SCG Cement defers Cambodian expansion

June 4, 2009
By Chalida Ekvitthayavechnukul
The Nation

SCG Cement has postponed its plan to build a further kiln in Cambodia following a considerable drop in demand in the neighbouring country.

Thailand's largest cement producer is the major shareholder of Kampot Cement, the biggest cement firm in Cambodia. The plant is located in Kampot province and has a production capacity of 950,000 tonnes per year.

"We earlier planned to build one more kiln to double our production capacity to 1.9 million tonnes, but the plan has been scrapped because demand in Cambodia plunged sharply due mainly to the economic slowdown," said SCG Cement marketing director Syamrath Suthanukul.

Despite the global economic crisis, the company has maintained its export target at 8 million tonnes this year as demand in Bangladesh, Vietnam and Burma remains high.

The company has also explored the possibility of penetrating African markets such as Tunisia and Madagascar, he said.

Meanwhile, SCG Cement forecast that its domestic sales would slump 10-15 per cent from last year's 9 million tonnes, unless special measures were taken. The projection is in line with the overall market, where cement demand is predicted to fall from 25 million tonnes in 2008 to 22 million tonnes this year.

The company has as a result spent Bt70 million on aggressive marketing activities and promotions, in the hope that it can maintain its domestic sales at last year's level.

"We hope the government will start its mega-projects as soon as possible, once Parliament passes the Finance Ministry's planned borrowing of Bt400 billion. The earliest recovery we see for the cement sector is the fourth quarter of this year," Syamrath said.

Sales revenue is likely to drop from last year, even if the company can maintain its volume. This is because of the upward trend in energy prices, freight costs and tougher domestic competition, he added.

He said the prices of some SCG Cement products had been cut by at least 10 per cent since the beginning of the year, in order to maintain market share and compete with rivals that were dumping prices to increase their sales.

However, the company can save Bt1.64 billion per year on energy, thanks to its installation of waste-heat generators at six cement plants.

SCG Cement currently operates at 70 per cent of its capacity. It has a 40-per-cent share of the Thai cement market.

Siam Cement Group subsidiary SCG Cement sees sales dropping

February 24, 2009
By Sucheera Pinijparakarn
The Nation

Firm turns to high-value products, new export destinations

Siam Cement Group subsidiary SCG Cement expects its sales volume to decline 16.67 per cent this year to 15 million tonnes, due to the sluggish economy.

The company is addressing the situation by focusing on boosting sales of more high-profit innovative products and seeking new potential export markets.

President Pramote Techasupatkul yesterday said the company expected domestic sales of 9 million tonnes and export volume of 6 million tonnes this year.

Last year, it sold 10 million tonnes domestically and 8 million tonnes abroad for combined sales revenue of Bt50 billion, up 13 per cent from 2007. Its net profit stood at Bt6 billion, up 10 per cent.

Pramote said sales revenue would likely drop this year but only slightly, due to an expected high revenue contribution from high-value products.

The company also predicts a 10-per-cent fall in domestic cement demand to 22.5 million tonnes this year.

Pramote said the situation should pick up slightly in the second half, thanks to the government's stimulus measures, with demand fully recovering in the next two years.

He said SCG Cement was already focusing on developing and promoting high-value products, in order to tap niche markets. The net profit margin of such products is 10 per cent higher than for conventional products.

He said the sales value of the high-profit products continued to grow. These items enjoyed sales-revenue growth of 9 per cent in 2007, 12 per cent last year and are expected to register 16 per cent growth this year.

"We plan to boost sales-revenue growth to 30 per cent within the next five or six years," he said.

SCG Cement has earmarked Bt180 million for research and development this year.

The company has also shifted its export focus away from the United States, where demand has slumped, to Southeast and South Asia and the Middle East.

Of last year's export revenue, 30 per cent came from South Asia, 30 per cent from Southeast Asia, 20 per cent from Africa and the rest from the Middle East.

The US market contributed 5 per cent of export revenue in 2007 before falling to zero last year.

Meanwhile, SCG Cement this year will complete its Bt5.8-billion project to install waste-heat power-generation facilities at its six cement plants in Thailand and Cambodia as part of its operating-cost reduction. The project will enable the company to save Bt1.64 billion in annual energy costs.

