PH real estate, tourism to boost Thai firm’s cement sales

MANILA, Philippines – Siam Cement Group (SCG), the largest industrial conglomerate in Southeast Asia, is expecting the revenues of its Philippine operations to soar by 18% to about US$173 million in 2013 on the back of the country’s booming private real estate sector and the government-led construction activities.

“SCG is expecting an 18% growth in 2013 due to the Philippines’ expanding real estate sector that increased the demand for cement and building materials for both residential and commercial developments,” SCG subsidiary Mariwasa Siam Ceramics (MSC) vice president of sales Jakkrit Suwanslip said during the company’s media briefing on Wednesday, March 13.

In a separate disclosure, Siam also highlighted the property purchases of an expanding middle class and the surge of real estate investments by overseas Filipino workers (OFWs) the past couple of years.

PPP projects, private partnerships

Along with the property boom in the country, SCG is also banking on partnerships with concessionaires with awards from the government to carry out infrastructure projects under the public-private partnership (PPP) scheme.

“The PPP projects now are on infrastructure and the projects give a lot of opportunities. We currently have contractors that we supply to since the requirements as of the moment are on cement and steel,” he said.

Suwanslip said they are also focusing on tourism-related projects, which SCG is looking to maximize by scoring supplying contracts to prospective developers.

The government’s goal of increasing foreign tourist arrivals to 10 million by 2016 is more than double the 4.3 million arrivals in 2012. Several airports, roads, bridges, hotels are lined up to support the target. 

Suwanslip said they are banking on the government to accelerate on public spending after the projects under the PPP scheme were delayed in 2011. 

“Actually we were expecting the government’s opening on the PPPs last year, but, you know, the government is not spending that much money as we expected for the business people. We’re hoping 2013 will be a better year,” he added.

Real estate partnerships

Currently, SCG have partnerships with key real estate developers including some of the projects by SM Development Corp, Vista Land & Lifescapes Inc., as well as the supplying rights of sanitary wares in the ongoing One Shangri-La project along EDSA.

Suwanslip said they are approaching other developers including the Ayala Group and Robinsons Land for possible partnerships in the future.

In 2012, SCG posted a total revenue of $147 million, almost a 50% growth compared in 2011, after the company increased its controlling stake in MSC, the country’s leading ceramic tile manufacturer, to 83% from 46%.

The Thai firm currently has 3 joint ventures and product brands in the Philippines, including SCG, COTTO and Mariwasa. SCG projects the sales proportions of all 3 to spike in 2013 at 20% (SCG), 5% (COTTO), and 75% (Mariwasa) from 15%, 3% and 82% in 2012.

As of December 2012, SCG’s total assets in the country amounted to $225 million, accounting for at least 13% of the industrial giant’s total assets in ASEAN.

P100-M expansion plan

SCG is also investing P100 million to fund the upgrade and expansion plan of its Mariwasa facility in Sto. Tomas, Batangas.

The upgrade and expansion plan is aimed to streamline the operations of the company to meet the growing domestic demand as well as further product development.

“We are investing P100 million in our Mariwasa facility in Sto. Tomas to meet demands and introduce new products. The Philippine population is huge and is in a demographic sweetspot. We want to focus on that,” Suwanslip said.

The plan is expected to be finished by the end of 2013.

The current investment is on top of the company’s P450 million investment in an energy facility in Sto. Tomas. The 45 megawatt thermal facility provides the energy requirement of the Mariwasa facility while helping provide livelihood to local farmers.

The energy facility uses “ipa” or rice straw as burning agent that is bought from local farmers from the surrounding communities. – Rappler.com