Bangkok: Listed Thoresen Thai Agencies Plc yesterday announced the acquisition of a coal-mining venture in the Philippines, its second deal within a month under a business strategy aimed at offsetting shrinking shipping revenue.
TTA yesterday informed the Stock Exchange of Thailand that it has acquired 21.18% of Merton Group (Cyprus) Ltd, the sole international partner in the Philippines-based SKI Energy Resources Inc (SERI) for 165.65 million baht. Funding came from working capital.
"TTA's primary interests in this investment are to secure a share in a coal production venture and extend our capabilities in coal transport and logistics, which are part of our business diversification strategy," said a TTA statement.
TTA on July 23 spent 374.4 million baht in its first non-shipping acquisition to buy EMC Gestion (EMCG), which is the sole owner of Baconco Co in Vietnam.
Baconco has a licence from the Baria-Vung Tau Industrial Zones Management Authority to produce and market synthetic chemical fertilisers and distribute agricultural products.
The announcement came as the dry-bulk carrier posted a 82.7% fall in net profit year-on-year to 352.6 million baht in the quarter to June, the third quarter of TTA's fiscal year, as revenue sank 45% to 4.9 billion baht from 8.9 billion.
Operating profit was 688 million baht in the quarter while cash equivalents fell by 151.7 million baht, said managing director M.L. Chandchutha Chandratat.
"Amidst the competitive economic environment, TTA remains profitable and generates positive operating cash flows. We have seen stabilisation and even some improvements in our core businesses," he said.
TTA's nine-month earning lost 79.9% to 1.34 billion from 6.72 billion baht a year earlier when revenue fell from 24.47 billion baht to 15.64 billion.
The company's fleet cargo volume for the nine months was 9.206 million revenue tonnes, down 53.5% year-on-year.
The Baltic Dry Index (BDI), said M.L. Chandchutha, had slightly rebounded over the last six months to 3,757 in June, an increase of 24% from October 2008.
"But we do not expect rates to continue with the current uptrend, because China is unlikely to continue with its heavy imports of iron ore and coal," he said.
A full economic recovery still looks remote. The aggressive consumer spending that previously fuelled growth remains in the doldrums. TTA believe these factors will put a cap on the BDI.
"We are still concerned about the shipping market over the course of 2009 and 2010 due to the structural overcapacity and the sustained weak global economic conditions," he said. [18/08/09]
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