The Siam Cement Group (SCG) expects its first quarter to be better than the previous one as it will have no inventory losses and its petrochemical businesses will improve, president Kan Trakulhoon said yesterday.
Last year, many businesses faced large losses on inventories purchased at high cost before the recession sent commodity prices plunging. SCG, Thailand’s largest industrial conglomerate, was among the businesses that booked inventory losses to curb risk exposure.
Mr Kan said SCG had begun to manage inventories better and improve its margins, while stocks are gradually running out, so it can place orders again.
"Sales were reduced dramatically in the last quarter of last year as all businesses were seeking to use all their excess stocks first. Then new orders were frozen everywhere," he said.
Conditions in the first two months have improved as operators have started to restock, and this is reflected through higher crude prices.
"Though it’s still impossible to clearly forecast first-quarter performance, the global outlook for the petrochemical business in the first quarter has definitely improved," Mr Kan said.
Despite the poor investment climate, he said SCG would keep looking for merger and acquisition opportunities. Three companies in its core businesses have approached SCG but further discussions are needed.
SCG has an investment budget of THB35bn this year and THB10bn for next year.
It is delaying a US$400m petrochemical joint venture in Vietnam for two years but preparations will continue so that it can be ready when the economy recovers.
He said ongoing projects worth THB70bn in Map Ta Phut in Rayong were moving ahead with operations to start in the second quarter of 2010.