SCG finalises Bt188 bn Vietnam JV

Corporate July 27, 2017 01:00

By KWANCHAI RUNGFAPAISARN
THE NATION

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THE SIAM Cement Group (SCG) yesterday said it has finalised plans to build a Bt188-billion petrochemical complex in Vietnam in a joint venture with Vietnam Oil and Gas Group (PetroVietnam).



The group has already invested Bt30 billion for the proposed petrochemical complex, mainly for the acquisition of land. Construction work will start next year and the complex will start commercial operations by 2022.

“The petrochemical complex in Vietnam will be among the largest investments in Asean for SCG,” said Roongrote Rangsiyopash, SCG president and chief executive officer.

SCG holds a 71-per-cent stake in the joint venture while the balance 29 per cent is owned by PetroVietnam. The project will use state of the art technology and prove a competitive proposition due to its full upstream and downstream integration. Production at the petrochemical complex would accommodate a flexible feedstock with Olefin production capacity at 1.6 tonnes per annum. It would also substitute the import of petrochemical products in Vietnam, as well as cater to growing domestic demand in the country. The internal rate of return for the project would be at between 13 per cent and 14 per cent.

Roongrote said the investment in Vietnam would be in line with SCG’s strategy to expand in Asean.

He said SCG’s revenue from sales in Asean countries, excluding Thailand, was Bt52 billion in the first half of the year, up 5 per cent year on year, representing about 24 per cent of the group’s total sales revenue. As of June 30, SCG’s total assets in Asean, excluding Thailand, stood at Bt137.7 billion, representing 25 per cent of the group’s total assets.

SCG yesterday reported its operating results in the second quarter of this year, posting total sales revenue of Bt108.8 billion, flat year on year. But the group’s profit for the second quarter dipped to Bt13.2 billion, down 17 per cent year on year and 24 per cent quarter on quarter, caused mainly by inventory loss, strong competition, and softness in demand in the domestic market for cement and building materials.

Bt30.6 bn net profit for first half 

SCG reported a profit of Bt30.6 billion for the first half of 2017, an increase of 4 per cent year on year. 

Meanwhile, the group’s total sales revenue in the first half of this year reached Bt225.09 billion, up 3 per cent year on year.

Export revenue in the first half of this year reached Bt60.6 billion, up 2 per cent mainly due to demand from China and South Asia. Exports contributed about 27 per cent of the group’s total sales revenue.

Following are the results for the second quarter and the first half of SCG’s business units:

SCG Chemicals recorded sales revenue of Bt49.5 billion in the second quarter of this year, flat year on year but down 9 per cent quarter on quarter. 

The unit posted a Bt9.2-million profit in the second quarter, representing a drop of 18 per cent year on year and 31 per cent quarter on quarter. 

Sales revenue for the first half was Bt103.8 billion, up 7 per cent year on year, with profit of Bt22.6 billion, up 12 per cent year on year.

SCG Cement/Building Materials recorded Bt42.6 billion in sales revenue in the second quarter, down 1 per cent year on year and 5 per cent quarter on quarter. The business unit registered a profit of Bt1.76 billion in the second quarter, dropping 29 per cent year on year and 28 per cent quarter on quarter. Sales revenue for the first half of 2017 was Bt87.4 billion, down 2 per cent year on year due to strong competition and softness in the domestic market for cement and building materials. Profit for the first half of the year saw a 27-per-cent drop year on year to Bt4.2 billion.

SCG Packaging posted sales revenue of Bt19.4 billion in the second quarter of this year, up 3 per cent year on year. 

The business unit also registered Bt1.01 billion in profit for the second quarter, flat year on year. Sales revenue for the first half was Bt39.2 billion, up 4 per cent year on year, mainly due to higher production capacity in the packaging chain. Profit increased by 20 per cent year on year in the first half of the year to Bt2.7 billion.

SCG expects its total sales revenue to increase by 3 to 5 per cent for the year, which is lower than earlier projected. The slowdown is a result of the shrinking demand for cement and construction materials, which dropped by almost 7 per cent in the first half of this year, as well as slower demand and higher competition in the cement and construction materials markets in Asean, particularly Myanmar and Vietnam.

 

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