Delta buys German site, eyes high-margin items
DELTA ELECTRONICS (Thailand), a power supply and electronic equipment producer, will purchase a 12-million Euro (Bt500 million) industrial estate in Germany to set up a wind turbine plant as part of its focus on high-margin goods.
Delta also plans to expand into the African market. It expects to achieve record net profits this year.
Anusorn Muttaraid, an executive director, said yesterday that the board of directors resolved to shift from leasing factory space at a German industrial estate to acquiring it. The remaining unused factory space will be leased to other businesses.
Besides Bt1 billion in cash and access to bank loans, Delta is also looking at other funding sources. The company’s debt-to-equity ratio was 0.49 times as of the end of the second quarter.
New products such as wind turbines offer higher margins than other products. The company already has 10 orders, with the first to be installed this quarter in India. Income from that job is expected to be booked at the end of this quarter or the beginning of next quarter.
The rest are pending the signing of contracts.
Delta plans to introduce wind turbines and other products in Asean, Australia and Africa.
Delta’s core products, such as telecom equipment, power supplies and solar cells, still account for most of its sales, which have started to decline. The higher margin products will hopefully alleviate the declining capacity to generate profits from its regular products.
Delta expects to post record high net profit this year after earning Bt2.68 billion in the first half compared to Bt1.61 billion in the same half of last year. The company believes profits will continue to grow in the second half, especially after sales of the high margin wind turbines this quarter and expansion into the Asean and African markets.
Higher sales seen
Delta believes second-half sales will exceed sales of Bt19.20 billion in the first half, mostly due to new products. Delta has allocated Bt500 million-Bt800 million to buy new machinery. The acquisition of business to support Delta’s expansion may not be visible this year, but Delta would increase its production capacity in Slovakia in the next phase to serve as a manufacturing base and to facilitate Africa and Europe’s imports.
For next year, Delta projects higher net profits based on higher-margin products and expansion into new markets that offer vast business opportunities.
