Christiani & Nielsen to be more selective in bids amid tough competition

Most major projects were put on hold during the transition from an elected administration to the current military-led government, Surasak Osathanugraha, a director of CNT, said yesterday.

CNT passed its lowest point last quarter when it set aside provisions for losses from two projects. However, it believes the situation will turn for the better this quarter. 

CNT will be more selective by focusing on high-margin projects next year, as it plans to bid for at least Bt250 billion worth of state projects, such as the Green, Orange, Pink and Yellow mass-transit routes and three dual-track railway routes. 

The firm expects next year’s revenue growth to be fairly flat, but a profit margin of 8-10 per cent is within reach, which is better than the current 6-8 per cent. 

In the first nine months of this year, CNT incurred a loss of Bt155 million from two projects worth more than Bt2 billion each. The company expected the loss, due mainly to rising labour costs, and allocated a reserve of about 80 per cent against that figure. 

For next year, CNT targets revenue of about Bt7 billion to Bt9 billion, assuming that the competitive environment will remain unchanged. However, the company believes its profit margin will improve to about 5 per cent in line with the projection for economic growth.

It also has a Bt6.49 billion backlog that will be fully booked as revenue next year. 

CNT will focus on hyper-margin projects, which will rise to 50 per cent of revenue from 41.5 per cent at present. 

CNT will postpone its plan to raise capital through a Bt175-million debenture issue via private placement, but will propose the plan to the board next year to consider how to proceed with it. CNT still has funding options from financial institutions, even though its debt-to-equity ratio remains at 2 times, while the figure for debt requiring interest payments is 0.8.