electricity cost is estimated to be reduced by a total of over 28.57 million Baht. Moreover, the Company provides the opportunities for interested people from both public and private sector to experience the project field trip, welcoming a total of 152 visitors from 10 groups.
In addition, P.C.S. Die Casting Co., Ltd. arranged a public hearing on the draft report on how to prevent and solve environmental impacts and how to monitor environmental impacts on the nearby communities within the radius of 5 kilometers in order to prepare the Environmental Impact Assessment Report (EIA) for the production capacity expansion project.
P.C.S. Precision Works Co., Ltd. received the Environmental Good Governance Awards 2017 from the Ministry of Industry.
Prospects of the Automobile Industry in 2018
Thailand’s automotive industry continues to see the growth momentum more obviously. However, since the industry has been sluggish for a long time, it is estimated that Thailand’s automotive industry will gradually see improvement. Based on the announcement of the Federation of Thai Industries’ automotive group, the total production of all types of vehicles in 2018 was targeted at 2.0 million cars, an increase of 0.56%, compared to the year 2017. In this regard, the production for domestic sales was 900,000 cars, and the production for export sales was 1,100,000 cars.
Directions of the Company in 2018
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 electric vehicles and 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, so as to diversify the Company’s business bases.
In 2018, the Company is planning to extend the investment opportunities in Europe through the purchase of partial assets from Küpper Group in Germany and Hungary in order to expand the major production bases for modern engines in the region that provide more accessibility to customers, as well as enhance the opportunities to venture into new businesses of electric vehicle parts. 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)