SIAM CEMENT GROUP'S board of directors has approved a Bt10-billion investment to build its first cement factory in Laos, as the group continues to expand in Asean.
SCG also announced its first-quarter results yesterday, showing a 5-per-cent drop in net profit and 11-per-cent increase in sales revenues.
President and chief executive Kan Trakulhoon said the 1.8-million-tonne-a-year cement plant would be established in Khammouane province, Laos, and was scheduled to begin production in the second quarter of 2017.
“Demand for building materials in the region has continued to grow, especially in Laos, Cambodia and Myanmar. This cement plant will mainly serve demand in Laos and the Northeastern region of Thailand,” he said.
Kan said SCG, which earlier announced a plan to build a cement factory in Myanmar, would accelerate its plan to set up its second cement plant in Cambodia. The company is also negotiating to buy a cement plant in Vietnam even though that country currently has a cement oversupply.
The group is negotiating many other merger and acquisition deals, one of which is expected to be concluded shortly, Kan said.
“SCG is moving ahead with every project that we have planned for Thailand and abroad, since we remain confident in the country’s potential even though politics is still a risk factor,” he said.
The company plans to invest between Bt40 billion and Bt50 billion this year.
In its filing to the Stock Exchange of Thailand yesterday, SCG disclosed the unreviewed consolidated financial statements of the parent firm and its subsidiaries for the first quarter. They showed profit for the period of Bt8.38 million, a decrease of 5 per cent year on year, because of a foreign-exchange gain of about Bt1 billion in the first quarter of 2013. Revenue from sales increased 11 per cent year on year to Bt121.77 billion, with growth in all business units.
On a quarter-on-quarter basis, profit for the period increased 5 per cent, attributed to the seasonal growth in the cement-building-materials business and the recovery of the paper business. Revenue from sales increased 17 per cent from increased quarter-on-quarter sales in all business units.
Kan said the first-quarter results were better than SCG had expected earlier, thanks mainly to an improvement in its chemical business. As a result, the group may raise its projection for the whole year from the 10-per-cent sales-growth target set previously.
Despite Thailand’s political situation, domestic cement sales were up by around 4 per cent in the first three months while building-material sales went down 7-8 per cent. Nevertheless, the domestic cement market is expected to come down in the current second quarter because of a lack of government projects, putting the whole year’s forecast at 0-3 per cent. However, demand in other Asean countries continues to be growing well, he said.
In terms of innovative products and high-value-added products, the board of directors of SCC has also approved a total investment of Bt1.825 billion for SCG Paper to upgrade the machines and appliances used in Thai Paper Co to manufacture glassine paper, a new interleaving paper used in pressure-sensitive labels, with the capacity of 60,000 tonnes per year.
This investment will make SCG Paper the first company in Asean manufacturing glassine paper, serving increasing demand both locally and regionally. Production is expected to start by early 2016.
In early April, SCG Cement-Building Materials formed a joint venture with Florim Ceramiche, one of the leading global ceramic players, to invest in production facilities for high-end ceramics under the Cotto brand. With total investment of Bt506 million, SCG Cement-Building Materials will hold a 33-per-cent stake. The plant will be in Bologna, northern Italy, with a capacity of 5 million square metres per year, and the expected start-up is early next year.
SCG recorded revenue from exports in the first quarter at Bt32.625 billion, an increase of 12 per cent year on year. The company expects export will increase from the previous years. Currently, the export proportion of SCG increased 2 percentage points quarter on quarter, to 27 per cent.
In the quarter, sales of HVA products amounted to Bt40.894 billion, equivalent to 34 per cent of SCG’s total sales. Furthermore, SCG’s sales of SCG eco-value products amounted to Bt38.013 billion, equivalent to 31 per cent of the total.
As for SCG business in Asean markets outside Thailand, revenue from sales in the first quarter amounted to Bt10.261 billion, an increase of 24 per cent from the same period of last year, and accounted for 9 per cent of SCG’s total sales revenue. Total assets of SCG in Asean as of March 31 amounted to Bt73.041 billion, 16 per cent of the total.
The SCG board also approved the appointment of Roongrote Rangsiyo-pash, president of SCG Paper, to take another position as executive vice president of the group, apparently to prepare him as the new president to succeed Kan.
The board also promoted Cholanat Yanaranop, the head of chemical business, and Pichit Maipoom, the head of cement building materials, to take another post as senior vice president of the group.