Wednesday, July 29, 2009

Thailand's Siam Cement expects higher cement demand

Thailand's cement consumption will likely shrink by only 5-10 per cent this year instead of the 15-per-cent contraction forecast earlier, says the Siam Cement Group, the country's largest maker.

President and CEO Kan Trakulhoon yesterday attributed the expected stronger demand to increased investor confidence in the economy in the final two quarters.

In the first and second quarters, cement consumption fell 10 per |cent and 4 per cent, respectively, |due to the economic slowdown and delays in construction projects.

However, Kan is optimistic the whole year will see less of a demand contraction than previously forecast.

"We believe cement consumption in the second half will be higher than in the first six months. Investors now have more confidence to continue their projects," he said.

"Government mega-projects like the Purple Line mass-transit scheme are also in progress."

Meanwhile, SCG's sales and net profit from the cement business dropped 11 per cent and 21 per cent, respectively, year on year in the second quarter.

Kan said SCG revenue from all businesses this year would likely plunge by 20-25 per cent, because of lower sales and the weakening of prices.

SCG posted net sales of Bt56.88 billion in the second quarter, up 3 per cent quarter on quarter but down 29 per cent year on year, due to lower prices of chemical and paper products.

Its consolidated net profit in the quarter was Bt6.837 billion, up 32 per cent from the previous three months, thanks to better performance in the chemicals, paper and building-material business units.

However, consolidated net profit was down 5 per cent year on year.

SCG recorded net sales of Bt112 billion for the first half of the year, down 29 per cent year on year, due to lower core-business prices. Net profit decreased by 16 per cent.

The company plans to issue a new lot of debentures not exceeding Bt10 billion and with a four-year maturity at the prevailing market interest rate at the time of issue.

It plans to sell the debentures to holders of existing debentures who are individual investors, and to the holders of the company's other debentures.

Kan said the issue would replace existing debentures due to be retired for redemption on October 1. After issuing the new batch, the company's overall debentures will not exceed Bt110 billion.

Meanwhile, SCG's planned petrochemical project in Vietnam has not been scrapped but has been delayed, because the global financial meltdown has made it difficult to find financing, Kan said.

SCG is also scheduled to test-run a new olefin plant in Rayong province next March and start commercial operations in the third quarter, he said.

The plant will boost the annual production capacity of ethylene from 800,000 tonnes to 1.7 million tonnes and of propylene from 400,000 tonnes to 1.2 million tonnes.

Kan also said the group would |support veteran SCG executive Payungsak Chartsutipol as a candidate to chair the Federation of Thai Industries.

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