SIAM CEMENT Group (SCG) plans to boost its 2019 investments by 30.4 per cent from last year to more than Bt60 billion, with as much as half the funds going into the group’s petrochemical project in Vietnam, president and chief executive officer Roongrote Rangsiyopash said yesterday.
The investment budget will be sourced from the industrial giant’s initial cashflows and bank loans as well as from the issuance of debentures worth Bt15 billion, with four years’ maturity, on April 1, Roongrote told a press conference.
“We will maintain our net debt to EBITDA at not over 2.5 times this year, even though we are expanding our investments,” he said, adding that the group has net debt to earnings before interest, taxes, depreciation and amortisation of 1.7 times.
Aside from the investment in Vietnam, the company plans to put Bt5 billion into its packaging business in the Philippines and Bt20 billion into the expansion of production capacity in its business in Thailand, as well as Bt5 billion into research and development for innovative products and startup operations that support its business solutions business.
“We started to expand our investment in startups in 2018 with an investment value of Bt400 million in 10 business that are located in Thailand and overseas,” Roongrote said. “This came as part of our efforts to improve business service to support our customers’ demand. We have a long-term investment to improve our business solutions platform at a time when businesses face increased risks from changes in the global economy.”
The company has also earmarked funds for mergers and acquisitions by focusing on the packaging and cement and construction materials industry both in Thailand and in the Asean region. Roongrote declined to state the size of the investment allocation.
“We cannot say how much the budget for mergers and acquisitions is, as that depends on the business opportunities that arise,” he said.
With its aggressive investment stance this year, the company expects growth in total revenue of up to 5 per cent year compared with last year.
Last year, the company reported total revenue of Bt478.438 billion, up 6 per cent from 2017. But net profit was Bt44.748 billion, down 19 per cent from the prior year.
The company's board yesterday proposed a 2018 full-year dividend of Bt18 per share for a total of Bt21.6 billion. This represents 48 per cent of profit for the year on a consolidated financial basis – of which Bt8.50 per share, totalling Bt10.2 billion, was paid as an interim dividend on August 22, 2018. The proposal will be submitted to the annual general meeting of shareholders for approval.
The final dividend will be Bt9.50 per share, totalling Bt11.4 billion. The payment will be made to those shareholders on the register on April 3, 2019, with the funds transferred on April 19, Roongrote said.
“Our net profit dropped when our production costs for the chemical industry fluctuated following the rise in oil prices in the fourth quarter of this year,” he said. “The oil price rose to US$80 per barrel, then fell to US$50 per barrel by the end of the fourth quarter of last year. As a result, we had to book a stock loss that had a direct impact on our chemical business, resulting in a profit drop.”
He said that a strong baht, with gains of more than 5 per cent against the US dollar over the past year, hurt the group’s earnings in 2018, as up to 43 per cent of its total revenue came from export markets.
The group’s exports to Asean countries accounted for 25 per cent of its total revenue in 2018, at Bt118.014 billion. Some 18 per cent of total revenue, or Bt86.155 billion, came from countries outside the region.
“We expect our total revenue this year will maintain growth and we will try to improve our net profit,” Roongrote said.
“However, the industry this year continues to face uncertainties, as the trade war between the US and China is not yet resolved, and the oil price continues to fluctuate and the baht remains strong.”