Message from the Chairman

Dear Shareholders,

Pruchya Piumsomboon, Ph.D., P.E.
Chairman of the Board of Directors

The year 2018 Chow Steel Industries Public Company Limited (“CHOW” or “the Company”) faced several business challenges, especially raw material price volatility in steel billet manufacturing and currency revaluation in Turkey. This gave Turkey an advantage in exporting steel products to the world market and pulling down global steel prices which was a main factor materially affecting the Company’s operating results in 2018. Even though over the past year, the Company has realigned the business strategy and expanded both domestic and export markets to generate income and improve operating results according to the plan in place, we were still unable to resist the impacts from uncontrollable external factors, especially the volatile raw material prices in the world market. This accordingly prompted the Company to revise the business strategy at the end of the year to generate more stable income and relieve the impacts from the raw material price fluctuations as in the past. We believe that this will boost our steel business operating results further on.

In 2018, CHOW’s income from steel manufacturing and distribution grew significantly fueled by the increase in domestic demand and penetration of export markets from execution of a memorandum of understanding with TATA International Metals (Asia) Limited, hence a success in business expansion plan as set out by the management. However, with global raw material price fluctuations, the Company’s costs increased substantially. At the same time, there was an overhaul of machines in the production lines not in operation over the past three years to accommodate new customer base in response to the revised business strategy. As such, the operating results of the steel business were not so satisfactory. To solve this problem, toward year-end, the management rethought the business strategy by focusing more on contracting service of steel billet manufacture for large customers based on the Company’s capabilities to manufacture products of international standard quality well accepted by end-users. With this strategy, besides generating definite income and profit, we no longer have to take raw material price risk, which has reflected our timely determination to solve problems and led to steel business growth as targeted.

Meanwhile, the Company’s renewable energy business has recorded rapid progress, especially such business in Japan, which has consistently been developed on a full-fledged basis according to the business plan. In 2018, we posted income growth from electricity sales compared with the previous year. We also sold another two developed solar power plant projects, one of which was duly in operation generating 4.02 MW DC electricity and the other was under development generating 12 MW DC electricity, to the Infrastructure Fund in Japan. This was part of the policy to add asset value for profitability in preparation of cash flows to serve new investment in future renewable energy projects. This will consequently enhance the growth of the Company’s renewable energy business as targeted.

The success in the past year and accelerated solution of problems from uncontrollable factors has reaffirmed the determination of our management and Board of Directors to jointly map out the strategy and review the business plan to suit the actual situations leading to sustainable growth according to the target. The Board of Directors, executives and all employees remain steadfast in bringing about successful operating results, with firm expansion of steel billet manufacture and distribution without exposure to uncontrollable risks and further expansion of solar power business base. Meanwhile, the Company has kept exploring investment opportunities in various businesses for greater business strength which will boost confidence and competitive advantage and pave way for continued growth.

For 2019, we have planned to overhaul the two steel melting plants to cut down costs and improve potential in the manufacturing process gearing up for further growth according to our strategy. After such improvement, we are confident that our operating performance will be strengthened to a greater extent making us to be a leading steel manufacturer in Thailand.

For our renewable energy business, we have projects under construction which can supply electricity in 2019, hence consistent power supply growth. There are also several other projects under development in Japan. Moreover, we are considering investment in solar power plant projects in other countries, conclusion of which is expected within 2019.

On behalf of the Board of Directors, I would like to thank the management and all employees for your contribution and dedication to overcoming all challenges and obstacles. My appreciation and gratitude also go to our shareholders and business allies for your trust and support all along, which has helped us achieve our vision, target, and policy under good corporate governance for the maximum benefits of all the parties concerned.