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THAILAND

Profits for Thailand Tobacco Monopoly expected to fall

17 Mar 2008. Profits for the state-owned Thailand Tobacco Monopoly (TTM) are expected to fall more than half to just THB two billion (EUR 41.5 million) per year within five years.

This is due to competition from foreign producers and declines in cigarette smoking. Pradit Pataraprasit, deputy finance minister, said the market share for foreign brands had increased by around 1 per cent per year over the past several years to around 25 per cent now. Declining rates of smoking and new depreciation charges that the TTM must now book on recent machinery upgrades would further affect profits over the next several years, he said. Profitability could only be maintained by reducing production costs and making distribution more efficient, Pradit added.

The Finance Ministry had no plans to list the state enterprise on the Stock Exchange of Thailand, but corporatisation would be a possibility, Pradit said.
The TTM, which posted 2007 net profits of THB 4.5 billion, produces the market-leading Krong Thip brand, and enjoys significant tax advantages over foreign imports. Sales last year totalled 30.9 billion cigarettes. (sra)