May 1, 2014 1:00 pm JST

Siam Cement to build $370 million plant in Laos

YUKAKO ONO, Nikkei staff writer

BANGKOK -- The Siam Cement Group will spend 12 billion baht ($370 million) to build a plant in Laos, the company announced Wednesday. With annual production capacity of around 1.8 million tons, the plant is expected to go online in the second quarter of 2017.

     While cement demand in Laos is firm, "this plant is meant to serve the greater Mekong region," President and CEO Kan Trakulhoon told reporters. With Asean, Southeast Asia's 10-country regional bloc, set to become a common market at the end of 2015, Siam Cement will continue investing to boost its presence in the region, Kan said.

     The company said revenue in the first quarter of 2014 increased 11% on the year to 121 billion baht, beating its initial projection of 10% growth. While Thailand's domestic market slowed, demand in the rest of Asean remained robust. Sales in the nine other member countries combined climbed 24% on the year.

     "The political tension (in Thailand) since the end of October 2013 is effecting sentiment, demand and everything," Kan said. As domestic demand for cement and other building materials softens, "we are shifting our emphasis to exports."

     For the full year, the company projects a 10% increase in sales. Exports are to account for roughly 27%, up around 2 percentage points from 2013, of overall revenue.

     To save transportation and logistics expenses, Siam Cement intends to continue investing around the world. Some of its investment baht will go toward the establishment of a joint venture with Italian cement company Florim Ceramiche, the president said. The venture is to promote high-end ceramics production in northern Italy; it will be the Thai group's first ceramics production base in Europe.