Overseas, state work to lift EMC earnings

Written by changthai11 on Monday, October 6th, 2008

CONSTRUCTION

NUNTAWUN POLKUAMDEE

The construction company EMC aims to double its revenues within the next three years to between five and six billion baht by shifting away from private contracts to state projects as well as expansion overseas.

EMC, which posted first-half revenues of 1.1 billion baht, projects full-year revenues of 2.9 billion for 2008 and 3.3 billion in 2009.

Chairman Chanachai Leenabanchong said EMC would increasingly focus on construction work from systems engineering as well as expand operations to other Asean countries.

Its project backlog currently totals 4.5 billion baht, including two projects announced last month: a 475-million deal for the Aloft Hotel due to be completed in October 2009, and a 74.9-million-baht project for the BU Landmark Complex due in March 2009.

Mr Chanachai said that from 2009 the company would increase its activity in bidding for state development projects as well as overseas work. Currently 90% to 95% of EMC’s projects are private contracts.

He said EMC was also interested in bidding for new energy projects in Cambodia, where demand for electricity was increasing rapidly with economic growth.

The goal was to position EMC to break into the top five of the construction industry, a sector now dominated by Italian-Thai Development, Ch. Karnchang and Sino-Thai Development.

EMC reported first-half profits of 50.85 million baht, up from 41 million in the same period last year. Second-quarter revenues dropped 28% year-on-year to 573.2 million baht, although the company said revenues would rise in the second half as it recognised income from new projects taken in the first half.

Profit margins now are relatively low at 4.8%, but Mr Chanachai, who holds 10% of EMC, expressed confidence that margins would increase as the company shifted more toward construction work.

“While most people know me as an investor, I have been in the construction business for more than 20 years. I graduated as an engineer, and will use my experience to help build up EMC to grow as much as I can,” he said.

“I think the secret to success in the construction industry is cost control. If you can manage your costs, margins and material inventories, then you can be successful.”

Shares of EMC closed on Friday at 0.25 baht, unchanged, in trade worth 7.45 million baht.