Asia Biomass Plc (ABM), Thailand's largest biomass fuel producer and distributor by volume, is struggling to escape a 77-million-baht loss last year by restructuring its business.
The loss was the result of a glut of biomass as well as tough competition in the Asian market as the number of new biomass suppliers grew, said Pongtham Danwungderm, chief financial officer at ABM.
Biomass prices decreased and the fuel became less attractive as an alternative to coal following a significant decline in coal prices from US$300-400 a tonne to $100 during the Russia-Ukraine war.
With the business restructuring plan, which includes cutting costs and boosting business operation efficiency, the company expects to see the results in the second quarter of this year, said Mr Pongtham.
The company needs to improve its financial situation after its shareholders agreed to increase capital to 225 million baht, up from 150 million baht, as well as issue warrants which will inject 270 million baht of working capital into the company.
During the business restructuring period, ABM will form partnerships with companies to jointly launch new projects, said Mr Pongtham.
He declined to give further details.
"We have been suffering for many months from low sales and prices of our products. We expect we can bottom out of this situation, which is the worst in the business cycle," said Mr Pongtham.
Last year, ABM saw its revenue decrease by 12% to 2.37 billion baht, down from 2.7 billion baht in 2022 when it earned net profit of 35 million baht.
Sales of biomass only rose by 3.8% to 650,000 tonnes last year, up from 635,000 tonnes in 2022.
ABM posted a loss of 15.6 million baht in 2019 before making profits between 2020 and 2022.
To boost revenue, the company needs to add value to its products, especially eucalyptus which is used as biomass fuel, said Mr Pongtham.
ABM may also need to focus more on manufacturing than distributing products in order to better control production costs.
In September last year, it bought a new eucalyptus wood chip factory for 40 million baht, which will double its total production capacity to 1 million tonnes a year.
Earlier in January 2023, the company bought its first eucalyptus wood chip production facility for 38 million baht.