Siam City Cement (SCCC), the country's second-largest cement-maker, expects flat sales growth this year due to the delay of mega-projects and lower investment in the private sector.

Chantana Sukumanont, executive vice resident for marketing and sales, said many building projects in main tourist areas such as Phuket and Pattaya had been halted because foreigners had lost confidence in Thailand's economy.

Demand for cement in the local market will obviously increase next year due to mega-projects and new property projects in areas around the BTS routes in Bangkok, she said.

She said the company was still focused on selling products in the domestic market and exporting its surplus capacity.

Last year its sales were 12.9 million tonnes: 7.6 million tonnes in the domestic market and 5.3 million overseas, especially the United States, Europe and Vietnam, according to managing director Leo Mittelholzer.

He said the company would boost exports to Vietnam because of 10-per-cent growth in the country's gross domestic product. Meanwhile, SCCC forecasts that the US import slump will continue.

Although Chinese firms are offering stiff competition through cheaper prices, the company will compete with quality.

"We can't raise our product's price because of fierce competition locally and internationally," Chantana said. "However, we can seriously reduce our production costs, particularly energy costs, instead."

This year, SCCC plans to invest Bt1.5 billion, of which Bt1 billion will be spent on maintenance and developing alternative fuels and raw materials.

The remainder will go towards constructing a new dry mortar and special cement plant in Saraburi province which will be completed by July next year.

The company currently has production capacity for special cement of 200,000 to 300,000 tonnes per year. If the new plant starts operation, it will boost capacity to 350,000 to 400,000 tonnes.

The company posted revenue of Bt23.647 billion last year, an increase of 6 per cent from the year before. Profit was Bt3.855 billion, a decline of 6 per cent from 2005 due to rising energy costs, which represented 65 per cent of production costs.

Chalida Ekvitthayavechnukul

The Nation