SCG allots Bt50 bn for region

Corporate January 31, 2013 00:00

By Watcharapong Thongrung
The Na

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Siam Cement Group, Thailand's largest industrial conglomerate, will spend Bt40 billion to Bt50 billion this year on its cement, construction material and logistics businesses, as it expands its regional presence ahead of the Asean Economic Community's i



Aside from a warehouse in Myanmar, SCG is awaiting permission to invest in a cement plant in the neighbouring country, president and CEO Kan Trakulhoon said at a press conference yesterday.

 The company’s businesses in Asean, excluding Thailand, posted sales revenues of Bt31.2 billion last year, up 39 per cent from the 2011 level. Asean now generates 8 per cent of the group’s sales.

 SCG’s assets in Asean amounted to Bt55.3 billion as of the end of last year, and higher foreign income will soften the impact from the baht’s appreciation against the US dollar, he said.

 Twenty-eight per cent of the company’s products are exported, he said, adding that every Bt1 increase in the value of the currency against the greenback will eat into revenue by Bt600 million-Bt700 million.

 However, thanks to hedging contracts, the effective impact will be in the range of Bt300 million-Bt400 million per Bt1 rise, he added.

 To support expansion, SCG will focus more on high-value added (HVA) products. The company has therefore set aside Bt2.15 billion for this year’s research and development budget, up from Bt1.43 billion last year.

 HVA products accounted for 34 per cent of group sales last year.

 “With its vision to become Asean’s sustainable-business leader, SCG will commit to its major strategy, which is the expansion of investment in Asean and continuous development of HVA products and services. The company will focus on enlarging investment in its main business in Indonesia, Vietnam and Myanmar,” he said.

 To finance the expansion, the company’s board yesterday approved the issuance of a four-year debenture worth up to Bt25 billion.

 The new issuance will replace the existing Bt20-billion SCC134A debenture, which is due to be retired for redemption on April 1. It will also comprise a new tranche of Bt5 billion to support future investment.

 Further expansion is planned though the company last year witnessed a drop in net profit, despite an increase in revenue. SCG posted a consolidated net profit of Bt23.58 billion, a drop of 14 per cent year on year, reflecting the trough in chemicals margins, an inventory loss in the second quarter, and the plant shutdown at Bangkok Synthetic.

 Sales revenue rose 11 per cent to Bt407.6 billion last year.

 

 
The operating results of the four major businesses are as follows:
SCG Chemicals: sale revenue at 203.5 billion, a 5 per cent increase y-o-y, from higher sales volume as the second complex ramped up capacity. Profit for the year decreased 76 per cent on year to Bt2.69 billion.
SCG Paper: sale revenue at Bt57.430 billion, a 5 per cent increase on year from higher sales volume in Packaging Paper business. Profit for the year increased 7 per cent to Bt3.56 billion.
SCG Cement: sale revenue of Bt67.56 billion, a 25 per cent increase on year on increased domestic sales volume. Profit for the year increased 26 per cent to Bt9.16 billion.
SCG Building Materials: sale revenue of Bt41.34 billion, a 21 per cent increase on year from continued acquisitions. Profit for the year registered double increase on year to Bt2.9 billion.
 

 

 Centenary focus

 

Celebrating its centenary this year, SCG has devoted itself to creating sustainability in the economy, society and environment. The group will also continue to pursue its determination towards progress and a better quality of life, Kan said.

 To celebrate its first 100 years, SCG will emphasise the transfer of best practices in business operations, good administration and management by opening its factories to visitors; holding an expo to show SCG’s innovation in the past, present and future; hosting regional seminars on research and development and sustainable development; and publishing books about management, human resources and sustainable development to serve as examples and allow organisations to apply the lessons learned for practical use.

 SCG will equally focus on building benefits for society in various ways, such as activities that enhance youth potential and the conservation of water, as well as launching 100 prototype sustainable communities and volunteer projects to benefit society, he said.

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