BAT-3K Wins Major Car Battery Contract with Benz

Aug 18, 2011 (Bangkok Post - McClatchy-Tribune Information Services via COMTEX) -- The maker of market-leading 3K batteries has secured a major contract to produce and supply valve regulated lead-acid batteries to Mercedes-Benz in Germany.

Thai Storage Battery Plc (BAT-3K) struck the deal recently with Daimler AG after two years of negotiations including visits by Mercedes-Benz research and development personnel to the battery plant in Thailand, said Veerawin Korphaibool, director and vice-president of the SET-listed company.

The contract calls for 3K to produce and supply 500,000 auxiliary batteries over four years starting in 2012 for Mercedes-Benz cars.

"It is the first time for 3K battery to export batteries to a carmaker abroad," said Mr Veerawin.

The company also supplies batteries to Volvo and General Motors in Thailand. It has no contracts with Japanese carmakers so its sales were not affected by their Thai units' recent production slowdown caused by parts shortages from Japan following the earthquake.

Mr Veerawat said sales of 3K Battery in the first half grew 34.2% year-on-year to 3.06 billion baht, mainly driven by the 3K V-Series, a sealed maintenance-free (SMF) battery with more than 100,000 units sold, and a target of 200,000 units by year-end. As a result, net operating profit in the first half was 219.39 million baht.

BAT-3K reported a net profit of 129 million baht for the second quarter, compared with 16.8 million a year earlier. First-half consolidated net profit was 217.4 million baht (10.87 baht a share), compared with a net loss of 1.95 million (0.10 baht a share) in the same period last year.

"Sales revenue in the first half was very successful due to the economic growth in the agricultural and industrial sectors and more stable political situation that had the psychological effect of boosting consumer confidence and increasing purchases," he said.

3K Battery projects to sell 1.5 million batteries this year worth between 5.7 billion and 5.8 billion baht, a 10% increase in value from 2010. The overall battery market totals about 4.5 million units annually and 3K is expected to capture a 30% share.

BAT-3K shares closed yesterday on the SET at 91 baht, up one baht, in trade worth 897,000 baht.