Siam City Cement expects no domestic sales recovery, Thailand

Siam City Cement expects no domestic sales recovery, Thailand
Published: 03 March 2008

Siam City Cement (SCCC) expects domestic demand this year to stay flat at best despite the government’s acceleration of mega-projects.  
 
Demand has yet to increase this year, due to the uncertainty about the mega-projects and low purchasing power caused by skyrocketing oil prices, Chantana Sukumanont, executive vice president for marketing and sales at the country’s second-largest cement maker, said yesterday. 
 
Demand would remain at 29Mt and supply at 54Mt, she said. 
 
"We would like to raise our cement price, but we can’t do it, because of fierce competition and almost double oversupply in the market," she said.  
 
Production costs have more than doubled since the last price increase in 2000, she said. 
 
To reduce energy costs, which make up more than 60 per cent of total production cost, SCCC last year spent about THB1bn on maintenance and developing alternative fuels and raw materials.  
 
It also cut output from 14Mt to 12.5Mt - 8.5Mt for the domestic market and the rest for export.  
 
The production amount and sales proportion would be maintained this year.  
 
The company considers Cambodia and Laos, where demand for cement is growing robustly, as part of the domestic market.  
 
The company’s consolidated revenue dropped 3.6 per cent to THB23.1bn last year on lower domestic cement sales.  
 
Expenses increased 0.6 per cent to THB16.37bn, due to higher fuel and electricity costs, while net profit was THB3.07bn.  
 
BankThai Securities forecasts that rising coal and electricity costs will cut SCCC’s net profit this year to THB3.23bn.  
 
It expects the company to boost its cement price by THB100/t due to a surge of 30-38 per cent in production costs this year.