RAYONG : Millcon Steel Industries Plc, controlled by a member of the Leeswadtrakul family, has upgraded its revenue target for 2012 to 20 billion from 17 billion baht due to a significant rebound of construction steel demand.
Sittichai: 20 billion baht is new target
The revised target was made although Millcon's acquisition of a wire-rod plant of Thai Special Steel Industry (TSSI) has been delayed, said president and chief executive Sittichai Leeswadtrakul.
The acquisition is expected to be completed in the third quarter, he said.
"What we have achieved in the first six months prompts us to believe we are able to book 20 billion baht in revenue for all of 2012," he said.
Millcon recorded revenue of nearly 10 billion baht in the first six months, including 5.24 billion earned in the first quarter. Thailand's steel demand is slated to grow from 15 million tonnes last year to 16 million this year.
"While the demand has surged, existing domestic supply has been consolidated, balancing supply and lessening price competition," he stated.
Besides, Millcon has begun exporting quake resistant-grade steel to Australia. Export is anticipated to generate 10% of Millcon's revenue this year and rise to 15% in 2013, Mr Sittichai noted.
Millcon's 3-billion-baht acquisition of TSSI needs more time to complete due to the number of legal documents.
Founded by Prachai Leophairattana of Thai Petrochemical Industry, TSSI has annual capacity of 500,000 tonnes of special-grade wire rods and its plant in Rayong stopped production in 2007 due to lack of funding.
In a full year of operation, TSSI will add 9 billion baht to Millcon's top line next year. Some of the output will be exported to Southeast Asia.
Millcon's 5-billion-baht Electric Arc Furnace, the so-called Green Mill plant, commenced commercial operation in February and is now running at full capacity of 500,000 tonnes of billets. Millcon produces 550,000 tonnes a year of steel bars and 300,000 tonnes of structural steel.
The backward integration to produce billets from steel scraps instead of imports will improve Millcon's margin. Billets are priced at US$650 per tonne compared with $400 per tonne of scrap. Lower costs should help its projected EBITDA margin rise to 8-10% this year from about 5% earlier.
Asean's steel usage stands at 50 million tonnes a year, he added.
Millcon earned 133 million baht in the first quarter following a loss of 56 million baht in the final quarter of 2011. First-quarter revenue increased 43% year-on-year and 52% quarter-on-quarter.
Shares of MILL closed on the SET at 2.40 baht yesterday, up two satang, in trade worth 930,000 baht.
