Acquisitions set to lift SCG revenue
Siam Cement Group (SCG), Thailand's largest industrial conglomerate, will raise its revenue target to more than Bt410 billion from the current Bt400 billion, riding on the back of its new acquisitions in the first quarter of the year.
The company’s investments this year are also likely to exceed the budgeted Bt40 billion as the group is in the process of acquiring a number of new assets in Vietnam and Indonesia, and making new investments in Myanmar. In the first quarter, SCG invested half of its full-year budget of Bt40 billion.
President and chief executive officer Kan Trakulhoon said |yesterday that the company |had realised revenue in the |current second quarter from Boral Indonesia, a building-materials company it acquired in February. This business is going well, hence total revenue is likely to exceed its target of Bt400 billion, he said.
"We will wait for the operating results of the second quarter before adjusting the sales target upwards. I’m quite confident that the company’s sales this year will achieve Bt410 billion. I will announce later how high it can go," he said.
The company’s revenue last year was Bt360 billion. Revenue in the first quarter of 2012 grew by 11 per cent from the same |quarter last year to Bt102.884 |billion, but profit plunged by 35 per cent year on year to Bt5.972 billion.
chemicals slow
Kan said the company’s increased sales were attributed to the improved sales volume and product prices of cement and building materials. Only the chemicals business did not perform well in the first quarter as the high global oil price pressured the spread margin of polyethylene (PE) and polypropylene (PP).
The spread margin of PE sank to its lowest in eight years to US$375 per tonne. In the first quarter last year, it was $456, and dropped slightly to $440. However, the spread margin is improving in the current quarter and now is at $453 per tonne.
The spread margin of PP in the first quarter was $408 per tonne, compared with $717 in the same quarter of 2011. The spread margin currently is at $488, showing signs of recovery.
"SCG’s operating result has already bottomed out. I do believe that the chemicals business, which is the company’s largest business unit, will perform better, particularly in the second half of this year," Kan added.
Regarding new investments in Southeast Asia, he said the company had submitted documents expressing intent to invest in a cement plant with a capacity of roughly 1.9 million tonnes per year in Myanmar. The investment is about Bt9 billion. The company expects to start construction by the end of this year.
SCG is also considering investing in a new cement plant in Indonesia. In addition to investments for new plants, the company is in the process of acquiring building-material firms in Vietnam and Indonesia.
