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Oishi down but not out after factory takes hit

Oishi Group, the country’s biggest green tea maker, expects to lose 2 billion baht in sales after its factory in the Nava Nakorn Industrial Estate was hit by floods.

In the worst case, sales this year would fall 18% short of expectations to 9 billion baht, as two-thirds of the production plant at Nava Nakorn has been damaged by the massive flooding, said president Matthew Kichodhan.

Oishi previously forecast 1.8 billion baht in sales of green tea in the fourth quarter and 1.2 billion from its restaurants. It now expects combined sales of only one billion to 1.5 billion baht.

“That means 1.5 to 2 billion baht in sales will disappear in the fourth quarter,” said Mr Matthew.

Net profit will approach one billion baht by year-end, 300 million shy of earlier projections.

Mr Matthew said that Oishi temporarily closed its Nava Nakorn factory on Monday.

Located on 60 rai, the 4-billion-baht factory produces 30 million PET bottles of Oishi green tea and 34 million UHT packages a month. A central kitchen at the plant prepares food and ingredients for 120 restaurants under the Oishi brand nationwide.

“This plant is the heart of Oishi, so we did many things to protect it,” said Mr Matthew.

An embankment one kilometre long and three metres high was built around the plant, with 50 water pumps installed and 120,000 sandbags laid. Out of 1,200 workers, 111 are on standby at the plant around the clock.

“If the flooding situation in Nava Nakorn is solved, we’ll resume normal operations within a week,” said Mr Matthew.

The plant has an inventory of 125,000 cases of green tea products, enough to supply the market for a month.

Although Oishi has another beverage factory in Chon Buri’s Amata Nakorn Industrial Estate, that plant makes only 15 million PET bottles a month or one-third of capacity.

The group has already moved all ingredients from Nava Nakorn to the Amata Nakorn plant. All computerised equipment has been moved to the second floor of the Nava Nakorn factory.

“We may close our factory in Nava Nakorn for 3-6 months for restoration in the worst case, if the water leaks into the building and seriously hits the manufacturing facilities,” said Mr Matthew.

Oishi has industrial all-risks insurance coverage for losses up to 3.4 billion baht, about 85% of total investment cost.

“What we have learned from this flood crisis is that corporate leaders have to be strong and control their temper and you have to be concerned about safety of your employees first. We also need to plan ahead to mitigate any risk,” said Mr Matthew.

Oishi shares closed yesterday on the Stock Exchange of Thailand at 68 baht, down 1 baht, in light trade worth 326,000 baht.

Source: Bangkok Post

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