Semperit says dispute with Thai unit hurting glove business, expansion

Sri Trang Agro-industry PCL

25/11/2016 10:48

By Khettiya Jittapong 
    BANGKOK, Nov 25 (Reuters) - Semperit Holding AG  SMPV.VI  
said a legal dispute with its partner Sri Trang Agro-Industry 
Pcl  STA.BK  in top rubber producer Thailand had dented 
operations at the Austrian firm's glove unit and hurt its 
expansion plans in the Asian country. 
    Since 2014, Semperit has filed three cases against Sri Trang 
in the Swiss International Court of Arbitration, saying the Thai 
firm had breached their joint venture (JV) agreement.  
    It initially claimed 35 million euros ($37.08 million) in 
damages but later raised the amount to 82 million euros, 
according to a Sri Trang statement earlier this year. At the 
time, Sri Trang had said it was not obligated to pay the damages 
because the company and other subsidiaries had not breached any 
provisions of the JV agreement.  
    Semperit and Thai natural rubber producer Sri Trang have a 
joint venture company Siam Sempermed Corp.  
    The legal dispute has hurt the day-to-day operations at 
Semperit's glove unit, competitive pricing, raw material prices 
and delivery plans, Chief Executive Officer Thomas Fahnemann 
told Reuters in Bangkok on Friday. It is unknown when the 
arbitration proceedings will be concluded, Fahnemann added. 
    Sri Trang declined to comment. 
    Semperit's CEO said the company would like to make an 
investment in Thailand but "unfortunately the legal dispute with 
the Thai joint venture partner makes it difficult for us to take 
another big step in Thailand".  
    The Austrian company, which has two production sites in 
Thailand, is now focusing on expanding elsewhere in Southeast 
Asia, Fahnemann said. The company's unit, Sempermed, is 
increasing output capacity at Kamunting in Malaysia, he said.  
    After a 150-million euro acquisition of Latexx Partners in 
Malaysia in 2012, Sempermed already has six glove producing 
factories in Malaysia and a seventh plant has been constructed 
with the first few production lines operational, he said.  
    The new plant, which will be fully operational in 2017-18, 
is Semperit's largest ever investment valued at more than 50 
million euros. Its production capacity is expected to double to 
about 12 billion units of gloves per year, which is as many as 
the first six plants produce together, he said. 
    Semperit is also looking for an opportunity to boost its 
presence in Asia where glove consumption per capita is low. 
    The group has spent more than 70 million euros in Asia in 
the past five years, excluding those spent via joint ventures. 
Some 75 percent of the amount was spent in Malaysia, 20 percent 
in China and the rest in India, Thailand and Singapore. 
    More than 10 percent of Semperit's annual sales come from 
Asia, with majority of it coming from Europe, he said. 
 ($1 = 35.6800 baht) 
 ($1 = 0.9438 euros) 
 
 (Reporting by Khettiya Jittapong; Editing by Himani Sarkar) 
 ((khettiya.jittapong@thomsonreuters.com; 66 2 648 9728; Reuters 
Messaging: khettiya.jittapong.thomsonreuters.com@reuters.net)) 
 
Keywords: SEMPERIT THAILAND/