Khonburi Sugar to boost output capacity

Khonburi Sugar, a listed sugar miller, will increase its production capacity by 2,000 tonnes to 23,000 tonnes per day, expecting income to increase by 5-7 per cent on the back of likely rises in sugar prices.

KBS director Issara Twiltermsup said the company would raise its daily production from 21,000 to 23,000 tonnes this year and to 25,000 tonnes next year. It expects to invest Bt200 million in the expansion, which will be financed through an initial public offering.
This year, sugar prices are on the uptrend, driven by the Thai Cane and Sugar Corporation. Prices could stabilise at 22-25 US cents per pound in 2013. Currently, the price averages 24.75 cents per pound, the highest in history, compared with last year's 22.50 cents.
This year, Issara expects to have 2.8 million tonnes of sugar cane for milling with net profit margin of 13 per cent, close to last year's figure. The company currently focuses on producing white and refined sugar.
KBS is raising its refined-sugar production to 1,200 tonnes per |day from 1,000 tonnes. Its extraction efficiency has also improved, prompting sugar yield of up to 104 per cent from 102.5 per cent.
"Given the higher sugar price, the capacity increase and forward sales for 2013, the company expects to see its revenue grow 5-7 per cent this year. Such an estimate is not high, as growth in the quantity of sugar cane is expected to be flat. What we could do this year is improve machine efficiency for white sugar," Issara said.
KBS forward contracts account for 15 per cent of its production capacity at an average price of 24.50 cents per pound.
Competition is not a concern, as KBS has signed contracts with overseas and domestic customers. It exports 70 per cent of its sugar and distributes the remainder in the Kingdom.
About 80 per cent of its domestic sales have been contracted and the remainder is planned for retail and general customers. More than 90 per cent of its overseas sales have been committed at prices comparable to those of the Thai Cane and Sugar Corp.
KBS plans to expand its power generation from 5 megawatts to 7-10MW with total investment of about Bt500 million. The expansion is expected to be complete in 2014. The electricity will be sold to the Provincial Electricity Authority.
The company has been studying ways to operate an ethanol business, aiming to produce more than 300,000 litres per day. This business would be operated by Khonburi Energy Co.
"We believe [we will have] a clearer picture within five years [for ethanol business]. Investment needs allies. We don't want capital from anyone but we need technology," Issara said.
KBS also plans to produce small cane-harvesting vehicles for commercial purposes with an estimated investment of Bt150 million. The plan is in response to higher demand for such vehicles from neighbouring countries such as Laos and Cambodia. This year, the company will produce between seven and 10 vehicles for internal use and expects to put such products on the market in 2014.


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