Slowing global economy forces ETG to revise down revenue target for 2007

Business News : Monday December 10, 2007

LOGISTICS / PERFORMANCE AND OUTLOOK

Slowing global economy forces ETG to revise down revenue target for 2007

ARANEE JAIIMSIN

Eternity Grand Logistics Plc (ETG), the MAI-listed logistics service provider, projects revenue of 1.1 billion baht in 2007, short of its earlier projection of 1.2 billion baht.

Managing director Poonsak Thiapairat attributed the lower-than-expected performance to a stagnant world economy that has resulted in declining export and import activities, as well as unstable local politics.

However, ETG still post higher revenue than last year, when it had sales of 1.05 billion baht and a net profit of 45 million.

The company reported revenue in the first nine months of 2007 at 793 million baht, an increase of 1.54% from 781 million in the same period last year. Net profit rose 23.8% to 26 million baht.

ETG targets a growth rate of between 20% to 30% per year in next three years, aiming to reach two billion baht in sales by 2011.

''Operational improvement swill enable us to achieve the sales target,'' said Mr Poonsak.

The logistics service provider has completed a three-year-business plan and strategy already and will discuss it with analysts in April, according to Mr Poonsak,

The company also expect to finalise a deal with a potential partner in January, with another strategic partner to be brought in within the next three years.

He said the two partnerships would help ETG improve its core business operation and financial status.

The arrival of the new partners, who could be either local or foreign companies, would also dilute the holdings of existing shareholders by 20% to 25%, he said.

Existing shareholders would continue to hold majority stakes, accounting for over 50% after dilution, said Mr Poonsak.

The new funds injected by the partners would help the company maintain its debt-to-equity ratio at no more than two times despite further investment plans. Its debt-to-equity ratio is slightly more than two times, said Mr Poonsak. Diesel is the main fuel for ETG's trucking fleet. Fuel accounts for 30% of operating costs; however, ETG has managed to pass high energy costs on to customers through fuel charges.

The company is also attempting to reduce energy consumption by modifying its truck engines to combustion natural gas (CNG) engines, with 60 trucks to be switched by March. The company would invest 15 million baht in 2008 in a natural gas for vehicles (NGV) station at its warehouse in Lat Krabang.

''Our own NGV station would secure us an NGV supply for the fleet, in case there are shortages in the future,'' said Mr Poonsak.

ETG share closed on Friday on the Market for Alternative Investment at 4.96 baht, unchanged in trade worth 150,000 baht.

By : Bangkok Post