SIAM Cement Group (SCG) plans to boost its 2019 investment budget by 20 per cent from this year to Bt60 billion, the group's vice president-finance and investment and chief financial officer, Chaovalit Ekabut, said yesterday.
Up to Bt20 billion of the total investment budget for next year will go towards construction of a petrochemical plant in Vietnam, with the remainder earmarked for mergers and acquisitions and the maintenance of its manufacturing plants in Thailand and other Asean countries, Chaovalit said on the sidelines of a company press conference.
He said that in the first half of this year, the group spent Bt18 billion of its investment budget on mergers and acquisitions and plant maintenance. Some Bt32 billion of its total investment budget of up to Bt50 billion for this year will be spent in the second half of this year. As with the first half, the funds will be spent on the maintenance of production plants and mergers and acquisitions with a focus on three categories: petrochemicals, construction raw materials, and packaging in the domestic and Asean markets.
The investments in the first half of this year included an increase in production capacity at the Map Ta Phut Olefins Plant from 1.7 million tonnes a year to 2.05 million tonnes. The group also acquired a 29 per cent stake in PT Catur Sentosa Adiprana Tbk (CSA), a leading retail firm in Indonesia. Its joint venture firm, Global House International, acquired a 30 per cent stake in PRO 1 Global Co Ltd, which is a distributor of building materials and home decoration items in Myanmar. Elsewhere, the group entered into a joint venture with Jasda Supply Chain Management International to establish an integrated logistics and supply chain management company focussing on China and Asean markets, Chaovalit said.
The investment budget will come from both its initial cash flows and borrowings from commercial banks; the group would maintain its net debt to equity ratio at no more than 2.5:1, Chaovalit said.
He said the group is scheduled to sign a US$3.2 billion (Bt102.4 billion) loan package with domestic and international financial institutions in August. The loan will be used to develop the petrochemical plant in Vietnam from 2019 to 2023.
The group yesterday announced its financial results for the second quarter of this year, booking total revenue from sales of Bt120.44 billion, an increase of 11 per cent from the same period of last year. Net profit was Bt12.4 billion, a decrease of 6 per cent from the year-earlier period.
With the total revenue and net profit contributions for the second quarter, the company announced total revenue from sales of Bt238.69 billion for the first half of this year, marking an increase of 6 per cent from the same period of last year. Net profit for the six months was Bt24.8 billion, down 19 per cent from the year-earlier period.
“Our total revenue from sales showed strong growth in the second quarter and first half of this year, coming from strong growth in the petrochemical, construction raw materials and packaging operations in both the domestic and overseas markets,” the group's president and CEO, Roongrote Rangsiyopash, said at the press conference.
“However, our net profit dropped for both the second quarter and the first half of this year. That came from the lower performance of the chemicals business, lower dividend income from the investment business, and some currency losses resulting from the strong baht when the group had export income of Bt64.99 billion, or about 27 per cent of our revenue from sales.”
However, Roongrote said the group is confident that total revenue in the second half of this year will remain strong at above 6 per cent. He said the group would benefit from the country's sustained economic growth as the government kicks off its investments to develop the country's infrastructure. This spending would boost demand for cement by almost 2 per cent in the second half, he said, noting that demand for cement grew just 1 per cent in the first half.
Roongrote said demand for petrochemicals would also grow in the second half of this year, thanks to strong demand from the global market amid robust expansion in the global economy. China’s new policies on plastic waste would encourage the use of new plastic, increasing demand for it in the global market, he said.
As a result, the group maintains its projection for business growth of more than 6 per cent in the second half of 2018.
However, the group would continued to monitor whether the unfolding trade war between the US and China will impact its business. For now, he said the tensions between the two countries had not affected business.