Siam City seeks higher prices to combat costs

Siam City seeks higher prices to combat costs
Published: 11 August 2006

Siam City Cement PCL (SCCC), Thailand’s second-biggest cement maker, said on Friday its 2006 net profit would be lower than the 4 billion baht (US$107m) earned in 2005 as costs rose. Revenues this year should be higher than last year’s 22 billion baht, but rising energy costs would hurt its bottom line, executive vice president Chantana Sukumanont told reporters.

"We will have higher revenues this year, but we expect a lower net profit because of higher energy costs," she said. SCCC raised the prices of its cement by 100 baht a tonne in the first half of the year, still small compared with the higher energy costs, she said.

It planned to raise prices by up to 350 baht a tonne later this year despite weaker domestic demand and price competition, she said. The margin on domestic sales was higher than on exports, with domestic prices at 1700-2000 baht per tonne (US$45.38-US$53.39) and export prices at US$41-US$42 per tonne, she said.

Domestic cement demand was expected to fall 2-4 per cent this year to about 27Mt, with growth likely to be flat next year due to delays in the government’s infrastructure spending plans, she said.

SCCC has focussed more on value-added products to boost its earnings. Its Conwood Co subsidiary, a wood replacement materials producer, planned to launch nine  new products, she said.

SCCC has recently gained a sand mining licence and spent about 200 million baht on the project while it was now applying for a hard rock mining licence, which would help strengthen its ready-mixed concrete business, she said.

SCCC, 32 per cent owned by Holcim, reported an expected 9.5 per cent fall in second quarter net profit to 1.03 billion baht due to higher fuel and electricity costs. Fuel and electricity account for more than 70 percent of its costs.