'BGC' transforms business model towards 'Total Packaging Solution' M&A investment plan given green light to double growth in 5 years

Monday 22 February 2021 15:16
BG Container Glass Public Company Limited (BGC) is set to build up its business towards "Total Packaging Solution" to become the leader in integrated packaging while planning to at least double the revenue growth in the next five years from 10,000 million baht to 25,000 million baht. At the same time the Board of Directors has approved the M&A investment plan in two companies that are in the business of producing and distributing plastic films, plastic caps, PET bottles, preform and corrugated paper boxes, in order to improve the ability to boost sales. The proposal is being prepared to be tabled for approval at the Annual General Shareholders Meeting. As for the year 2021, the target is for a 35-percent growth over 2020 when the revenue from sales was 10,968 million baht and the net profit was 516 million baht, while the approved dividend payment was 0.12 baht per share.
'BGC' transforms business model towards 'Total Packaging Solution' MA investment plan given green light to double growth in 5 years

Mr. Silparat Watthanakasetr, Chief Executive Officer, BG Container Glass Public Company Limited (BGC), the major producer and distributor of glass containers in Thailand and ASEAN, revealed that the Company has put in place the policy to build up BGC's business from being the producer and distributor of glass packaging to become the Total Packaging Solution Provider to increase its operational strength to support the doubling of revenue growth from 10,000 million baht to 25,000 million baht within 2025. At the same time, the Company's vision has been redefined as "Bringing Good Value to Everyone Everyday" to reflect the Company's determination to bring the best in value to everyone on a daily basis with quality packaging under the mission to provide value to all stakeholders, namely, shareholders, customers, employees as well as the society and the world.

"During the past year, we faced many challenges due to the impact wrought by the COVID-19 pandemic. However, we managed to achieve satisfactory performance as we look further for opportunities to develop our business to make business stronger, as well as to invest in mergers and acquisitions (M&A) to further expansion in both product related to glasspackaging and existing business. This is to fulfill our target to become the 'Total Packaging Solution Provider', or the integrated packaging producer and distributor, from currently being the producer and distributor of glass packaging. With that goal, the Company can offer a wider variety of packaging and services, from glass packaging to plastic films, plastic caps, PET bottles, preform and corrugated paper boxes. This will increase the sales opportunities from each customer and strengthen the business operations," Mr. Silparat said.

Most recently, on February 18, 2021, BCG Board of Directors has approved the M&A investment plan involving two companies. These are: (1) the 100-percent shares acquisition of BG Packaging Company Limited (BGP), the producer and distributor of plastic films, plastic caps, PET bottles, preform; and (2) the 100-percent shares acquisition of Bangkok Visypak Company Limited (BVP), the producer and distributor of corrugated paper boxes with the production capacity of 50,000 tons per year. These two M&A's require a total investment of approximately 1,650 million baht with loans from domestic financial institutions, while the Company will still maintain its D/E ratio at not more than 2.5.

The business operations of both acquisitions have shown continuous profit in the past; therefore, it is with confidence that this investment will help to further strengthen the business capability and BGC's performance due to the additional revenue and profit to be realized from both companies following the completion of the M&A process. In addition, the Company will be able to offer one-stop service from packaging to labels, caps and corrugated paper boxes, supported by experienced and expert teams in the packaging industry along with the latest in design technology. Also, this investment will increase the level of convenience for the customers through the offering of a wide variety of products and services. It is expected that the Company will start to realize the revenue related to this investment as from May 2021 onward, pending approval at the 2021 Annual General Shareholders Meeting.

At the same time, the Company has set the expansion target to increase the capability of being the "Total Packaging Solution Provider' that will result in the change of revenue structure in the future. It is expected that in the next five years, the Company will achieve about 55 percent of the total revenue from glass packaging; 40 percent from products related to glass packaging and 5 percent from energy business. This is in contrast to the present when 95 percent of the total revenue was derived from glass packaging and 5 percent from the energy business.

Mr. Silparat said further that although there were economic problems arising along with the negative impact from the curfew, lockdown and the prohibition on the sales of alcoholic drinks in a bid to contain the COVID-19 pandemic, as well as the increase in energy costs in the last quarter of 2020, the Company still managed to post a net profit of 516 million baht, or about the same as in 2019 when a net profit of 512 million baht was achieved. This is despite the revenue from sales of 10,968 million baht which was a drop from 11,252 million baht in revenue from sales in 2019. With due consideration, the Company's Board of Directors has approved the dividend payment in relations to the 04/2020 performance of 0.12 baht per share, totaling more than 83 million baht. XD mark is expected to be posted on April 21, 2021, with the dividend payment to be made on May 7, 2021.

Meanwhile, the government measures to contain the new wave of COVID-19 epidemic this past January has no clear impact on the demand for packaging. At present, the Company is still receiving regular orders. As for the increase in the energy cost at the end of last year, the Company has a plan to tackle this problem by increasing the variety of fuels being utilized to spread the risk and to increase the use of cullets in the production process to reduce energy consumption, and control the fuel feed to achieve the utmost efficiency. However, it is expected that the Company will have a positive impact from the steady decline in the price of soda ash, which is the main raw material in the production of glass, as well as the stable price of cullets. The Company has set the total revenue target for 2021 at 35 percent above the previous year's as a result of the M&A business expansion plan.

Source: MT Multimedia