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Siam Cement sees good demand, ASEAN expansion

By: | at 08:00 PM | Channel(s): International Trade  

Siam Cement, Thailand’s leading industrial conglomerate, plans to invest at least 20 billion baht ($639 million) at home and abroad over the next five years to expand its cement business and upgrade products, Pramote Techasupatkul, president of SCG Cement Co. Ltd., told Reuters in an interview.

Siam Cement, with a history dating back almost a century, already has a cement plant in Cambodia and is looking for other investment opportunities in Southeast Asia.

“We are looking at several options,” Pramote said, adding cement demand in Thailand and other Southeast Asian countries should expand at twice the economic growth rate.

The 20 billion baht cement budget is part of the group’s plan to invest more than 100 billion baht over five years.

President Kan Trakulhoon told Reuters it was possible Siam Cement could invest in a new cement plant in Indonesia with capacity of almost 2 million tons.

“The outlook for Siam Cement is positive and we expect strong growth in earnings next year,” said Kim Eng Securities analyst Surachai Pramualcharoenkit.

Apart from strong cement demend, Siam Cement should benefit from higher petrochemical output and the government’s attempts to end the impasse at the country’s largest industrial estate, Map Ta Phut, where it has operations, analysts said.

Strong H1 Growth
Siam Cement, 30 percent owned by the Crown Property Bureau, the investment arm of the Thai royal family, is a major exporter in the Association of Southeast Asian Nations (ASEAN), which groups Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Laos, the Philippines, Singapore, Thailand and Vietnam.

At home, domestic demand began picking up in the second half of last year with growth coming from the residential sector in the provinces, Pramote said.

In April, Siam Cement had expected cement sales to grow only 5 percent in volume this year.

After contracting in the past three years, cement demand in Thailand is expected to rise 10 percent in 2010 and growth should average 5 percent over the next three years, thanks to a better economy and government infrastructure projects, Pramote said.

“For this year, overall demand should rise about 10 percent and our sales volume should be in line with that,” he said, adding the infrastructure work would trigger private construction in the vicinity of mass transit projects.

In the first half of 2010, domestic cement demand rose 13 percent from a year earlier, but growth in the second half is expected to be about 5 percent, Pramote said.

The cement unit, which contributed 20 percent of Siam Cement group profit in the second quarter, sells Tiger and Elephant brands and has a market share of 40 percent.

It competes with No. 2 maker Siam City Cement , in which Swiss cement firm Holcim is a major shareholder, and TPI Polene Pcl .

Founded in 1913 as the country’s first cement producer, Siam Cement has no capacity expansion plans for the home market because industry capacity of 55 million tonnes should be enough to satisfy domestic demand in the next three years, Pramote said.

The firm is running at about 85-90 percent of annual capacity of 23 million tonnes, and about 30 percent of output is exported. Two-thirds of its cement exports go to Asia. (Reuters)