SCG group sees higher profits

Somluck Srimalee

The Nation

Industrial conglomerate the Siam Cement Group (SCG) foresees higher net profits this year, due partly to pricing its exports in strong currencies rather than the weakening US dollar.

"This helps the company reduce foreign-exchange losses," Pichit Maipoom, president of subsidiary SCG Building Materials, said yesterday.

This year products have been sold in euros, yen, Australian dollars and other currencies, he said.

About 30 per cent of SCG's sales come from exports to Australia, the Middle East and elsewhere in Asia. Due to the weakening US dollar, the company's baht revenue is lower than last year, when it took in Bt30.35 billion, up slightly from Bt29.45 billion in 2006.

SCG Distribution and SCG Building Materials have also adjusted their strategies to focus on innovative products with the aim of increasing sales 20 per cent and 8 per cent, respectively, this year.

Pichit said the company estimates its sales increasing about 9 per cent to between Bt24 billion and

Bt25 billion this

year, from between Bt22 billion and

Bt23 billion last year.

Its net profit margin will improve to 5-8 per cent, from less than 5 per cent.

"Although our production costs went up following oil prices, we succeeded in managing them and also increasing our products' value through innovative technology. As a result, we can sell our products for 10-20 per cent more on average than standard products," he said.

"We can increase our export prices by 10-20 per cent for our innovative products and gain foreign exchange when the baht is strong. That's why we can increase our net margin when we face higher costs," he said.

SCG Distribution upgraded this year's growth forecast from 5-10 per cent to 20 per cent after revising its strategy to boost the share of its business from distributing materials from outside SCG to 30 per

cent this year, from 25 per cent last year.

SCG Distribution president Kajohndet Sangsuban said his company had to balance its business portfolio when logistics costs rose from 40 per cent of operating costs to 75 per cent, due to oil prices.

The focus on building up the business from outside the group will help the company manage its logistics costs and lift its sales target to Bt100 billion this year, from Bt80 billion last year, he said.