Siam Cement to hold line on prices

Siam Cement to hold line on prices
24 August 2004

The Siam Cement Group, the country’s largest industrial conglomerate, may cap the prices of its products for 12 months despite rising operating costs due to higher fuel prices, according to group president Chumpol NaLamlieng.  "If we increase product prices immediately in line with rising costs, public sentiment may be severely affected and consumer purchasing power could drop rapidly. So, a better approach would be to delay raising prices as long as possible or hike them gradually," he said.  But he said prices definitely needed to be increased within the next 12 months because of the higher energy costs.

"Electricity and transport are key elements in the production process. So, inevitably, operating and production costs will go higher in line with fuel costs," he said, adding that even though the government is capping local diesel prices, imported raw materials and capital goods have been subject to higher prices due to higher production and freight costs.

Nevertheless, Mr Chumpol said the economic outlook remained promising but expressed concern about the effect higher fuel prices would have on the country’s current account as Thailand is a net importer of crude oil.

Siam Cement has a corporate strategy of extending beyond the local market and become a regional company.
Kan Trakulhoon, a vice-president of SCC, said that as the company may make further acquisitions, its outstanding debts might not fall below 100 billion baht by the end of this year as previously targeted.  Mr Kan said investors should not be too concerned if the goal is not achieved and they should look at SCC’s net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) instead.

SCC’s net debt to EBITDA is expected to be around 2.3-2.5 times by the end of this year, much lower than the target of three times. The ratio indicates the time period involved for the repayment of the company’s debt.

Published under Cement News