Message from the Chairman

Investor Relations

 

We will continue to strengthen our operations throughout the supply chain to gain better market share and wider name recognition in the industry and reinforce our position as the world’s leading fully integrated natural rubber company.

STA had an especially challenging year in 2017 as a turbulent natural rubber market was a real test of our mettle. While STA has been in the rubber industry for 30 years and has grown accustomed to volatility in rubber prices, the development of the market in 2017 had elements of surprise we had never before experienced. An excess of speculative activities in the futures market, particularly in Shanghai, had the effect of distorting prices, which no longer reflected the fundamentals of supply and demand and were prone to extreme volatility.

This was particularly evident in the first quarter of the year when rubber prices, which started out the year strong and reached a three-year high in February, fueling optimism and hope for a turnaround after years of downward cycle, started dropping precipitously. In response to this unexpected turn of events, we acted promptly to reevaluate our previously laid out plans and quickly came up with a turnaround strategy.

In addition to battling volatility, we also had to contend with another year of persistently low rubber prices. But because of our experience and expertise, we managed to record 1.3 million tons in sales volume despite the inhospitable industry climate.

A significant development for STA in 2017 is that we finally assumed full control of our glove business, Sri Trang Gloves (Thailand) Co., Ltd. (STGT), which has been operating for nearly 30 years and is currently Thailand’s largest and a world-leading glove producer.

While we have always been closely involved in the operations of STGT, we strongly believe that having the ability to independently manage the operations and execute our expansion plan will further strengthen the “Sri Trang Gloves” brand. We also expect significant synergy between the operations of STGT and STA’s midstream operations.

This is an opportune moment for us to expand the presence of STGT. The global glove industry is growing steadily as heightened awareness of hygiene fuels demand, particularly in emerging markets like China, India, Africa, etc. Prices of gloves are also not subject to volatility, a factor that should make our overall bottom line look more attractive.

We believe that we are well positioned to take steps to expand our STGT operations, having accumulated nearly 30 years of know-how and industry experience. We also have a strong sale and marketing team who will be instrumental in our strategy to increase market share and gain a foothold in new markets. In 2017, we managed to achieve a record sales volume of 16 billion pieces.

Going forward, we will continue to strengthen our operations throughout the supply chain to gain better market share and wider name recognition in the industry and reinforce our position as the world’s leading fully integrated natural rubber company.

Dr. Viyavood Sincharoenkul
Chairman
Sri Trang Agro-Industry Public Company Limited
February 2018