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Siam Cement Plc (SCC), the country’s leading industrial conglomerate, came out to say that it would cut its capital expenditure as the global economy goes on a ‘recessionary’ mode.
SCC, which is considered to be barometer of industrial activities in Thailand, came out to say that it was lowering its investment budget for merger & acquisition (M&A) and other investments to 70 billion Baht from earlier projection of 75-80 billion Baht during the course of this year.
SCC, which has been on a regional expansion plan with ongoing plans to acquire assets in Indonesia and Vietnam, said that the uncertainty in the global markets has prompted the company to cut part of its CAPEX for this year.
Because the company has to be more cautious in investing due to the effects of the economy that may slow down, the company has reduced investment capital this year to 70 billion Baht from the original figure of 75-85 billion Baht and emphasizes greater liquidity and building financial strength, Narongphan Leesahapanya, Investor Relations Director of SCC said.
He said that the company needs to be a little more cautious on its investments and maintain liquidity and build financial strength while keeping an eye on China to open the country as it would increase the demand for all product groups.
Narongphan was talking to investors at the Opportunity Day event that the company is still moving forward with its acquisition plan M&A that will help expand its business in the second half of 2022.
He said that although the situation is highly uncertain, but the company needs to review investment projects, if it is a deal that benefits the company, SCC will continue making that deal.
The company expects the easing of China’s lockdown measures to be a positive factor supporting its earnings in the second half of the year as it will increase the demand for all products of the company, especially the demand for petrochemical products that tend to improve.
As for the Long Son Petrochemicals Company Limited (LSP 1), an integrated petrochemical project in Vietnam, Narongphan revealed that the construction is currently 93% complete with a target customer base of more than 3,000 customers and that he is confident that the commercial machine (COD) can be operated in mid-2023.