REUTERS SUMMIT-Thailand's Siam Cement aims to boost ASEAN business

by Reuters
Thursday, 27 March 2014 10:34 GMT

* Sees cement capacity up 20 pct by 2016

* Plan to double cement capacity in Indonesia, Myanmar over 5 years

* 2014 capex may be as high as 60 bln baht vs 2013's record 50 bln baht (Adds capex, Vietnam investment)

By Khettiya Jittapong and Wilawan Pongpitak

BANGKOK, March 27 (Reuters) - Siam Cement PCL, Thailand's largest industrial conglomerate, aims to boost cement production and sales in Southeast Asia to offset a slowdown at home where political unrest has delayed spending on infrastructure projects.

Siam Cement, which also produces chemicals and paper, has been building cement factories in the fast-emerging economies of Cambodia, Indonesia and Myanmar where an infrastructure bonanza has pushed up demand for construction materials.

At home in Thailand, sales have slowed because of a decline in rebuilding demand after widespread flooding in 2011, and have been exacerbated by the prospect of clashes between supporters of the prime minister and protesters who allege corruption.

Siam Cement projects domestic cement demand growth of 2 percent to 3 percent this year, from 7 percent last year. That compares with the annual growth it projects in the Association of Southeast Asian Nations (ASEAN) of 7 percent to 8 percent.

"If political crisis is prolonged, Thai cement demand is likely to be negative," Chief Executive Kan Trakulhoon said at the Reuters ASEAN Summit on Thursday.

"ASEAN will be a growth platform for the world economy. Its attractiveness has increased significantly after Myanmar was included," Kan said at the summit.

Myanmar is emerging from decades of military rule and isolating sanctions and has been looking to attract foreign investment since a quasi-civilian government took office in 2011. This year, the country is chairing ASEAN for the first time.

Siam Cement's ASEAN assets reached $2.2 billion last year, or 16 percent of the total from 5 percent in 2008. The company aims for ASEAN sales to reach 30 percent from 20 percent by 2018, Kan said.

ASEAN is made up of Thailand and the hosts of its three new factories, plus Brunei, Laos, Malaysia, the Philippines, Singapore and Vietnam.

Siam Cement aims to begin production at the new factories over the next two years, raising overall capacity by 20 percent from 24 million tonnes now, Kan said.

The company then plans to double capacity in Indonesia and Myanmar within five years of beginning production, Kan said.

"We are investing more in ASEAN and less in Thailand, where we focus on high value-added products," Kan said.

Capital expenditure could be as high as 60 billion baht ($1.84 billion) this year, beyond the 40 billion baht to 50 billion baht range previously announced, Kan said. That would compare with last year's record 50 billion baht.

A large chunk of those funds is destined for ASEAN countries, Kan said. In Vietnam, for instance, the company expects to start building a $4.5 billion petrochemical complex in early 2015, to be completed in 2018.

Siam Cement is a century old and 30 percent owned by the Thai royal family's Crown Property Bureau investment arm.

The company is ASEAN's second-largest cement maker by capacity after Swiss Holcim Ltd, and is the region's biggest producer of downstream chemicals for plastics.

Shares of Siam Cement, valued at $15 billion, have fallen 12 percent over the past 12 months, versus an 11 percent fall in the benchmark index.

Follow Reuters Summits on Twitter @Reuters_Summits ($1 = 32.5700 Thai Baht) (Additiongal reporting by Tripti Kalro in Bangalore; Editing by Christopher Cushing)

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