Energy costs erode cement firm’s profit

Energy costs erode cement firm’s profit
Published: 08 July 2005

Thailand’s second-largest cement maker, Siam city Cement said yesterday rising fuel costs and more competition are eroding the company’s profit.  Chantana Sukumanond, senior vice chairman of SCCC, said her firm’s net profit will be less than earlier projection as production costs increased as much as 15 per cent.    “SCCC has been able to increase its production efficiency, reducing fuel costs by 7 per cent. But this means that the current oil price hike has pushed up fuel costs by 8 per cent,” she said.   Of the company’s total production cost, 40 percent is spent on fuel and another 30 percent on electricity, she said.  
 
“Cement producers are facing a tough time,’’ Chantana said. “The company cannot raise prices to cover higher costs because competition is intense.’’ Profit at Siam City Cement, controlled by Switzerland-based Holcim, rose 2.3 per cent in the first quarter to 1.23 billion baht ($30 million). The cost of goods sold rose 15 per cent to 3.52 billion baht, according to its exchange statement. Profit growth slowed from 26 per cent for the full year of 2004. Profit growth this year will lag last year’s gain, Chantana said.  
 
Sales volume at Siam City Cement rose 16 per cent in the first five months of this year to 3.54Mt from the same period a year earlier, Chantana said. The price for a 50-kilogram bag is about 105 baht, almost unchanged from three years earlier, she said.