SCG rejigs investment plans

SCG rejigs investment plans

Increasing energy prices a major factor

Mr Roongrote says SCG may need to increase the prices of its petrochemical products.
Mr Roongrote says SCG may need to increase the prices of its petrochemical products.

The widening impact of the Russia-Ukraine war is causing SET-listed Siam Cement Group (SCG), Thailand's largest cement maker and industrial conglomerate, to review its investment plan this year as energy and raw materials prices are increasing.

The company earlier vowed to allocate 80 billion baht for investments in Thailand and overseas this year.

"We will delay some new investment projects, especially greenfield investments, and consider increasing more investments under merger and acquisition plans to avoid possible impact on our long-term financial management," said Roongrote Rangsiyopash, president and chief executive of SCG.

The ongoing conflict between Russia and Ukraine is blamed for driving up global crude oil prices, causing higher energy costs in the logistics and manufacturing sectors.

Prices of naphtha, a key feedstock for the petrochemical industry, also cannot avoid the impact, said Mr Roongrote.

Naphtha costs account for 70-80% of SCG's petrochemical business. Energy costs account for 20% in the company's cement and building material business and 5% in its packaging business.

"SCG may need to increase the prices of petrochemical products, following higher naphtha prices," said Mr Roongrote.

"Prices of cement and building materials will also gradually increase."

Global oil prices are expected to continue to soar after rising towards US$130 a barrel earlier this week. US President Joe Biden has also announced the US will ban Russian oil imports, causing more concerns over higher energy prices.

SCG maintains its revenue growth target of 10% this year, up from its total revenue of 530 billion baht in 2021.

Its petrochemical business is a main driver of revenue as this accounts for 50% of total revenue. Its profit makes up 60% of the firm's total profit.

The firm will continue the development of the Long Son Petrochemicals complex project in Vietnam. Its construction is 90% complete, with commercial operation set to start in the first half of 2023.

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