13 August 2009 The President The Stock Exchange of Thailand Dear Sir/Madam, Re: Management Discussion and Analysis on the second quarter 2009 financial performance Financial Performance Summary - 2Q09 Berli Jucker Public Company Limited ("BJC") is pleased to announce its 2Q09 earnings results.In 2Q09, sales were THB 5,434 million, representing an increase of 1.9% YoY but a decrease of 2.5% QoQ. Despite sales decline from the previous quarter, profit for 2Q09 improved significantly.Operating profit was THB 390 million, an increase of 36.4% QoQ. Net profit after tax to equity holders was THB 272 million, an increase of 33.3% QoQ. Sales breakdown is as follows: THB MM 2Q09 2Q08 %YoY 1Q09 %QoQ Industrial Supply Chain 2,431 2,499 (2.7) 2,640 (7.9) Consumer Supply Chain 1,781 1,739 2.4 1,776 0.3 Healthcare & Technical Supply Chain 1,128 1,084 4.1 1,122 0.5 International Business Group 94 10 840.0 38 147.4 Total Sales 5,434 5,332 1.9 5,576 (2.5) Other income 49 76 (35.5) 83 (41.0) Total Revenue 5,483 5,409 1.4 5,659 (3.1) Operating profit 390 633 (38.4) 286 36.4 % margin 7.1 11.7 (4.6) 5.1 2.0 Net profit 269 461 (41.6) 181 48.6 % margin 4.9 8.5 (3.6) 3.2 1.7 Attributable to : Minority interest profit (loss) (3) 55 (105.5) (23) 87.0 Equity holders of the Company 272 406 (33.0) 204 33.3 % margin 5.0 7.6 (2.6) 3.7 1.3 Note: 1) For the purpose of the Management Discussion and Analysis, the financial results of the Technical and Healthcare Supply Chains are jointly reported, consistent with historical reporting format. By the same token, the performance of the International Business Group is reported separately from the other supply chains. 2) %YoY and %QoQ changes for operating margin, net profit margin, and net profit margin attributable to equity holders of the Company denote the absolute changes YoY and QoQ respectively Industrial Supply Chain THB MM 2Q09 2Q08 %YoY 1Q09 %QoQ Sales 2,431 2,499 (2.7) 2,640 (7.9) Net profit 76 217 (65.0) (7) 1,185.7 % margin 3.1 8.7 (5.6) (0.3) 3.4 Note: %YoY and %QoQ changes for net profit margin denote the absolute changes YoY and QoQ respectively In 2Q09, the Industrial Supply Chain posted sales of THB 2,431 million, a decrease of 2.7% YoY and 7.9% QoQ. A decline in sales from the previous quarter mainly attributed to poor performance of galvanized steel structures business. 2Q09 net profit was THB 76 million, a decline of 65.0% YoY, due to lower profitability of glass packaging and aluminum can businesses. However, in this quarter, net profit showed a notable recovery from a net loss in previous quarter to net profit of THB 76 million, due primary to better performance of the glass packaging and aluminum can businesses. Sales of the glass packaging business improved slightly from the same period last year and were around the same as the previous quarter despite intense competition in the beverage segment (beer and energy drinks). 2Q09 net profit showed a decline YoY due mainly to higher cost of quality control on production in order to comply with the provisions of the Liability for Damages Arising from Unsafe Products Act B.E. 2551; higher cost of raw materials such as soda ash and cullet compared to the same period last year; and lower capacity utilization as BJC commenced operation of a new furnace at Bangplee (BP5) in June 2008. However, compared to previous quarter, 2Q09 net profit showed a significant improvement primarily due to higher capacity utilization, higher production efficiency, and lower selling and administrative expenses such as stock handling cost. In 2Q09, sales of the aluminum can business dropped from the same period last year as a result of softening demand due to the poor economic situation. However, sales improved from previous quarter due mainly to a pick up in domestic sales. In terms of profit, net profit in this quarter was lower than 2Q08 due to the high aluminum price of the stock carried over from last year, as a result of forward purchase of aluminum in 4Q08. In 2009, however, market price of aluminum (LME price) declined, and as a result, we were pressured to lower the selling price, thereby negatively affecting gross margins. However, 2Q09 net profit showed an improvement compared to 1Q09 due to higher capacity