Sri Trang proposes record dividend to cap a year of historic highs

The board of Sri Trang Agro-Industry Plc (STA) is seeking approval from shareholders for a final dividend payment at 0.65 baht per share for 2021, taking total dividend for the year to an all-time high.

Ex-dividend will be posted on April 19 this year.

The company hit a record-high net profit of 15.84 billion baht, up 13.4 per cent year on year, thanks to increased cost management efficiency and higher demand for natural rubber.

Sales of rubber last year hit the target of 1.3 million tons, increasing market share in both Thailand and abroad.

STA, the world’s leading producer and distributor of integrated natural rubber products and Thailand’s largest producer of latex gloves, also expected expansion in production capacities to further boost growth in 2022.

The company's chief executive officer, Veerasith Sinchareonkul, said 2021 was a golden year for the company with revenue from sales and service reaching 118.27 billion baht, up 56.7 per cent year on year, the highest in a decade.

In addition to the historic high net profit, the company said gross profit for natural rubber operations exceeded 12 per cent for each quarter, setting a new standard for the country’s rubber industry, he added.

He said some of the highlights of last year’s performance and the factors behind them were:

● Sales of natural rubber increased to 1.3 million tons as targeted, up 25.4 per cent over the previous year, which was higher than the market’s overall growth.

● The rubber industry has been on an uptrend and the recovery of the auto tyre industry increased the demand for natural rubber.

● Cost efficiency has been enhanced by such initiatives as investment in production technologies that keep labour demand down, and the introduction of “Sri Trang for Growers” app to facilitate rubber trading and communication with rubber growers.

● The company has been able to set rubber prices higher than the prevailing average global rates.

“Our natural rubber sales over the past year increased considerably. Our machines [for all types of rubber] ran on average 70 per cent of the time all year round compared to 55 per cent in 2020. And specifically for block rubber, our machines in Thailand ran on average over 80 per cent the whole year compared to 57 per cent in 2020,” Veerasith said.

The company’s board of directors on February 17 resolved to pay a final dividend of 0.65 baht per share and to declare XD on April 19, with the payment to be made on May 6. The board’s resolution will be placed before shareholders at the annual general meeting for approval.

In 2021, dividend payment for the first quarter was 1.00 baht per share, 1.25 baht per share for the second quarter and 1.25 baht per share for the third quarter. Together with the fourth quarter payment, the total dividend for the entire year amounts to 4.15 baht per share, the highest payout in the company’s history.

Veerasith said he expects 2022 to be another year of sustained growth. Sales of natural rubber could rise to 1.6 million tons, more than 20 per cent higher than last year’s performance. Contributory factors include market expansion in Thailand and overseas, the uptrend in the global natural rubber industry, as well as the company’s continuing expansion of production capacities throughout all quarters.

Veerasith said the company’s facilities in Phitsanulok, Bung Kan, Sakon Nakhon, and Trang provinces will have an increased capacity of more than 290,000 tons of block rubber production per year while the plants in Bung Kan, Narathiwat and Surat Thani (Kanchanadit district) provinces will increase the production of concentrated latex by more than 180,000 tons per year.

In addition, the sales price of TSR20 block rubber on Singapore’s futures exchange is expected to be on an uptrend as well, averaging no less than 171 cents per kilogram for the year compared to 167 cents per kilogram in the previous year, he added.

"In another development, STA has begun planting hemp in its plantations in the Thoen district of Lampang province. The land has undergone tests to ensure the absence of heavy metal contamination. The pilot plot will yield the first harvest in April," he said.

"Future produce, including seeds, leaves, and roots, will be delivered to customers who have placed pre-orders, or who have signed business cooperation agreements with the company," the CEO said.