SET-listed Siam Cement Group (SCG), Thailand's largest cement maker and industrial conglomerate, expects to see its 2022 total revenue increase by more than 10% year-on-year from 530 billion baht last year due to a rise in its product prices.
The increase comes from higher prices of energy and raw materials, which are blamed for driving up production costs, said Roongrote Rangsiyopash, president and chief executive of SCG.
"The prices will continue to rise, mainly due to the impact of the Russia-Ukraine war," he said.
Prices of the company's products will also be determined by consumer demand.
In the first quarter of this year, SCG saw its revenue increase by 25% year-on-year to 152 billion baht, but its profit fell by 41% year-on-year to 8.84 billion baht.
Although its chemical business performed better in the first three months of 2022, it also faced higher feedstock prices.
The cost of the feedstock naphtha accounts for 70-80% of SCG's petrochemical business. Energy costs account for 20% in the company's cement and building material business and 5-10% in its packaging business.
The company is adopting "proactive business management" to deal with higher energy and raw material prices, as uncertainties caused by the protracted Russia-Ukraine war and the Covid-19 pandemic may continue in the next 3-6 months.
SCG has used more alternative energy to reduce production costs.
From January to March, the company's proportion of biomass energy, mainly from agricultural waste and other refuse-derived fuels, accounted for 16.4% of its total energy consumption. Biomass energy made up 30.4% of energy usage for cement production in Thailand.
Other measures include inventory management that responds well to consumer demand, and use of digital technologies to increase energy management efficiency.
In another development, SCG has submitted a registration statement and a draft prospectus to the Securities and Exchange Commission as the company prepares to list its subsidiary SCG Chemicals on the stock market.
"We plan to raise funds to expand the business and support its growth in Asean," said Mr Roongrote.
"We plan to sell 1 million tonnes of green polymers annually by 2030."
