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Thailand: Kan eyes 5% rise in 2015 cement demand
SIAM Cement (SCG) chief executive Kan Trakulhoon believes the Thai economy has bottomed out since August, and forecasts that cement demand - a leading indicator of economic growth - will expand by at least 5 per cent next year.

Kan, who runs the country s |leading chemicals/building materials/paper group, also expressed optimism about the world economy, and in particular the petrochemical industry, whose upswing cycle he expects will now extend from next year to 2018.

Despite reporting a 20-per-cent drop in net profit for the third quarter yesterday, which was caused mainly by non-recurring gains booked in the same period last year, the SCG boss told a press conference that the worst was probably over for the Thai economy, which was now recovering gradually. He said SCG expected cement demand to recover significantly from the second half of next year, thank chiefly to government projects.

"We expect cement demand, which is a leading indicator of the economy, to grow by a minimum of 5 per cent next year. This is our conservative estimate," he said.

SCG expects Thai cement demand to fall by 3 per cent this year, after soaring last year to the record level posted in 1996.

The fall in global oil prices, from about US$110 (Bt3,570) a barrel in the middle of the year to about $85 at present, has also been benefiting the petrochemical business, which contributes about half of the group s revenue and assets, said the CEO.

The spread between the prices of its polyethylene products and naphtha raw materials rose from $691 a tonne in the third quarter to more than $800 in some weeks this month.

Similarly, the polypropylene-naphtha spread has shot up from $716 a tonne to more than $800 during the same period.

Since oil prices are still falling, Kan said SCG might book some Bt500 million-Bt700 million of inventory losses in the current quarter, but stressed that he was "1,000 per cent certain" that the overall results for the group in the quarter would be better than in the previous three months.

SCG reported a third-quarter net profit of Bt7.84 billion, a decrease of Bt1.94 billion or 20 per cent from the same period last year, when it posted a non-recurring gain of Bt1.7 billion resulting from a fair investment value adjustment of sanitaryware and fittings assets, and the sale of assets to Japan s Toto.

The group s sales revenue increased 9 per cent in the July-to-September period, to total Bt124.27 billion, largely due to higher chemical prices.

For the first nine months of the year, SCG recorded a 12-per-cent increase in revenue, to Bt370.83 billion, and a 13-per-cent drop in net profit, to Bt28.51 billion.

Kan said the upcycle of the petrochemical industry worldwide was now expected to last from next year to 2018, or six months longer than the previous estimate of mid-2017.

SCG has not yet reaped the full benefit from the current spike in petrochemical spreads, which began from upstream products, since it currently has more stakes in downstream products than in upstream products, he explained.

Meanwhile, Kan said SCG s board had recently approved the company s planned investment of Bt2.8 billion for the construction of mortar factories in Khon Kaen and Lampang.

The company also expects to conclude a deal to buy a European technology company next month.

The group will put most of its Bt250-billion budget approved for the next five years into Asean investment outside Thailand, "because it is where the growth is", he said, pointing to the 16-per-cent growth of its Asean sales booked for the first nine months of the year.

In the next five years, SCG s non-Thailand assets will grow to 25 per cent of the group s total, from 17 per cent at present, and its non-Thailand Asean workforce from 30 per cent to 47 per cent of overall employees, the chief executive added.

UAECEMENT.COM - Oct,30,2014



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