Siam City Cement Plc (SCCC), the country’s second largest cement company, projects cement consumption will fall by 5% this year due to delays in large state projects and shrinking private investment.
Marcel Smith, the new president of SCCC, a local unit of Holcim, said cement sales had slumped as the economic slowdown and political tensions hurt consumption and investment.
"Because of the poor domestic economic climate, we have tried to offset shrinking sales with exports despite lower margins of the latter," he said.
He expected that the overall situation would improve after the general election scheduled in December.
The company’s net profits dropped to 1.14 billion baht in the first quarter of this year, down 1.6% from 1.16 billion in the same quarter of last year. Total sales declined to 5.94 billion baht from 6.16 billion.
Chantana Sukumanont, senior vice-president for marketing, said domestic cement sales were likely to fall by 5% this year. Last year’s total domestic consumption stood at 27Mt.
SCCC has set a target for export volume this year at 4.2Mt compared with 3.7Mt last year, while domestic sales are expected to drop by 500,000t from 8.7Mt last year. The company is currently running at its full annual capacity of 14.5Mt.
To help lift margins, SCCC is turning more to its alternative fuel and raw-materials (AFR) programme, now in its third year, Mr Smith said.
The programme run by subsidiary Eco Siam has invested in waste management and recycling plants, helping SCCC to reduce its energy costs by 5-7% this year.
One billion baht has been invested in its two first phases of a waste recycling plant. The first phase will start operating by the end of this year and the project will be completed next year.
"We also are studying heat-generating systems, which reuse heat from cement production. If we proceed, millions of baht will be required for investment," Mr Smith said.
The AFR venture is projected to break even in five years.
SCCC subsidiary Siam City Concrete yesterday signed a THB200m agreement with Unique Engineering and Construction Plc to provide 120,000 cubic metres of ready-mixed concrete for the Rarm Intra-Outer Ring Road expressway.