SCG expects more sales, lower margin
SCG Cement, the country's largest cement maker, expects its sales volume to increase by 5 per cent this year but gross profit margin to start shrinking.
"The Commerce Ministry's request to reduce the cement price by Bt5-Bt10 per [50-kilogram] bag is higher than the |actual decline in costs. So our gross |profit margin is likely to be squeezed," president Pramote Techasupatkul said yesterday.
The Commerce Ministry had asked for cement prices to be lowered because the government's policy to suspend taxes on retail sales of fuel had helped cut manufacturers' operating costs.
Pramote said the drop in the diesel |price after the tax levy was removed had helped the company save slightly on transport costs, while other fuels such as petrol and gasohol were not a major operating cost.
Other energy costs such as for coal and electricity are likely to rise, and these are the major pressures on SCG Cement's operating costs.
SCG Cement has cut its prices for an indefinite period.
Its sales volume this quarter slipped because of the prolonged flooding, but |is expected to recover next quarter, as |the flood victims have to repair their |houses.
Sales volume in the first half grew more slowly than expected, but the spurt in sales next quarter is expected to help boost total sales volume by 5 per cent for the whole year.
"The government's projects such as for construction will be a major driver of cement consumption this year despite the serious flooding," Pramote said.
