Landy cuts costs with cement blocks
Construction company Landy Home (Thailand) Co Ltd has diversified into the production of cement blocks in a bid to cut building costs following a rise in the price of raw materials over the past year, managing director Piched Maneerattanaporn said yesterday.
To cover the cost of investment in the new venture, the company has set up a holding company, Neo Build Co Ltd., with registered capital of Bt3 million. The company was established in the first quarter to hold the major stake in its new cement-block businesses. Neo Build has invested in three construction-material manufacturers, holding a 35-per-cent stake in each of them. The firms are based in the provinces of Saraburi, Ayutthaya and Bangkok The firms will each produce about 10 million cement blocks per year. Piched said the company was supporting the three businesses in the introduction of technology to produce an item they have not previously made. Some of the cement blocks will be used in the company's own construction projects, while the rest will be sold. Landy Home has also launched a new construction concept, the Nova home - partly ready-built housing - which aims to reduce the construction period from an average of six months per unit to four months. Piched said the new construction material coupled with new concept would save the company an average of 20 per cent on building costs, helping it maintain an average net profit of 10 per cent of total sales this year - despite cost increases such as labour transportation. The company expects revenue of Bt500 million this year, an increase of 19 per cent from Bt420 million last year. Forty per cent is from the construction of property projects, and the remainder from individual customers who contract the company to build homes on their land. Piched said the home-building market had only grown slightly in the first half of the year due to customers' concerns about the uncertain political environment and a rise in the cost of living following the hikes in oil prices and interest rates. As a result, revenue in the first six months was Bt200 million, which is lower than Landy Home's target. In an attempt to achieve its target revenue of Bt500 million by the end of the year, the company has launched a Bt25-million marketing campaign to boost sales. Of this figure, 30 per cent has been earmarked for advertising, 40 per cent will be spent on special events, while the remaining 30 per cent will go on public relations. "We believes our business strategy will drive our sales to meet the target," Piched said. Somluck Srimalee, The Nation
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