Eka Global sees no impact on its business
despite rising cost from Russia-Ukraine war
Long-term contract, raw material management and regular cost review
are key to mitigate risks
Eka Global, the leading longevity packaging producer, is confident of achieving 30-40% sales growth target despite the continuing Russia-Ukraine war, considering its high volume of long-term contract with majority customers and ability to efficiently manage costs and regularly review business risks.
The company also recommended food product entrepreneurs to prepare for the rising production and transport costs as well as long-term economic impact, which will increase prices of food and consumer goods.
Mr. Chaiwat Nantiruj, Eka Global’s Group CEO, said that the Russia-Ukraine war and fluctuating global economy remained the kay factors significantly affecting the global production cost, including raw material and transport costs, as well as prices of foods and consumer products across the world.
Thailand has also experienced the impact of such changes. Consumer expenses have been increasing. The nation’s inflation rate has exponentially increased to 5.23% in February 2022, a new record high in 3 years. This may pressure food and plastic packaging industry to adjust their prices to reflect the rapidly increasing costs.
Eka Global, however, was in a better position. The company has made long-term contract with most of its customers, enabling the company to efficiently manage and control its raw material supplies, cost-related and exchange rate risks. Meanwhile, order from customers has continued to expand by 30-35% over last year in correlation with the increasing global demand for food safety, food delivery and ready-to-eat food products as well as premium pet food products as the COVID-19 pandemic continues. Eka Global, therefore, has enjoyed constant order from its local and international customers.
Internally, Eka Global has continuously invested in R&D to enhance its ability to meet with customers’ changing needs in the long run. Its R&D activities focuses on three areas namely bioplastic (PLA) packaging which uses natural raw materials, such as tapioca, corn and sugarcane; biodegradable packaging which is totally produced from natural raw materials; and packaging made from PCR. The company aims to invent at least one innovative product within 1-3 years. Another goal is to develop special packaging that can extend shelf life of food products from currently two years to 3-5 years without refrigeration.
“We are strongly confident of achieving 30-35% sales growth in the first quarter this year,” said Chaiwat. “Orders from customers in Thailand and overseas have been streaming in. The total orders on hand have already kept our production lines busy at its maximum capacity throughout the first half of the year. If this continues, our maximum capacity of 2,850 million pieces per annum will be achieved. Considering these trends, our main challenges are cost management and our ability to meet global customer demand and growing food packaging market across the world.”
Chaiwat believed that SMEs, especially those in the food and drink, construction and restaurant segments will experience high impact from the current situation in the world because of limitation in cost management and financial flexibility, including ability to increase goods prices. Should the Russia-Ukraine war continue for a long time and rapid interest increase, SMEs may not be able to survive the higher production costs. This will have impact on their market competitiveness and may affect their market share in the future.
“There is a good news for SMEs, though. In addition to the government’s clear policy to support SMEs, Eka Global has already laid a clear plan to help SMEs. When the pandemic situation improves, Eka Global will begin our road shows to allow SMEs nationwide to experience our innovative longevity packaging products and see more opportunity to expand their market in the future,” said Chaiwat.
