Siam Cement Group (SCG), Thailand's top industrial conglomerate, is set to invest more than 11 billion baht to expand its business in Asean, including constructing a greenfield cement plant in Laos for 10 billion baht.
President and chief executive Kan Trakulhoon said yesterday that SCG's board has approved its plan to build a cement factory in Laos with maximum capacity of 1.8 million tonnes per year.
Located in Khammouane province, the plant will start operating in the second quarter of 2017 to serve growing demand in the Great Mekong Subregion (GMS). The cement market in Laos is estimated at 2.8 million tonnes this year, with expected growth of 5-10% over the next 10 years.
SCG exports more than 100,000 tonnes of cement per year to the GMS, said Mr Kan.
Another investment is for production of Glassine paper of 60,000 tonnes per year from 2016.
About 506 million baht will be spent for a 33% stake in a joint venture in Italy to produce ceramic tiles under the Cotto brand from early 2018.
In the first quarter, SCG posted revenue of 121.7 billion baht, up 11% year-on-year, with growth reported in all business units.
Net profit dropped 5% to 8.38 billion baht due to foreign exchange adjustments of 1 billion from chemical business.
SCG expects its sales revenue will beat the forecast and will adjust it projection of 478 billion baht. The specific amount will be revealed at a later date.
Sales from its cement and construction materials business in Thailand decreased 8% due to weak demand in the construction sector.
"Without a functioning government, there are no projects from the public sector to drive demand for cement," said Mr Kan.
SCG projects domestic demand for cement will grow by 0-3% this year.
Sales of high value-added products rose at a higher rate than commodity products at 34% year-on-year to 40.8 billion baht.
"The political conflict has had less effect on our sales revenue because there is demand from overseas for SCG products," said Mr Kan.
In the first three months, the group earned export revenue of 32 billion baht, up 12% from last year. Asean accounted for 42% of sales with an increase of 24% to 10.2 billion baht.
SCG expects its export ratio will increase to 27% of total revenue in 2014 from 25% at present, Mr Kan said.
Shares of Siam Cement (SCC) closed yesterday on the Stock Exchange of Thailand at 434 baht, down 8 baht, in trade worth 1.17 billion baht.