SINGAPORE (May 14): Sri Trang Agro-Industry reported a 109% surge in 1Q18 earnings to THB831.8 million ($34.8 million) from earnings of THB7.6 million a year ago on the back of higher operating profit and gross profit margins.
Group revenue fell 38% on-year to THB17.7 billion due to a decline in both natural rubber (NR) average selling prices (ASPs) and sales volume, due to a drop in export volume following the implementation of an export quota and in line with the NR prices on the global markets, respectively.
The group also attributes the lower NR sales to continued pressure from excess supply that lingered from last year, while highlighting that Jan-Feb also coincided with Thailand’s NR peak season.
While export volume to China fell the most, the group notes that it nonetheless remained its largest market accounting for 46.1% of total sales volume, whereas other Asian markets accounted for 24.6% of total sales volume followed by European and the US markets at 4.9% and 4.4% respectively.
Revenue from the gloves business however grew 53.3% on-year to THB2.6 billion, partially because of a change in accounting method of STGT from being a JV to a subsidiary, as well as the expansion of gloves sales.
Meanwhile, revenue from other products and services came in at THB 29.6 million.
Share of profits from investments in associates and JVs grew 38.3% over the quarter to THB 80.1 million, which was attributed to improved operating results of Sri Trang’s JVs on NR and high-pressure hydraulic hoses.
Administrative expenses halved to THB 433.9 million from THB 969.7 million in the absence of expenses from the group’s demerger of STA and Semperit recorded in 1Q17.
In all, Sri Trang saw improved profitability over the quarter with a gross profit margin of 8.5%, and an adjusted gross profit margin of 12.4% due to robust demand from both domestic and overseas tire manufacturers as well as relatively stable NR prices.
Going forward, it expects a substantial increase in NR supply after the end of the wintering season, or a shortened wintering season, to continue supressing NR prices even as consumption by overseas tire manufacturers is expected to grow.
Shares in Sri Trang closed 1 cent lower at 49 cents on Monday.
