MESSAGE FROM THE CHAIRMAN

MR SUMETH SIMAKULTHORN CHAIRMAN OF THE BOARD OF DIRECTORS

MESSAGE FROM THE CHAIRMAN

Up until 2020, Kulthorn Kirby Public Company Limited has been established for 40 years. With a commitment to continuously produce compressors to meet global market demands. Therefore, the company never stops developing the product’s quality at competitive prices following the market demand by increasing production capacity as well as increasing potential in business management with technology and develop a management system to lead to a quality management system.

The Company was originated by a Thai Government’s policy that Thailand is a tropical country. Therefore, air-conditioner and refrigerator are necessary for the better living of Thai people. The government had set their sights to establish motor compressor industry in Thailand in order to support the expansion of air-conditioner and refrigerator industry. As a result, The Company has been selected from the Board of Investment of Thailand (BOI) referring to the announcement No. 4/2521 dated 1 June 1978 to establish the neutral company

Consisting  of the shareholders of 10 manufacturers of refrigerator, air-conditioner and Industrial Finance Corporation of Thailand (IFCT) which were equivalent to 60 percent of the total shares. The remaining portion was equally divided into Kirby Australia and Simakulthorn Group at 20 percent each. According to the government’s conditions, the company has to use 80% of a domestic raw material within 3 years. However, a domestic raw material was in short-supply at that time. Because of that, the company has established a subsidiary to produce their own parts and raw materials for example Kulthorn Kirby Foundry Co., Ltd. (KKF) which produces high quality cast iron, Kulthorn Steel Co., Ltd. (KSC) which produces processed steel, and Kulthorn Materials Co., Ltd. (KMC) which produces high quality enamelled copper wire.

                Over the past 40 years, the company has overcome many obstacles and the turnover is profitable every year until 2017 which he company began to have a loss for the first year and continuous losses until now. Part of the reason came from the fact that Thailand has signed Bi-Lateral Free Trade Agreement with China which began on November 10, 2017. This agreement reduced the import tariffs of motor-compressors from China from 30% to 0% as well as the import tariffs on air conditioners and refrigerators reduced from 60% to 5% without any requirement about using of 80% domestic produced parts. These issues resulting in Thai air conditioner/refrigerator manufacturer turned to importing finished air conditioners from China instead of using domestic compressors in their production processes and also allow a huge number of Chinese items which have cheaper price and lower cost of production compare to a domestic rate to enter Thailand’s markets. If this agreement still continues use, the company had to be impacted even more and these can be able to destroy domestic industries. Thence, the company has written a complaint letter to the Government of the Prime Minister and relevant ministers to inform the impact on the motor compressor manufacturers industry. At present moment, the government has created a team to study the impacts and consider ways to help the motor, compressor and related industries. Although, the solution has not come out yet and the meeting has to be halted due to the outbreak of COVID-19.

                In 2018, I decided to come back as Chairman of the Board again on June 1, 2018, when it was reported that Kulthorn Kirby Public Company Limited had a loss since 2017.

                In 2019, I have necessary to be an acting president from April 21, 2020 since Mr. Sutee Simakulthorn at that time was president has resigned from that position. Due to, the group had 3 consecutive years of operating loss from 2017 - 2019 as follows:

        ·   Year 2017;   Total sales of Baht 9,559.52 million    Loss -172.75   million baht

        ·   Year 2018;   Total sales of Baht 7,482.72 million    Loss -605.79   million baht

        ·   Year 2019;   Total sales of Baht 5,961.56 million    Loss -1,123.73 million baht

      After acting president’s inaugural, I have desperately performed my duties to improve the companys operation in various sections such as raising the compressor sales price by 10% since September 2020 and controlling unnecessary expenses until the company’s operation losses has reduced from Baht 1,123.73 million in 2019 to Baht 638.2 million in 2020.

                In 2020, the company have met several kinds of challenges from the outbreak of coronavirus disease (COVID-19) which impact to the sluggish of overall economy of Thailand. This is resulting in more than half of the Thai economy has to rely on foreign markets. However, both exports and tourism have to face a slowdown from closing borders or locking down as well. All those occurrences impact all businesses and industries including motor compressor and other related industries in the supply chain. Moreover, the company has also been confronting with extremely fierce competition during this period. Nevertheless, the company is still operating in accordance with its business plan in order to improve operational performance with the goal to generate profits in 2021 under the management of the new President who took over since February 24, 2021.

                One of the achievements of the past year, on September 10, 2020, the company officially opened the new compressor line under the world-class brand name “Bristol” which the company has acquired various proprietary branded machinery assets as well as relocated all production bases with the technique teams to Thailand with an expectation to produce a compressor for use in air conditioners, heat pumps and commercial refrigerators. Due to these line of products is greatly demanded in the United State of America and Middle East, research and development in new products to be more efficient and cost-effective, improvement in significant production processes to be automation and semi-automation, more robust inventory management. All these initiatives would bear their fruits in very near future. They would create company’s sustainable growth and performance.

                The Company would like to thank the Board of Directors, shareholders, customers, business partners, financial institutions and government entities. The Company would like to also extend our thanks to the Executive Management and every fellow team member who dedicate their continual support, co-operation and collaboration.