Siam City Cement to boost production, Thailand

Thailand’s Siam City Cement (SCCC) has said it will resume operations of two clinker lines from next year on the back of increased local demand. The company is also looking to construct its first cement plant outside of Thailand.

Two of SCCC's six kiln lines have been shut down since the economic crisis in 2008. With local consumption now showing sound levels of recovery, Mr Arto said one kiln will reopen next October, which will add 10 per cent (1.4Mta) of capacity. The other kiln is due to restart in 2014. With all six kilns in operation, SCCC will have the capacity to produce 12.5Mta of clinker and 14Mta of cement.

Increasing demand

The Thai market has been rebounding this year and further growth is forecast for 2013 due to an increase in both public and private sector projects. SCCC, in which Holcim has a 25 per cent stake, projects domestic cement demand will increase by 5-10 per cent next year. This year, the market has surpassed previous estimates, expanding more than 10 per cent from 2011 when the market was severely hit by floods.

Cambodia investment

Meanwhile, the company’s board of directors is also considering a plant to invest in Cambodia early next year. "Our board of directors will make a decision on this plan in 2013. This would be our first investment outside Thailand," Mr Arto said.

If the plan is approved, SCCC will set up a cement plant in Cambodia via a joint venture with a local partner. "We are interested in investing in Cambodia because we have a more than 40 per cent share in the cement market in the country," Arto said. The plant is expected to have a capacity of 1Mta and is slated to be completed by the end of 2015.

According to local press reports, SCCC is also looking for an investment partner in Myanmar.

Cost reduction

Based on expected increases in domestic demand, Mr Arto believes the company’s total sales in 2013 will increase by five per cent YoY.  However, while consumption is rising, SCCC is also trying to offset strong local competition by reducing management and production costs to increase net profit.

"We have a policy to manage our costs because we cannot raise our price. However, we believe we will control our costs and see our net profit margin improve in 2013," he told local press.

SCCC's sales in the first nine months of this year climbed 10.8 per cent to THB20.02bn (US$653m) from THB18.08bn in the same period of last year on growing demand, but net profit dropped 5.3 per cent to THB2.88bn from THB3.04bn on rising energy costs.