BERLI JUCKER PLC: For the Swiss, mountains are a challenge, not a barrier. Berll jucker takes the same view of the current recession

For Berli Jucker Plc, one of Thailand's largest conglomerates, growth has come like clockwork.
Perhaps that's not surprising; it was founded by a Swiss 116 years ago as a trading house, general merchant and ship chandlery. Most of its early success came from the introduction of imported consumer goods, including leading European brands of tinned milk, cocoa and tissues.

‘We are investing today for a recovery that I see is three to five years away, so it’s a very long-term proposition’
DAVID NICOL
President

In the 1950s, the company established its first manufacturing base in Thailand by taking over a soap factory that later introduced the famous Parrot brand.

Next it teaiiied up with Australian Consolidated Industries, the region's leading glass producer at the time, to establish Thai Glass. The company ran Thailand's first automated glass factory, producing bottles for the growing soft drink, beer and liquor markets.

Today, Berli Jucker's business covers an ever expanding range from consumer products to engineering, packaging and technical goods.

The company is 70% owned by First Pacific, which is listed on the Hong Kong stock market and headed by the Salim group of Indonesia.

Most of First Pacifie's investments are in Asia and cover banking, property, marketing and distribution, as well as telecommunications. It is actively involved in Thailand, the Philippines, Indonesia, India, Singapore, Malaysia, the United states, Australia, New Zealand and Hong Kong, with an annual turnover exceeding US$2.6 billion, and profits topping $201.7 million.

First Pacific used to control Hagemeyer, the Dutch marketing and distribution giant, but sold it for $2 billion in the belief it had expanded the business as far as possible. The proceeds were used to reduce debt and fund expansion.

Like many large concerns, it sees a silver lining in the recession. "The regional economic downturn has created once-in-a-generation, opportunities for investors with cash, and the focus
and management platform to deploy it," First Pacific said in a report.

With more than $1 billion left after debt restructuring, First Pacific was putting 8.4 billion baht into new acquisitions in Thailand, said managing director Manuel Pangilinan. He said he would keep the existing four core businesses, but with a special emphasis on marketing and distribution.

This kind of positive response from the majority shareholders has put Berli Jucker on a stronger footing, too. It has made a series of investments in recent months, the latest being the
acquisition of Srithai Superware Plc for an estimated 1.2 billion baht.

That move followed two other big deals worth about 1.2 billion baht each. It raised its holding to 97.7% in Thai Glass Industries Plc(TGI), and acquired 74.7% of Cellox Paper.

And more is to come, according to president David Nicol, the Australian chartered accountant who recently succeeded Adtil Amatavivadhana, who had headed the company for eight years.

After increasing its capital by four billion baht, Berli Jucker was looking for four or five more acquisitions, and Tight raise another four billion baht to complete the purchases, he said.

"We are focused heavily on two areas: firstly consumer companies and secondly packaging companies'

"If we look at the initial four billion baht, 1.2 billion each went into debt reduction and the tender for TGI, and we put 1.2 billion baht into acquiring 60%,of Srithai.

The balance is not nearly sufficient for the acquisitions we have planned.

It's likely that to complete our agenda there would be a further four-billion-baht capital increase."

The sharehold structure will change, as Mr. Nicol is looking for a more diverse group of investors mainly local and foreign institutions "We are investing today for a recovery that I see is three to five years away, so it's a very long-term proposition."

Of the four core businesses - consumer goods, packaging, technical and engineering -only the first two are targeted for expansion be-cause they have growth potential and are closely intertwined.

"We are looking only at companies that have been hurt by foreign-exchange [volatility], or companies that have no operating problems but require more capital. Both types require good management."

About 95 % of Berli Jucker's business is in Thailand, so the fall in consumer buying power signals a period of consolidation for 18 months, according to Mr Nicol.

He disagrees with any suggestion that Berli Jucker is entering the takeover market too early, that the bottom, is not in sight.

"The risk is in waiting too long for the right moment. You don't want to see a potentially great business go to the wall and then try to invest, because at that point it would have started to deteriorate so badly that there would be noth-ing left to save."

Mr Nicol also dismisses the idea of focusing on exports to stay competitive, saying the new businesses focus on the domestic market.
"Exporting today is the flavour of the month, but how long Thailand can stay competitive in the export market, and in what industries, is a big question mark."

Thai consumers were a better bet as they would al-ways be there, with pur-chases fluctuating in line with the economy, he said.

Staying competitive in worsening conditions has brought about some redundancies and has forced cutbacks in spending and stock.

But Mr Nicol takes pride in his staff, praising their caution in assessing customers since bad debts are the direct responsibility of each sales team.

Berli Jucker had to accept that certain business lines had to be terminated, such as photo mini-labs that were to sold on time payments to opera-tors. Many of these labs had to be repossessed when the businesses failed.

Berli Jucker acquired more than 97 % of Thai Glass to ensure full control of the company and benefits in marketing, tax planning an other common areas. But as the company now faced competition from plastic bottles and cans, it planned to make these, too.

"We are looking at acquisition and then expansion as we already have some specific customer-base targets."

Looking toward year-end results, Mr Nicol said he expected Berli Jucker to be close to where it was at the end of last year, with the difference this time that there would be no unhedged foreign debt.

Berli Jucker Plc
Established: 1882
Registered capital: 158.8 million shares at par value
Major shareholders: Holland Pacific BV 44.75%, Multi Purpose Co 24.6%
Main businesses: Consumer products, packaging, technical products and engineering
Subsidiaries: Thai Glass Industries Plc, Berli Prospack Co, Siam Snack Plc, Cellox Paper Co, Rubia Industries Ltd
Number of employees: 6,100
Assets at end-1997: 13.03 billion baht
1997 gross revenue: 10.77 billion baht
1997 net profit: 384 million baht

Worldwide
First Pacific Co Ltd
Headquarters: Hong Kong
Number of countries: 50
Activities: Marketing and distribution, telecommunications, property and banking
Number of employees: 51,270
1997 gross revenue: US$8.3billion
1997 net profit: $401.1 million