NER expects revenues in 2023 to rise by 20% as it looks to penetrate Indian market and expand business lines

North East Rubber Plc, one of the leading listed rubber players in Thailand, has come out to say that it expects its revenues during this year to rise by as much as 20% thanks to the rising demand of its products and expansion into new markets such as India.

NER, which has a market capitalization of just about 12 billion Baht, has seen its net revenues rise over the past few years from just 13 billion Baht in 2019 to 18 billion Baht for the 9-months ending September 2022, said that it was expecting its revenues for 2022 to hit 25 billion Baht. It was 24.45 billion Baht in 2021.

Chuwit Jungtanasomboon, the chief executive officer and also the single largest shareholder of NER, came out to say that for 2023 the revenues would reach as high as 30 billion Baht as the sales volumes of NER would rise to 500,000 tons against 460,000 tons seen during 2022.

Chuwit also came out to say that NER would also be investing up to 400 million Baht in capital expenditure that would help improve the efficiencies and production capacity of the firm.

For 2022 NR said that it expects that the sales volume will be around 460,000 tons, representing approximately 25 billion Baht in revenue due to the increase in the number of orders from customers. As for this year NER will focus more on expanding the market for Indian customers. At present, the company has signed contracts for 5 new customers in India, targeting in 2023 there will be sales from India of about 50,000 tons or 10% of total production capacity.

To further boost NER’s revenues, the reopening of China since January 8, 2023, will benefit the company’s rubber sales. NER, Chuwit said, had seen in December 2022 there was a continuous signal of ordering products.

China’s rise in demand for electric vehicle (EV) has been on the rise and this is likely to help NER, resulting in increased demand for tires in China. In addition, the company will focus on expanding its new customer base especially in India after finding that India has a relatively high demand for the product.

A woman cuts out stains from a raw rubber sheet at a factory

In addition, from Q1/2023, the company will begin exporting a full range of livestock bedding. Currently, the first orders are waiting to be delivered to customers in Japan after sending the product to customers to try and there will be adjustments to production according to the sales plan. It is expected that in the year 2023 there will be revenue in this segment of the business of 300 million Baht.

As for the plan in the year 2013, the company plans to increase work efficiency and increase production capacity including focusing on research and development of finished products. Others than that the use of rubber as the main raw material to continuously add value to the product, it will start launching finished products.

This will cause the proportion of sales of downstream products to grow sequentially especially products in the finished goods group that use a mixture of rubber as the main raw material to create sustainable growth for NER in the long run

Chuwit said that NER has set an investment budget of about 400 million Baht, divided into machinery improvements to increase production capacity by about 15% in April 2023, amounting to 100 million Baht, and the remaining approximately 300 million Baht will be used to invest in research and development. (R&D), which will start to see more downstream products in 2023.

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