In the 2021 fiscal year, the Thai economy has had a slow recovery. The resurgence of the COVID-19 since late 2020 and the widespread outbreak of the delta variant in the third quarter of 2021 have resulted in many economic activities being constrained under the tight pandemic control measures enforced for several months. The outbreak has affected business fields as it caused production line disruptions in industrial and construction sectors. Nevertheless, in the last quarter of the year, vaccination has made significant progress, and the outbreak in the country has eased. There has been a gradual relaxation of strict control measures, and economic activities can resume. However, the outbreak of the new strain of Omicron variant at the end of the year has raised concerns about the direction of economic recovery again. Overall, the Thai economy expansion of the year 2021 grew only slightly at 1.2% against the severe contraction of -6.1% in 2020.
Exports are a key driver of the economy in 2021, which can rebound to expand at a high rate of about 16.5% from the previous year’s -6.5% contraction due to the economic recovery and global trade. Also, the expansion reflected by the export market growth spread both in terms of market and product category. They also benefited from the Work from Home (WFH) policy that continued the demand for products related to COVID-19 infection prevention. The sharp increase at the end of the year has supported the growth of related export products.
Domestic spending supported by the government but remained weak. Private consumption growth is slightly 1.1% compared to -1.0% contraction in 2020. The strict pandemic control measures disrupted many economic activities, and employment and income of workers affected the consumer confidence sank to a record low; however, COVID-19 spending began to recover as the situation eased. Also, there are COVID-19 relief grants for individuals and various spending support measures, including domestic tourism, at the end of the year. Therefore, private investment is projected to expand by 4.2%, in line with the expansion of exports.
On the other hand, the baht fluctuated rapidly, especially in the third quarter of the year, due to the severe outbreak of the Delta variant in Thailand. Also, the dollar strengthened after the Federal Reserve (FED) signaled a reduction in Quantitative easing (QE) measures and prepared to raise interest rates faster and more robust than previously expected. There was also pressure from the current account deficit for the first time in eight years. However, external stability, such as Thailand’s high interbank reserves, remained strong. Above are factors that support the volatility of financial markets and capital flows to some extent.
Among various negative factors such as the Thai baht volatility, export charges soared exponentially due to higher freight rates, and various supply chain management issues that have been affected by the pandemic situation in both the country and the country of the Company's trading partners. The Company urged to solve many new risks that considerably affect the Company's performance. The cost of sales and cost ratio increased compared to the previous year. The shortage of electronic components, parts, and raw materials soared, and the procurement difficulty and manpower and production management significantly increased the goods’ cost. Also, the container shortages and increased freight fees caused the shipping cost to foreign countries to rise. In addition, administrative and general expenses increased significantly from expenditures related to preventing the spread of Covid-19 in the factory. In the past fiscal year 2021, the Company had sales revenue of 7,898 million baht, a decrease of 388 million baht from the previous fiscal year 2020 or -4.7%. Revenue decreased from refrigerators, electric fans and ventilation fans in the domestic market, Japan market and other export markets, but the water pump product sales went well continuously in the Thai market. As a result, the Company posted its net profit significantly lower at 337 million baht, down from 998 million baht in fiscal 2020.
The Board of Directors has resolved to propose to the 2022 Annual General Meeting of Shareholders for approval of dividend payment for fiscal 2021 at 8.55 baht per share or 50.23% of net profit after tax which is in line with the Company’s dividend payment policy.
In the fiscal year 2022, the Thai economy's growth rate is expected to continue to grow at 3.7% from 1.2% in 2021, and the value of economic activities is likely to return to pre-pandemic levels in the second half of the year. The main economic drivers come from internal and external factors, such as progress in vaccine distribution that has supported Thailand and many other countries to open the country more widely. The recovery of the global economy and the positive effects of regional economic integration could benefit the Thai export sector growth and lead to a new investment cycle. Domestic spending and tourism support schemes from government measures improved the expenditure in the tourism sector in the first phase of recovery. However, domestic spending may be limited due to the fragility of the labor market. The overall average wage in 2022 is expected to increase but will remain below pre-pandemic levels.
In addition, risk factors and challenges that may pressure the Thai economy's recovery in 2022 include the uncertainty of the COVID-19 outbreak due to mutations affecting vaccine efficacy. Labor market vulnerabilities, rising debt problems, and the side effect of the normalization of monetary policy in the core countries have caused volatility in the capital and financial markets. World supply constraints may be a prolonged problem affecting production costs. There are also geopolitical risks from international conflicts, including political risks in the country that may affect the continuity of economic policy. The negative factors are remaining and affecting the Company's performance. Nevertheless, the Company will continue to strive for the continued growth of sales revenues and profitability through prioritizing on enhance the sales of value-added products, convey VE; value engineering activities, improve the potential of production, and quality assurance continually by investing in the e-f@ctory pro ject that integrates production and IT systems with a focus on real-time data connectivity at all levels. In addition to strengthening the employee ability for Sustainable Organization, in parallel with social responsibility under corporate governance principles and code of ethics, and regarding sustainable benefits to the shareholders and other stakeholders.
On behalf of the Board of Directors, the management, and all staff members of the Company, I would like to convey our gratitude to our business partners, shareholders, and all other stakeholders for your continued trust in and continued support of the Company. We will remain committed to and devoted to working with the best and unstoppable efforts to upgrade our business operation and develop our potential to cope with the volatile market circumstances and relevant risk factors ahead to maintain the shareholders' trust and support. Again, thank you very much.