SCG lines up B5bn Asean expansion

SCG lines up B5bn Asean expansion

Group puts focus on innovative products

SET-listed Siam Cement Group (SCG) will continue its plan to expand in Asean with a focus on high-value-added products and investing to create innovations that match market demand, says president and chief executive Roongrote Ransiyopash.

SCG president and chief executive Roongrote Ransiyopash says the company aims to grow at an average of 5% annually, the same rate as the Asean market.

The company is targeting annual average growth of 5%, said Mr Roongrote, who officially took the helm of the country's largest industrial conglomerate and cement producer early this year.

"The Asean market is growing by about 5% each year. We also aim to grow at the same rate or higher," he said.

SCG is also exploring southern Chinese cities whose economies are expected to grow rapidly with logistics facilities to help boost businesses, he said.

"Asean remains a strategic market with strong purchasing power of more than 600 million people. We see the region as a strategic place to expand business and our presence in each Asean country," Mr Roongrote said.

"We are also interested in southern China, where there are 60-80 million people, with strong potential to grow."

Mr Roongrote said SCG would take a few years to study the southern China market before deciding which type of businesses to invest in.

In Asean, the company will focus on deciding which countries and sectors are most suitable for expansion.

"This year we plan to spend 5 billion baht of our investment budget on expanding business in Asean including Thailand," Mr Roongrote said.

SCG has cement, construction materials, packaging and petrochemical businesses in Indonesia and Vietnam. It also has packaging and construction materials businesses in Laos, Myanmar, Cambodia, Singapore and Malaysia.

Its US$4.5-billion petrochemical complex in Vietnam has been postponed for another six months after Doha-based Qatar Petroleum International, its former partner, withdrew from the project.

"We are still in the process of seeking a new partner. That is expected to be finalised by mid-year and we should have a clearer direction about the project by the second half," Mr Roongrote said.

SCG will maintain its plan to focus on creating innovative products to match changing demand in each country while introducing high-value-added products that help to generate rising revenue.

"High-value-added products provide about 39% of our total revenue and the proportion is expected to grow substantially as we continue to develop more such products," Mr Roongrote said.

To create new high-value-added products, the company has to invest more in research and development (R&D), not only in terms of investment budget but also in human resources, he said.

This year SCG has allocated around 1% of its annual revenue or about 4 billion baht for R&D. That was up from 0.8% or around 3 billion baht last year.

Moreover, the company has around 1,000 employees working on R&D.

"In terms of employees working on R&D, we will not increase the number," Mr Roongrote said.

"However, we will pool our employees on the marketing and services side, who have been dealing with customers, to work together on creating innovations. This will help the company to come up with innovations that match the demand of our customers."

SCG posted revenue of 110 billion baht in the first quarter.

Its first-quarter net profit reached 13.6 billion baht, up 23% year-on-year, driven largely by its chemical and packaging businesses.

Domestic demand for cement is expected to rise by 3-5% this year, driven by government megaprojects. Cement consumption is likely to reach 40 million tonnes this year.

Acceleration of the government's infrastructure projects helped cement consumption in the state sector to grow by 20% in the first quarter.

SCC closed yesterday on the SET at 482 baht, down six baht, in trade worth 602 million baht.

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