At the time of writing the Chairman’s report last year, I noted that “the very recent emergence of Coronavirus as a threat is expected to impact certainly regional economies if not the global economy. There is little doubt that it will have a negative impact on the tourism sector which may counteract or indeed reverse any growth expectations”. I also noted that “as yet excluding the impact of Coronavirus, consensus GDP growth expectations are reported to be stable compared to the out-turn from 2019 and of the order 2.8%” and further noted the “the impact of the Coronavirus on China’s manufacturing sector is starting to be seen and this will certainly cause some loss of demand which may again place downward pressure on MMA price”. Not only have these predictions unfortunately have been borne out, but the severity of the impact on local, regional and global economies has been significantly worse than most, if not all, contemporary forecasts.
At the time of writing this address this year, whilst there is some room for optimism as the global roll-out of a number of vaccines with reported varying, but significant effectiveness against the prevailing and emergent variants of the virus commences, much uncertainty remains and any forecast of the extent, and in particular the timing of local, regional or global recoveries and subsequent growth must but treated with great caution. As such I will not seek to report or comment on forecasts for Thailand’s or the global economy’s recovery or growth in this report. Rather I shall reflect upon what has been an impressive and pleasing performance by TPA given the operating and trading conditions of 2020 with a brief look-ahead to 2021 based on current trading conditions.
In summary, TPA has had an excellent year in 2020 improving its trading profit from Baht 41 Million in 2019 to Baht 73 Million in 2020. This performance has resulted from a number factors including but not limited to retention of domestic market share, recovery and growth in exports, maintenance of contribution margin despite significant domestic and export competition, raw material procurement improvements and significant increase in demand for cast acrylic sheet for new applications associated with COVID-related protective applications (point of sale screens, medical protective barriers etc). Prevailing economic conditions maintained downward pressure on raw materials although in the second half of the year, global demand for acrylic products (COVID related applications coupled with some demand improvement in conventional sectors (coatings, automotive, optical) has seen MMA price recovery.
Whilst, in absolute terms TPA’s profitability improved most in its Cast Acrylic ranges, in TPA’s other product ranges (extruded sheet), there was also pleasing improvement in profitability resulting primarily from improvement in contribution margin, with the process improvement activities of 2019 translating into significant and sustained improvements to manufacturing costs in 2020.
Overall, the Company reported total revenue in 2020 of Baht 937 million which was 1.0% decrease over last year (Baht 946 million). However, this decrease in revenue was offset by significantly improved contribution margins (22% overall compared to 17% in 2019) resulting in the trading profit of Baht 73 million as reported above. Sales volume was virtually unchanged from 2019 (11.4 kMT vs. 11.5 kMT) when extrusion toll volume is included and improved to 10.1 kMT from 8.6 kMT in 2019 excluding tolled volumes.
TPA ceased to be a Thai-majority owned public Company as a result of changes in the ownership of its major shareholders announced in June 2020. Subsequently, TPA applied for, and was granted, a foreign business licence to allow it to continue with its tolling operations.
Anti-corruption and good-governance remain a focus of the Board of directors and management. As such TPA has continued to work to strengthen its governance and internal control processes during 2020 as part of its continuing Anti-Corruption program for which it received reaccreditation on 30 September, 2020.
Looking ahead, the Company expects that the price of key raw materials (MMA in particular) will increase in 2021 due to supply / demand imbalances at least in the first half of 2021 as a result of continued demand for acrylics productions for COVID-related applications and slow recovery in conventional applications demand. Price competition for TPA product range is expected to remain strong given excess manufacturing capacity in the local and regional markets. The two effects will likely result in some loss in contribution margin. Nevertheless, TPA management shall seek to minimize this and are targeting profitability to be of the same order as achieved in 2020.
In conclusion, TPA has delivered an excellent performance in extremely difficult operating and trading conditions. Not only has the TPA team be able to retain domestic market share, it has grown its export market and improved profitability in both its product ranges.
On behalf of the Board of Directors, I would like to thank the Company’s shareholders, customers, and stakeholders for their support. I would also like to thank Mr Rakchai Sakulteera, his management team, and in particular the employees of TPA for their great efforts to operate the plant safely and reliably in order to supply TPA’s customers with cost competitive, high-quality products despite the significant constraints and precautions necessarily put in place to mitigate the risks associated with the COVID-19 pandemic.
Dr. Benjamin James Harris
Chairman of the Board of Directors