Crippled SVI braces for lower profit
Electronic-parts manufacturer SVI fears a drop in its profit for this year after taking an expected loss this final quarter because the floods have put 70 per cent of its production capacity out of commission.
Chief executive officer Pongsak Lothongkam said yesterday that the company’s full-year revenue would not reach the target of US$330 million (Bt10.1 billion) because of the floods, which have devastated its machinery and raw-material inventory at its plant in Bangkadi Industrial Estate in Pathum Thani. SVI expects to lose two months of sales this quarter.
This year’s revenue will still be higher than last year’s, as its third-quarter revenue was $260 million, equal to all of 2010. However, net profit is likely to fall short of last year’s Bt735 million.
SVI reported a third-quarter net profit of Bt688 million, and is likely to see a slight loss in the fourth quarter.
This impact on the company’s operations is likely to prove temporary and the company believes it can maintain its existing customers while seeking new customers to maintain its gross profit margin next year.
SVI expects to have a 100-per-cent insurance pay-out on damages from the floods with a preliminary estimate of Bt4.09 billion, of which Bt1.64 billion is for machinery, Bt1.7 billion for raw materials and Bt700 million for business disruption.
The insurer’s representatives are now assessing the damage.
The highest flood damage was from sodden raw materials, which are completely unusable and need to be reordered. The company has not run into any difficulties in importing raw materials while it faces short supplies of local materials due to the floods.
SVI will likely take the hardest hit this quarter but start recovering in the first quarter of next year and return to normal operations in the second quarter.
Production has shifted to the Chaeng Wattana plant, which provides 30 per cent of total production capacity.
After the flood waters recede late this month, as forecast by Bangkadi management, SVI will salvage its machinery for repair in the expectation that it will be working again in three months, Pongsak said.
