RT reveals that the construction sector is still affected by labor shortages and rising prices of oil and materials. The outlook for Q2/2022 remains risky, prompting the company to adjust its construction project management strategy, focusing on cost and labor management. They are preparing to take on 6 new projects valued at 5.64 billion baht, aiming to achieve a backlog target of 8.5 billion baht. In the first quarter of 2022, the company reported total revenue of 503.69 million baht, with a net loss of 25.32 million baht.

Mr. Chawalit Thanoonthin, Chief Executive Officer of Right Tunneling Public Company Limited (RT), a specialist in civil engineering and geotechnics, stated that the construction industry this year continues to be impacted by the ongoing COVID-19 pandemic, following disruptions from 2021, including temporary construction camp closures and labor shortages, which have slowed down construction activities. Additionally, the rising costs of construction materials due to increased transportation oil prices have further exacerbated the situation.

However, the company is closely monitoring the situation and trends in material prices, adjusting strategies to cope with the volatile construction factors. They are assessing material usage plans periodically and negotiating with business partners to plan for advance procurement of construction materials. Furthermore, the company has received assistance from the Comptroller General's Department for contract renewals and waivers or reductions of penalties for construction projects affected by the COVID-19 pandemic.

For the business direction in Q2/2022, the company continues to focus on managing material price risks at appropriate levels, anticipating that construction material prices will remain high and require close monitoring due to ongoing crises, such as the Russia-Ukraine war, which continues to drive up oil and steel prices.

The company has a clear approach to addressing construction labor issues to expedite project completion on time, expecting improvements if the government considers the COVID-19 outbreak as endemic in the second half of 2022. This is believed to lead to the relaxation of various measures, particularly allowing construction project management to proceed normally, enabling the gradual recognition of revenue from the backlog.

Additionally, the company is preparing to take on new projects in various categories, such as soft soil tunneling and slope protection work, with a total of 6 projects valued at 5.64 billion baht, including 2 projects with signed contracts, 2 projects awaiting contract signing, and 2 projects under consideration.

Currently, the company has a backlog of 4.78 billion baht (as of March 31, 2022), which will be gradually recognized as revenue from 2022 to 2024, with a target backlog of 8.5 billion baht for the entire year of 2022.

In the first quarter of 2022, the company reported total revenue of 503.69 million baht, a decrease from 735.52 million baht in the same period last year, a drop of 231.83 million baht or 31.52%. The net loss was 25.32 million baht, down from a net profit of 37.25 million baht in the same period last year, a decrease of 62.56 million baht or 167.97%.

The slight decrease in revenue was attributed to a slowdown in construction work recognition, with an increased number of workers in projects needing to quarantine, along with rising material costs, such as steel prices increasing by over 30%.

“In the past, the company has adapted to the situation by rotating employees from quarantined areas in projects with outbreaks, resulting in delays in operations from the planned schedule. However, the company manages risks and has solutions in place, including employee care, to ensure normal operations,” Mr. Chawalit stated.