EAST ASIATIC (THAILAND): A seafaring people, Danes have always looked abroad for opportunities. Many have found them in Thailand

Few companies that claim to be long-term investors in Thailand can match the track record of East Asiatic (Copenhagen).

‘New things require attention, like management of working capital and cost control. When you talk about future plans in this environment, people are more worried about their survival from day to day’
ANDERS NORMAN
Managing director

The company established East Asiatic (Thailand) Plc in Bangkok in 1884 and has, expanded its business to include chemicals, healthcare products, technical marketing and joint ventures with a wide variety of companies, taking economic ups and downs in its stride.

The current recession is simply an opportunity to expand the core chemical-supply business, according to managing director Anders Norman.

"We are looking at expanding some of our profitable businesses but will take our time in deciding when."

The company (EAC) focuses mainly on the domestic market for chemicals, in which it has become a leader in partnership with world producers in the last 60 years.

"We are the largest importer and marketer of industrial chemicals in Thailand. EAC is well consolidated and will be looking for growth opportunities as in a depressed economy there are lots of opportunities," Mr. Norman said.

For all companies, the future has acquired different implications because of the increasingly volatile world economy.

"Today it means you need flexibility in managing … and EAC is managing changing times. We are facing totally different challenges from years ago, when we were managing on the basis of past growth, expansion and market share. Today it's a new ball game.

"New things require attention, like management of working capital and cost control. When you talk about future plans in this environment, people are more worried about their survival from day to day," Mr. Norman said.

EAC faced the same pressures as other businesses but had begun restructuring two years
ago, he said.

Company chairman Carsten Nielsen said restructuring was aimed at focusing resources on expanding its chemical operations throughout the region.

Business would be difficult this year but, given the company's strong financial platform and re-structuring, it would cope with tight liquidity.

Anew entity, Thai-Dan Enterprises, had been established as a holding company for non-chemical businesses.

Last year, EAC (Thailand) felt the impact of the economic slump, with revenue totaling three billion baht, down from 3.9 billion in 1996.

Foreign exchange losses resulted in a net operating loss of 99 million baht, compared with a profit of 245 million.

Mr. Norman said involvement in products in which the company had little expertise had put pressure on the group's result.

"Our involvement in marketing and consumer products didn't fare too well. Therefore, we have sold these businesses," he said, adding the benefits had been immediate.

The company made a net profits topping 35 million baht in the first quarter of this year, a re-mark able achievement L7iven last year's result.

Most of the improvement had been made in operating profit. Gains in terms of foreign ex-change had been small as the company had borrowed relatively little in foreign currency, he said.

Mr. Nielsen said that to expand its chemical business, the company had established two new joint ventures, one with BASF AG of Germany and the other with a 1ocal partner.

With BASF, the company established BASF Asiatic Colours and Chemicals to make textile dyes and auxiliaries. EAC holds 51% of the shares. Siri Asiatic Co was established with a lo-cal partner holding 50%.

Mr. Norman said the company was looking at exports to improve cash flow but not at the expense of local customers.

"If we go for exports, it will be very competitive as everybody is directing their attention to that segment. If you are not already geared for export, then you just can't come from Friday to Monday and expect to start exporting.

"You have to adjust a lot of things, the infrastructure, the thinking, the culture, the structure and place: all these need to be considered before you start exporting."

Turning to government policy, Mr. Norman said the government was on the right track with economic reforms.

"Tight liquidity is one of the most severe problems and many companies do not have the backing of a foreign partner who can help out during bad times," he said.

Thailand had the advantage of having a qualified and cheap workforce, and this could attract other industries.

His company's strategy was to delay non-essential investment with the emphasis on consolidating, rather than building, market share.

"We are not going through a massive scaling down, but with the business environment shifting from fourth gear to third, we have to follow suit."

Mr. Norman said he had achieved his goals in terms of business structure; portfolio and organization but the recession had hindered other objectives.

"We have the ability to operate with our own finance and thus don't have to depend too much on liquidity in the market. This shows we are managing our firm pretty well and will certainly come out of this crisis in a much stronger position," he said.

East Asiatic (Thailand) Plc
Established: 1884
Major shareholders: East Asiatic Co Ltd, A/S, Copenhagen (48.9%); EAC Export Corp Ltd, Bangkok (15.6%)
Registered capital: 900 million baht
Main businesses activities: Marketing and distribution of chemicals, food ingredients and other raw materials for industry in Southeast Asia. Marketing and distribution of pharmaceuticals and medical devices in Thailand
Subsidiaries: ICI 1996 (Thai), ICI Asiatic Chemicals, Zeneca Agro Asiatic, Zeneca Pharma Asiatic , Chemtrans Asiatic, BASF Asiatic Colours and Chemicals, Siri Asiatic Co, Pacific Seeds (Thai), Thai Poly Acrylic Plc, M. Consolidated Co, Thai-Dan Enterprise, EAC Technical Marketing, Heidelberg Graphics, EAC Logistics and Santa Fe (Thailand) Ltd
Number of employees: 2,200
Assets at end-1997: 4.378 billion baht
1997 gross revenue: 4.38 billion baht
1997 net loss: 99 million baht (foreign exchange changes)

Worldwide
Headquarters: Copenhagen, with operational headquarters in Singapore
Number of countries: 36
Number of employees: More than 10,000
1997 gross revenue: DKr18 billion
1997 net profit: DKr127 million