Message from the Chairman and Chief Executive Officer
The political crisis which had continued from the last quarter of 2013 has led Thailand’s
economy to grow at 0.7% in 2014, in particular the households, business and government
sectors were wary of spending, both for consumption and investment. The tourism sector
was also significantly affected. In addition, export sector grew at low rate due to the
slump in prices of agricultural products such as rice, rubber and palm, etc.
The political crisis which had continued from the last quarter of 2013 has led Thailand’s economy to grow at 0.7% in 2014, in particular the households, business and government sectors were wary of spending, both for consumption and investment. The tourism sector was also significantly affected. In addition, export sector grew at low rate due to the slump in prices of agricultural products such as rice, rubber and palm, etc. However, Thailand's economy started to recover after the political situation became clearer in the 3rd quarter as seen in the domestic expansion of consumption and private investment from the gradually rising confidence as well as increased government spending. The tourism sector also improved after foreign tourists began to relinquish their concern.
In the midst of the country's gradual economic recovery, the Company continued to perform satisfactorily. This was attributed to various strategic policies and planning which the Board of Directors, management and employees have jointly developed and implemented continuously. This included rapid store expansion, integrated business management, proactive approach to create customer satisfaction and so on. As a result, in 2014, the Company recorded total revenues of Baht 142,532 million or an increase of 9.8% and net profit of Baht 4,885 million or an increase of 13.6%, in comparison to 2013.
In 2014, Makro celebrated its 25th anniversary of operating in Thailand and has launched various projects and activities to express our gratitude to over 2.6 million registered customers for putting their trust in “Makro” as their trusted partner. The success was attributed to the business operation that focus on customer-centric and multi-format strategies leading to best value offerings that fulfill customers’ requirement. Furthermore, the Company continues to operate with social responsibility in mind in accordance to good corporate governance principle. All of the above represents Makro’s firm commitments that we adhered to and practiced to create sustainable success for the past 25 years.
The Company announced its new vision “To be number one food solution provider for professional customers in ASEAN”, which signifies a challenge for the Company to elevate its business operation to regional level and to create a business model that can meet the differing needs of various professional customer groups. The Company has continuously focused on developing new store formats with various sizes of selling area as well as unceasingly develops products and services in response to the needs of customers. Today, apart from being a membership based Cash and Carry operator which has gained the acceptance from retailers nationwide, Makro has also gained the trust from HoReCa operators as evidenced by the growth in revenue participation to total revenue of this group of customers from merely 4% to 23% over the past decade.
The Company has also developed new store formats under the name “Makro Foodservice”, focusing on providing solution to food service professionals, that help to drive Makro towards leadership in food service business. In 2014, the Company expanded 13 Makro stores, a new expansion record in Siam Makro’s history and the Company ended the year with 77 Makro stores and 5 Siam Frozen shops. The Company also inaugurated the second Dry Food and Non Food Distribution Center in Bang Sao Thong District, Samut Prakan to enhance its distribution capability as well as being a foundation for future store expansion.
Apart from providing solution to customers via “complete assortment, good services, at a reasonable price”, Makro is also determined to nurture and develop our over 2.6 million registered customers to enhance their business potential for their sustainable growth along with us.
We provided knowledge on business operation to retailers through the “Makro Retailer Alliance” project and “Retail Expo” event and to HoReCa operators through “Makro HoReCa” event.
The Company also provided knowledge to business alliances and suppliers, especially farmers, to raise their production standard and product quality. As part of sourcing criteria, Makro will source quality agricultural product that meets safety standards to sell in our stores so our professional customers can in turn satisfy their consumers, whom are placing an increasing emphasis on food safety.
The Company has initiated the business plan to expand to overseas, particularly to the countries within the ASEAN Economics Community (AEC), focusing on studies to identify investment opportunity where we can capitalize on the Company’s strength, coupled with support from the major shareholder who possesses expertise in food industry, to maximize benefit and add value to such countries. In 2014, the Company has set up an international team to be responsible for project feasibility study and has established Makro ROH Company Limited for overseas investment to create sustainable growth.
The success of Makro throughout the 25 years came from the Company’s vision, careful planning and good cooperation among Makro’s staff that perform their task with honestly, good team collaboration and responsibility to achieve the set goals. However, the rapid stores expansion required manpower both in term of quantity and quality on a timely manner, which was a challenging task for Makro.
The Company has announced its core value“VICTORY - Makro 7 values” to unite all employees at all level into one to jointly drive Makro’s business towards the challenging goals.
Makro has always given importance to returning to the society, particularly on the occasion of 25th anniversary celebration for operating business in Thailand. Makro has undertaken various special activities, for instance, the “1 Bill, 1 Baht” project to raise fund for building poultry housing, purchasing egg-laying chicken breeds to give to 25 schools around the country; and, the “Sharing and Giving, Endless Relationship” project by Makro’s staffs and customers jointly donated blood which totaled 1,250,880 cc. to the Thai Red Cross Society. At the same time, the Company continued to run the corporate social responsibility projects which were previously initiated and these included the “Unleaded Thai Noodle Pot, Thai Strong, Thailand Strong” campaign, school buildings project and scholarships, educational materials and computers for underprivileged schools, etc.
Thai economy in 2015 is expected to continually recover and growth rate is expected to accelerate to reach 3.5-4.5%, as supported by the expected increase in expenditures from the government sector, improvement in consumption as well as investment of private sector, and increase in numbers of tourists. Period towards that end 2015 will be especially important as Thailand will fully join the AEC. Therefore, it will be a challenge for Makro to prepare human resource and develop the organization to be ready to support the fast and sustainable growth. Additionally, the Company plans to open the third Fresh and Frozen Food Distribution Center in late 2015 to support the growth in food service business in the future.
On behalf of Siam Makro Public Company Limited, we would like to express our gratitude to all of our customers for always putting their trust in Makro to be their trusted partner. We also like to thank our business alliances, shareholders, government bodies and financial institutions for their consistent invaluable support. The Company would also like to express our thankfulness and appreciation to all management and employees for their contribution which is fundamental to the Company’s success throughout the 25 years. The Company is committed to operate its business with efficiency, transparency, upholding good corporate governance, undertaking corporate social responsibility, and with determination to grow the business in a strong and sustainable manner.