Operational efficiencies and cost savings boost Siam City Cement 4Q15

Operational efficiencies and cost savings boost Siam City Cement 4Q15
Published: 15 February 2016

Siam City Cement Co (SCCC), Thailand's second-largest cement producer, achieved a 45 per cent increase in 4Q15 net profit due to a reduction in costs and non-recurring items.

Vorathep Rangchaikul, chief executive officer of SCCC, told The Nation that the cement producer attributed the strong performance to efficient production operations at high-capacity utilisation and cost savings harnessed through investments in industrial assets as well as lower energy prices.

"Nevertheless, our core cement business has continued to benefit from lower coal prices and electricity tariff rates. In addition, operational efficiencies and procurement savings initiatives have contributed to the reduction of production costs. This has helped the company maintain a gross margin of 44 per cent, despite the challenging business environment."

However, for the full year, sales were down by two per cent to THB31.1bn. Rangchaikul said business challenges last year included lower domestic sales volume and prices in the face of weaker demand in most of the key businesses.

"Profit for the year, however, declined by 10 per cent to THB4.6bn because of higher depreciation, financial expenses and lower earnings from associates offset by a non-recurring income item (1.2 per cent).

Investments during the year included a greenfield cement plant in Cambodia and expansion of grinding capacity at the company's Saraburi cement works in Thailand.

For the first quarter of this year, Rangchaikul expects to see moderate growth in its domestic market of Thailand, stating: "We will not likely see drastic growth until the implementation of the infrastructure mega-projects."

Rangchaikul also expects the supply-demand imbalance to continue. "The supply will continue to exceed the domestic demand, especially with newly added capacity of the domestic cement producers. SCCC's key approach is to produce at competitive cost, [maintain] quality and maintain market share during this difficult situation by offering the best value to our customers," he said.