Phoenix eyes 50% growth after capacity boost

Phoenix Pulp and Paper has targeted revenue growth of 50 per cent this year, from Bt4 billion to Bt6 billion, following an increase in its capacity to produce uncoated paper.

The company is the Khon Kaen subsidiary of the Siam Cement Group.

It has invested in new machinery to boost its production capacity an additional 200,000 tonnes from 350,000 tonnes previously.

Managing director Terasak Chamikorn said production would rise 100,000 tonnes this year and reach full capacity next year. The company makes wood pulp from eucalyptus trees, and paper produced from the pulp is used mainly to supply the domestic market. However, about 20 per cent of its uncoated paper is exported.

He said with the company's plant producing 450,000 tonnes a year, revenue would reach Bt6 billion this year and climb to Bt8 billion within two years of reaching full annual capacity of 550,000 tonnes.

However, Terasak said despite

the increased revenue, this year's

net profit was expected to be

only Bt500 million, the same as

last year, because of increases in

the cost of oil and wood pulp.

"The cost of energy alone is more than 35 per cent of our total operating costs," he said. "And the strong baht is a pressure factor on our margin."

Terasak said although Phoenix Pulp and Paper made its own wood pulp, the amount was insufficient to supply domestic demand for paper, so the company not only imported pulp, but also bought it locally from farmer growers. Local purchases help reduce imports and save money. However, the local pulp costs Bt1,000 a tonne, and the cost of transporting it is such that the company has set up collection points in the Northeast, in order to save fuel.

He said the present price for uncoated paper was US$800 (Bt26,500) per tonne and that the trend was rising, with increases expected to average $20 to $30.

Project manager Surasak Amawat said the company would increase its production of wood pulp as well as uncoated paper.

The price of uncoated paper is increasing, because of the development of education, and Phoenix has room to grow, because the kind of paper its makes is used for writing and printing, especially textbooks, magazines and newspapers.