SSI expects record revenue this year

Sahaviriya Steel Industries (SSI), Thailand’s largest hot-rolled-coil manufacturer, is headed for record revenue of more than Bt50 billion this year, and that number is expected to grow to Bt70 billion in 2013 once SSI Teeside is running at its full annual capacity of 3.6 million tonnes. 

The company this year is forecast to return to profitability, mainly on the commencement of SSI Teeside’s slab production in the first quarter and increased steel consumption in Thailand in main sectors including construction, automotive and electronics. 

Group president and chief executive officer Win Viriyaprapaikit said yesterday that the company was anticipated to produce more than 2.24 million tonnes of hot-rolled coil steel in Thailand this year, the same as in 2010. The utilisation rate of the Thai production this year therefore will rise to 55-60 per cent on average, higher than 39 per cent in 2011. 

Domestic demand for steel is forecast at 15 million tonnes, up from 14.6 million tonnes last year, driven by the construction, automotive, electronics, and food-packaging sectors. 

These factors should generate revenue of Bt13 billion from SSI’s hot-rolled-coil production alone in the first quarter. 

About 9 million tonnes or 60 per cent of steel consumption in Thailand is by the construction sector, 2 million tonnes by the automotive industry, and roughly 600,000 tonnes by the food-packaging sector, Win said. 

He said another supporting factor was the restoration of production by SSI Teeside after the company acquired UK-based Teeside Cast Products, a slab and coke plant in northeastern England, last year. SSI has set up Sahaviriya Steel Industries UK (SSI UK) to operate the Teeside plant. 

The company will restart the slab production there in March. About two-thirds of the slab output will be shifted to serve the hot-rolled-coil production in Thailand, and the rest will be sold to clients in Europe. 

“SSI’s revenue in the first quarter of this year will hit a record Bt15 billion, of which Bt13 billion will come from the hot-rolled-coil production and Bt2 billion from selling coke from SSI UK. Revenue will improve in the third and fourth quarters once SSI UK has a utilisation rate of more than 90 per cent and nearly reaches full capacity by late in the year,” Win said. 

He added that SSI UK’s earnings before interest, taxes, depreciation and amortisation (EBITDA) would reach break-even point if the plant’s utilisation rate is higher than 90 per cent. 

Operating results of SSI UK this year may still post a loss, but it is expected to turn a profit in 2013 once it is up to full capacity of 3.6 million tonnes per year. 

“SSI UK is targeted to generate revenue of Bt20 billion next year. If we include the revenue from the Thai production, the company’s total revenue in 2013 is expected to go as high as Bt70 billion,” he said.