utilization as domestic sales has been picking up. In addition, to comply with the accounting standard relating to inventory recognition, there was an inventory impairment charge of approximately THB 31 million in 1Q09 due to the high aluminum price carried over from last year. For other businesses, sales of the engineering products & services were around the same as the previous quarter, while sales of the galvanized steel structures significantly decreased due to customer delay of project commencement from the 2nd quarter to the 3rd quarter, 2009. Consumer Supply Chain Group THB MM 2Q09 2Q08 %YoY 1Q09 %QoQ Sales 1,781 1,739 2.4 1,776 0.3 Net profit 96 76 26.3 97 (1.0) % margin 5.4 4.4 1.0 5.5 (0.1) Note: %YoY and %QoQ changes for net profit margin denote the absolute changes YoY and QoQ respectively In 2Q09, the Consumer Supply Chain achieved sales of THB 1,781 million, an increase of 2.4% YoY and 0.3% QoQ. 2Q09 net profit showed a 26.3% improvement from the same period of last year, but reported a slight decrease of 1.0% from the previous quarter. Despite a weaker economy and more cautious consumer spending, the snack business was still able to achieve higher sales than previous quarter. Growth momentum was particularly strong in "Party" products such as Caramel, Krongkrang and Banana flavors, and sales of "Party" products grew by more than 25% from the same period last year. In addition, BJC launched the 3-month limited edition of "Tasto Latino Color" in June 2009, and received good consumer response. However,profitability was under pressure due to lower selling price and higher advertising and promotion spending. Sales of the tissue business were maintained at around the same level as last quarter. To boost sales amid the economic downturn, BJC launched new products and new packaging designs,such as "Melona Fun & Style" in May 2009, and received good consumer response. Meanwhile,"Cellox Purify" which was introduced in 1Q09 also continued to show strong growth momentum this quarter. 2Q09 net profit improved notably from the previous quarter, due to higher efficiency and productivity, successful cost control and a decrease in paper pulp price. The performance of soap and third party contract manufacturing businesses remained solid.The brand building efforts that commenced mid 2008 continued to be the key driver for "Parrot Botanicals" bar and liquid soap sales. Bar soap sales were particularly outstanding in view of the contraction of the overall bar soap market. For third party contract manufacturing, sales of "Kato" remained strong. In 2Q09, we also clinched the right to provide contract manufacturing, sales and marketing services for the "Kirin Tea Break" products. In terms of profitability, soap and the third party contract manufacturing business benefited from favorable costs of raw materials, such as crude palm oil and crude coconut oil. For the logistics business, revenue from external customers declined, but was offset by an increase in revenue from within the group company with higher export volumes of the International Business Group to Vietnam. As a result, total revenue was approximately the same as the previous quarter and the previous year. While revenue was sustained at around the same levels, net profit grew by more than 20% from the previous quarter due to the continuous success of cost control efforts. Healthcare and Technical Supply Chain THB MM 2Q09 2Q08 %YoY 1Q09 %QoQ Sales 1,128 1,084 4.1 1,122 0.5 Net profit 116 115 0.9 84 38.1 % margin 10.3 10.6 (0.3) 7.5 2.8 Note: %YoY and %QoQ changes for net profit margin denote the absolute changes YoY and QoQ respectively In 2Q09, the Healthcare and Technical Supply Chain reported sales of THB 1,128 million, an increase of 4.1% YoY and 0.5% QoQ. 2Q09 net profit was THB 116 million, approximately the same as last year, but significantly improved by 38.1% QoQ. Net profit margin was 10.3%, which was close to 2Q08, but improved notably from 7.5% in 1Q09. For the Healthcare Supply Chain Group, despite the unfavorable economic situation, we still achieved a sales increase YoY and experienced a minimal decline QoQ. Net profit showed an impressive improvement YoY and QoQ due to higher proportion of sales in products with