Siam Cement Industry aims to dominate Asean

Chalida Ekvitthayavechnukul, Somluck Srimalee / Th - 2006-12-18 10:14

Thailand, December 18, 2006 (The Nation) - Siam Cement Industry, a subsidiary of Siam Cement Group, aims to be the leading company in Asean in line with its parent company's policy of boosting the proportion of its international business up to 20 per cent of total revenue in five years.

The company's international business will start next year when its new plant in Cambodia starts operation.

President Pramote Techasupatkul said the company was always looking for the opportunity to expand business in other countries, particularly in Southeast Asia.

It will establish two plants in Indonesia and another two in Vietnam with a total investment of Bt300 million next year, all of which will produce ready-mixed cement, he said.

He said both Indonesia and Vietnam had high demand for cement thanks to the growth of their populations and economies. The company plans to penetrate Indonesia's market by being a small producer, because Indonesia already has a few giant cement-manufacturers.

He added that the competition in the cement business in Vietnam was not too tough because there were only small and medium-sized cement-producers there.

Pramote said the company was considering a location in Vietnam to set up a cement plant but the problem was the distance between sources of raw material and the market.

The company also expects to realise revenue from its four new plants next year. Siam Cement Industry has invested Bt3.5 billion to construct a cement plant in Cambodia, which has a production capacity of one million tonnes per year. This plant will start operation and the company realise revenue in the beginning of 2008.

It presently exports about seven million tonnes per year. The main destinations are countries in South Asia such as Bangladesh and Sri Lanka, the Southeast Asia region and the US. It also exports 5-10 per cent to the Middle East.

He said the company would lessen its exports to the US next year because of the country's economic slowdown and increase export proportion to South Asia and the Middle East.

He believed that the growth of domestic cement demand in the coming year would be flat because of weak consumer confidence in the economy and the continued pressure from energy costs. He forecast that export volume in the fourth quarter would shrink due to weaker demand from the US. Operating profit may drop by 19 per cent year on year owing to higher energy costs, he estimated.

However, the company has to develop a new premium product to meet with the customer demand.

"The cement industry has to develop its products to focus on niche markets," he said.

He added that the company had invested Bt100 million in research to develop new products this year and would invest another Bt200 million next year.

"Research and development will be our tool to develop our product to compete with our rivals and create a value-added product. That may be boost our margin," Pramote said.

The cement industry generated 26 per cent of Siam Cement Group's total revenue of Bt207.21 billion in the first nine months of this year.