Thailand’s Siam City Cement records Q1 revenue of $34.5 mln in Vietnam

Thailand’s Siam City Cement Public Company Limited (SCCC), also known as INSEE, recorded revenue of THB1,188 million ($34.5 million) from its business in Vietnam in the first quarter of 2023, down 33.6% year-on-year.

Globally, the Thai cement giant recorded revenue of THB11,353 million ($329.1 million) in Q1, down 9.8% year-on-year, according to the group's quarterly report.

As a result, the Vietnamese market, mostly the southern region, accounted for 10% of the total. Thailand, its domestic market, made up the biggest portion of 74%, followed by Sri Lanka with 11%, and Vietnam.

Regarding earnings before interest, taxes, depreciation and amortization (EBITDA), the Vietnamese market’s figure was negative THB52 million ($1.51 million), versus THB371 million ($10.8 million) in Q1/2022. As a result, the EBITDA margin fell from 20.7% in Q1/2022 to minus 4.4% in Q1/2023.

SCCC attributed the underperformance to cement demand lowering by 30% due to challenges in the Vietnamese real estate sector.

Nevertheless, some signs of recovery were detected, the firm added. Moderate growth in the future is expected, subject to the real estate sector's recovery. However, for the rest of 2023, tight liquidity in the Vietnamese market is expected to continue weighing on building materials demand, the firm stressed.

SCCC estimated that Vietnam's production capacity was unchanged at 25.7 million tons in Q1/2023, while demand was 19.4 million tons, falling from 19.6 million tons in Q1/2022 and 20.6 million tons in Q4/2022.

SCCC’s production capacity in Vietnam is 5.2 million tons of cement and 1.6 million tons of clinker per year.

In 2022, Vietnam was the biggest overseas market for SCCC with a revenue of THB8,442 million ($244.7 million), up 42% year-on-year.

In December 2022, INSEE Vietnam, a subsidiary of Thailand’s Siam City Cement, began construction of its second production line worth $35.7 million in Ba Ria-Vung Tau province. The Thi Vai cement grinding station mill No. 2 is the second investment in its facility in the southern coastal province, after the first worth $53 million in 2003, aiming to serve growing local demand.

INSEE Vietnam, with its head office in Ho Chi Minh City, now operates two grinding stations in HCMC and Dong Nai province, and three cement plants in HCMC, Ba Ria-Vung Tau province and Kien Giang province, all in the South.

Siam City Cement Group was established in 1969 in Thailand and started producing cement in 1972. In 2017, the group spent $580 million for a 65% stake of Holcim Vietnam, one of leading cement and concrete suppliers in southern Vietnam, and renamed it INSEE.

Many cement companies reported losses or sharp profit declines in the first quarter of 2023 due to property market woes, slow disbursement of public investment capital, and supply surpluses.

Vietnam Cement Industry Corporation (Vicem) data shows that cement supply continues to exceed demand. Cement supply is forecast to be about 117.8 million tons in 2023, while domestic demand is predicted at only 68-68.5 million tons, leading to increasingly fierce competition.

Meanwhile, according to the Ministry of Construction, cement sales in Vietnam fell 10% year-on-year to 43 million tons in the first half of this year, while production decreased 7% to 39 million tons.