CAMBODIA: SCCC not put off Cambodia

Siam City Cement Plc (SCCC) is proceeding with plans for a cement plant worth 4-5 billion baht in Cambodia, brushing aside concerns about the border clashes.

Managing director Philippe Arto said the Cambodian plant with annual capacity of one million tonnes was highly likely to be operational within five years. Thailand's second-largest cement maker has joined with a Cambodian partner to study the market potential and select a site, with the final decision expected within six months.

SCCC is the leader in the Cambodian cement market, with a 40% share of the 800,000 tonnes exported there from Thailand each year.

However, most shipments are made by sea and other land crossings besides Si Sa Ket province, where the clashes have been occurring.

"We are looking beyond the current short-term issues [between Thailand and Cambodia]. The two countries are neighbours and have common economic interests," said Mr Arto.

SCCC, one-third owned by Holcim of Switzerland, is also studying building a plant in Burma, another of its key neighbouring markets.

Investment in Burma could be in the form of acquiring an existing plant or partnering with local companies that can expand the capacity, said Mr Arto.

"Burma is one of our long-term strategic countries for growth, but no commitment has been made yet," he said.

Last year, SCCC's exports to Cambodia, Laos and Burma totalled 1.76 million tonnes, up by 7% from 2009. Another 2.8 million tonnes went to Vietnam and Bangladesh.

Cement export prices rose by US$2-3 a tonne last year to $45 and are expected to increase another $3-4 this year.

The local cement price is the lowest in the world at 112 baht per 50-kg bag of ready-mixed cement, according to SCCC.

Given the sharp rise in energy costs, that could soon increase to 120 baht a bag, said Chantana Sukumanont, an executive vice-president.

Last year's exports totalled 13.6 million tonnes, driven mainly by a huge capacity surplus of 16.3 million tonnes.

With a general election imminent, total local cement consumption is expected to grow by only 4.18% to 27.4 million tonnes this year after last year's 9.2% increase to 26.3 million tonnes, said Ms Chantana.

SCCC posted net sales of 21 billion baht last year, up by 5% from 2009 thanks to the government's Thai Khem Khaeng infrastructure investment programme and strong demand from the private sector.

However, net profit slid by 8.47% to 2.7 billion baht on lower cement prices.

In the fourth quarter alone, sales increased by 6% year-on-year to 5.33 billion baht, while net profit fell by 18.9% to 571 million baht.

SCCC shares closed yesterday on the SET at 220 baht, up two baht, in trade worth 35.25 million baht.