Tuesday, March 25, 2014

THAILAND: SCG REVIEW BUSINESS PLANS

Siam Cement Group (SCG), Thailand's top industrial conglomerate, is poised to revamp its business plans to cope with theimpact of the political turmoil and adverse economic outlook, setting its sight on more exports and trading with the Asean market.

President and chief executive Kan Trakulhoon said the country's prolonged political problems and the absence of a functioning government have affected the operational plans of all businesses including SCG.

The company is scheduled to submit the new business plans to the meeting of the shareholders and board of directors on Wednesday.

According to Mr Kan, the existing business plan called for the company to cut cement shipments by 1 million tonnes a year from 5 million tonnes in 2012 to 4 million tonnes in 2013 and 3 million tonnes this year to serve more domestic consumption.

But given the unfavourable market conditions at home, the company will keep cement exports at 4 million tonnes this year, with Myanmar, Cambodia and Vietnam as the target markets.

"The overall market of cement and construction materials has shrunk over the past couple of months thanks to the sluggish economy which has been hit by the prolonged political problems,'' said Mr Kan. "Earlier we forecast the two industries should increase by 8-9% this year, but now we see they would grow at best at 4-5%."

According to Mr Kan, the cement and construction materials fell 7-8% during January and February against 4-5% growth it projected earlier. Normally, late December until April is the peak selling season for products in this group, as people build and renovate their homes during this period.

Cement and construction materials are expected to be harder hit in the second and fourth quarters of the year, as the construction and property business slows down in line with tepid economic prospect and a lack of new private investments because of the absence of a new Board of Investment (BoI).

Investment proposals worth 500-600 billion baht are still awaiting approval from the BoI’s main board which has yet to be appointed because of the political crisis since last October, when board member terms expired.

SCG itself has one project, a joint venture with Japanese partner, pending approval from the BoI. The company also has two other joint venture investment projects with the Japanese investors waiting to submit the investment privileges with the BoI.

Mr Kan said he remains upbeat that SCG's sales revenue would grow by at least 10% this year from 434 billion baht last year.

Domestic sales are expected to make up for 65% of the group's sales revenue this year, with overseas sales contributing the remaining 35%, 20% of which will come from Asean

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