Thai Rung Union Car, Thailand’s largest pickup truck modifier, said on Tuesday it had cut its 2006 revenue and net profit targets due to weaker economy and stiff competition.
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Thai Rung, which said in March it expected a 20% rise in revenues this year, now forecast a 9-12% fall from 2.9bn baht ($79m) last year and a net profit short of last year’s 119.7m baht, a top executive told Reuters.
“The overall picture this year is weak. Our revenues and net profit should be lower than last year,” managing director Sompong Phaoenchoke told a new conference.
Thai Rung’s second quarter profit fell a larger than expected 83% to 3m baht due to lower sales and weak gross margins. Its revenues in the first half were 1.2bn baht and it made a net profit of 29.4m baht.
The weakened earnings were due to high oil prices, rising interest rates, domestic political turmoil and intense competition, Sompong said, according to the news agency.
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By GlobalDataSales of modified pick up trucks had fallen to 60-70 per month so far this year from 400-500 per month last year, he said.
Thai Rung faced competition from top car makers’ models such as Toyota’s Fortuner and Isuzu’s MU-7, analysts told Reuters.
Reuters cited Sompong as saying auto-parts sales would rise 30% to 1.2bn baht this year. He had said earlier the firm aimed to boost revenues from its original equipment manufacturing (OEM) businesses to 50-60% of revenues over the next 2-3 years.
It would spend 620-720m baht this year as planned on a new plant and new machinery and invest another 500-600m baht to build an auto-parts plant early next year, he said.
Overall domestic vehicle sales would rise a mere 3% this year from about 700,000 last year, he said.
Two analysts polled by Reuters Estimates had a mean 2006 revenue forecast of 3.3bn baht for Thai Rung and a mean net profit forecast of 195m baht for the year.
Reuters noted that Thai Rung has entered a deal with India’s bus and truck maker Tata Motors to assemble and manufacture parts for pickup trucks.