SCG plans to raise [cement] output in Cambodia

$200m set aside for cement subsidiary

Monday September 01, 2008
NAREERAT WIRIYAPONG
Bangkok Post

PHNOM PENH : Siam Cement Group (SCG), Thailand's largest industrial conglomerate, is planning to invest $200 million to more than double the capacity of its cement factory in southern Cambodia.

Kampot Cement Co Ltd, a joint venture in which SCG holds 93% and a Cambodian partner the rest, aims to lift its annual capacity to three million tonnes by 2010 from the current one million, according to the Thai embassy in Phnom Penh.

So far, SCG has invested $127 million in the facility located 148 kilometres southwest of Phnom Penh and within driving distance of the Cambodia-Vietnam border.

''The increase is to purely serve the domestic Cambodian market where demand for cement has risen sharply from ongoing construction projects. The property sector is also booming here,'' a high-ranking embassy official said.

Cambodia still imports cement from neighbouring countries including Thailand. But given the current high oil prices that have pushed up transport costs, local cement producers would gain more competitive advantages.

''Consequently, the expansion at Kampot has become more feasible for the time being,'' the official said.

SCG's Thai headquarters declined to confirm the expansion plan, saying the project had been studied.

According to the embassy, construction materials are the main items Cambodia import from Thailand, along with sugar and farm and consumer products.

Thailand last year recorded a 70% rise in exports to Cambodia with a total value of $1.4 billion. The figure does not include about 30 billion baht in cross-border trade.

According to SCT Co Ltd, an international trading arm of SCG, Thailand ranks third among the trading partners of Cambodia after Vietnam and China.

On the investment side, Thailand has yet to play an active role in Cambodia with South Korea, China and Malaysia taking the lead. Apart from SCG, major Thai businesses operating in Cambodia are Charoen Pokphand (CP), as well as are Siam Commercial Bank and Krung Thai Bank.

The Cambodian government provides incentives for foreign investors such as tax-free machinery imports and corporate income tax holidays. It also promotes Special Economic Zones that comprises an export free zone, container yard area and other facilities for industrial zones.

The Thailand-funded road Number 48 in Koh Kong is expected to facilitate more business links between the two countries by strategically turning Koh Kong into the gateway to Phnom Penh.

Siam Cement shares (SCC) closed on Friday on the Stock Exchange of Thailand at 165 baht, up one baht, in trade worth 65 million baht.

Siam Cement Group eyes concessions in Laos, Cambodia

Friday May 09, 2008
NAREERAT WIRIYAPONG
Bangkok Post

Siam Cement Group (SCG), the country's largest industrial conglomerate, will seek concessions for eucalyptus forestation in Laos and Cambodia to secure raw material supplies for its paper business. Poramate Larnroogroj, managing director of Siam Forestry Co, an affiliate of SCG Paper, said the company had started growing eucalyptus in pilot areas in the two countries.

Siam Forestry decided to look abroad after developing about one million rai of eucalyptus in Thailand, mainly in Kamphaeng Phet, Kanchanaburi and Khon Kaen.

''We have started discussing the possibility of getting the concessions there. It would take two to three years to implement the project,'' he said.

New eucalyptus plantations should be in areas where the wood can be conveniently shipped to SCG Paper's pulp factories in Thailand's northern and northeastern regions, said Mr Poramate.

''We are looking to secure raw-material supplies in the long term after there is no more area for eucalyptus in Thailand,'' he said. ''It is critical to make sure we have enough material for paper production in the future.''

Material security is a major concern as prices of pulp and other raw materials for paper production have surged.

Currently, short-fibre pulp is traded at $725 per tonne, up $40 from the same period last year, while long-fibre pulp prices have risen 15% to $760, pushed by strong demand and tight supply.

Siam Forestry's short-fibre eucalyptus serves SCG Paper's plants while long-fibre pulp is imported from Europe and the United States. SCG Paper has to import scrap paper from the US, Japan, and Singapore because of inadequate supply locally. Imported scrap prices have risen to $250 per tonne from $140 a year ago, while domestic prices are up from four baht a kilogramme to six baht.

SCG Paper, one of the four flagships of Siam Cement, generated total sales of 12.25 billion baht in the first quarter of this year, up 12% year-on-year, thanks to higher product prices. However, net profit fell 20% to 740 million baht due to surging fuel and raw-material costs.