higher margins particularly in the medical equipment and medical imaging businesses. For the Technical Supply chain, sales improved from previous quarter, but were still lower than the same period last year due to the persistent economic slowdown. Similarly, net profit declined YoY, but showed a strong improvement QoQ particularly in the stationery and chemical specialty product businesses. Key Highlights of 2Q09 Income Statement THB MM 2Q09 2Q08 %YoY 1Q09 %QoQ Sales & Service 5,434 5,332 1.9 5,576 (2.5) Other income 49 76 (35.5) 83 (41.0) Total Revenues 5,483 5,409 1.4 5,659 (3.1) Cost of good sold 4,102 3,897 5.3 4,451 (7.8) Gross profit 1,332 1,435 (7.2) 1,125 18.4 Selling & Administrative expenses 991 879 12.7 922 7.5 Operating profit 390 633 (38.4) 286 36.4 Interest expenses (incomes) 56 53 5.7 64 (12.5) Share of profits from investments 26 21 23.8 14 85.7 Earnings before tax 360 601 (40.1) 236 52.5 Tax 90 140 (35.7) 55 63.6 Net profit for the quarter 269 461 (41.6) 181 48.6 Attributable to : Minority interests profit (loss) (3) 55 (105.5) (23) 87.0 Equity holders of the Company 272 406 (33.0) 204 33.3 EBITDA 733 907 (19.2) 612 19.8 Key Ratios (%) 2Q09 2Q08 %YoY 1Q09 %QoQ Gross profit margin 24.5 26.9 (2.4) 20.2 4.3 SG&A as % of sales 18.2 16.5 1.7 16.5 1.7 Operating profit margin 7.1 11.7 (4.6) 5.1 2.0 Net profit margin (attributable to equity 5.0 7.6 (2.6) 3.7 1.3 holders of the Company) EBITDA margin 13.4 16.8 (3.4) 10.8 2.6 Note: %YoY and %QoQ changes for gross profit margin, SG&A of sales, operating profit margin, net profit margin, net profit margin attributable to equity holders of the Company and EBITDA margin denote the absolute changes YoY and QoQ respectively Sales BJC reported 2Q09 sales of THB 5,434 million, an increase of 1.9% YoY, but a decrease of 2.5% QoQ. The Industrial Supply Chain Group remains a major revenue contributor, representing 45% of total sales. In this quarter, sales of all supply chains, except the Industrial Supply Chain, showed an improvement YoY and QoQ. Gross Profit In 2Q09, gross profit was THB 1,332 million, posting a decrease of 7.2% YoY but an increase of 18.4% QoQ. Gross profit was lower compared to the same period of last year due to poorer performance of the glass packaging and aluminum can businesses. However, compared to the previous quarter, gross profit of all supply chains showed a notable improvement. Gross margin was 24.5%, which was a decline from 26.9% in 2Q08, but a significant improvement from 20.2% in 1Q09 and 12.5% in 4Q08. This upward trend indicates that BJC's gross margin is reverting back to its normal levels. This improvement is a culmination of our relentless efforts in developing and introducing new products, improving efficiency, and productivity and maintaining effective cost controls. Selling and Administrative Expenses ("SG&A") Selling and administrative expenses in 2Q09 were THB 991 million, an increase of 12.7% YoY and 7.5% QoQ mainly attributed to an increase in advertising & promotion expenses of the Consumer Supply Chain and an increase in general & administrative expenses of the International Business Group. SG&A as a percentage of sales was 18.2%, higher than 16.5% in 2Q08 and 1Q09. Net Profit 2Q09 net profit attributable to equity holders was THB 272 million, a decrease of 33.0% YoY but increase of 33.3% QoQ. Net profit margin was 5.0%, a decrease from 7.6% in 2Q08, but an improvement from 3.7% in 1Q09. Debt to Equity Ratio (x times) 2Q09 1Q09 4Q08 3Q08 2Q08 Liabilities / Equity 1.08 1.08 1.16 1.16 1.10 Interest-bearing Debt / Equit 0.57 0.60 0.63 0.62 0.56 2Q09 liabilities-to-equity-ratio was 1.08x, remaining at the same level as the previous quarter. The interest-bearing-debt-to-equity-ratio was 0.57x, a slight decrease from 0.60x in 1Q09.BJC's liquidity position remains strong and interest-bearing-debt-to-equity-ratio remains significantly below the debenture covenant of 1.75x. The decrease in interest-bearing debt was due to debt repayment by Thai Beverage Can Ltd., Thai Glass Industries Plc., Berli Jucker Cellox Ltd. and Berli Jucker Foods Ltd. Please be informed accordingly. Yours faithfully, Berli Jucker Public Company Limited Thirasakdi Nathikanchanalab Aswin Techajareonvikul Director Director