SCG keeps flat 2020 horizon on uneven prospects

Siam Cement Group (SCG), Thailand’s largest cement maker and industrial conglomerate, expects 2020 revenue to stay flat because global and local economic sentiment are unfavourable.

SCG’s olefins plant in Map Ta Phut, Rayong is projected to shut down for 45 days, reducing revenue temporarily, said president and chief executive Roongrote Rangsiyopash.

“This is a tough year for SCG’s business units because there are myriad risks such as the US-China trade war, US-Iran military tensions, the local drought, and baht appreciation. The virus outbreak in China is also affecting the country’s tourism sector,” he said.

“SCG expects the government will accelerate megaprojects and speed up state disbursement to improve the country’s GDP and build up local business and investment confidence.”

Mr Roongrote said SCG plans to spend roughly 60-70 billion baht in 2020 for its business expansion in Asean, largely for the Long Son petrochemicals complex in Vietnam and the packaging paper operations in the Philippines.

SCG announced operating results in 2019 dipped 8% year-on-year to 438 billion baht, largely down to a decline in chemical prices.

The company posted profit of 32 billion baht in 2019, a decrease of 28% year-on-year from the lower chemical earnings, including a severance pay adjustment of 2.04 billion.

In 2019, SCG’s revenue from sales of high value-added (HVA) products and services reached 179 billion baht, a decrease of 3%. The HVA segment accounted 41% of total revenue for SCG last year.

SCG spent 5.67 billion baht on R&D activities in 2019, which was 1% of total revenue.

Its revenue from overseas businesses including exports totalled 180 billion baht in 2019, down 12% year-on-year.

This segment accounted for 41% of SCG’s revenue last year.

SCG’s cement and building materials recorded 2019 revenue of 185 billion baht, up 1% year-on-year. The segment’s profit for the period stood at 5.46 billion baht, a 3% rise.

SCG’s packaging recorded 2019 revenue of 89.1 billion baht, a 2% rise, but profit for the period remained in a red with a 13% drop to 5.27 billion baht due to lower margins.

Revenue for the chemicals segment fell 20% year-on-year to 178 billion baht because of lower product prices. Profit for the period stood at 15.5 billion baht, a decline of 46%.