Thailand's largest industrial conglomerate Siam Cement PCL (SCC) said on Friday sales from its paper and packaging business should rise 5-10 percent this year as higher demand from Southeast Asia countries helps offset slow growth at home.
Siam Cement, Southeast Asia's biggest packaging paper maker, expects domestic demand to rise just 1 percent to 2 percent in 2015 due to weak consumption and poor exports, said Roongrote Rangsiyopash, president of its packaging unit.
"Domestic demand is not quite good, while growth in Vietnam should be around 5 percent and 6-7 percent in the Philippines," Roongrote told reporters, speaking after an event to mark the rebranding of the company's paper business.
He said he expected domestic demand to improve in the second half on hopes of better economic conditions, while Southeast Asian markets are expected to grow 5 percent or more.
Siam Cement had sales of $2 billion from paper and packaging business last year, accounting for 15 percent of total sales. But profit from the paper business slid 30 percent in January-March compared with the same quarter a year earlier due to weak margin and rising expenses.
Siam Cement reorganised its paper business to focus more on packaging operations, which are expected to contribute 80-90 percent of combined paper-packaging sales over the next five years, up from 70-75 percent currently, Roongrote said.
The company, which has packaging production bases in Vietnam, Indonesia, the Philippines and Singapore, has actively invested to expand packaging capacity in the region, he said. Last year, Siam Cement acquired a 90 percent stake in PT Indoris Printingdo, a producer of high-quality packaging products in Indonesia.
Siam Cement is investing 4.125 billion baht ($122.22 million) to expand packaging paper capacity in Vietnam with annual capacity of 243,000 tonnes, and expected to start operations in 2017, Roongrote said. The expansion will increase Siam Cement's annual capacity to 2.6 million tonnes across Southeast Asian operations.
The company also set aside a research and development budget of more than 400 million baht this year to focus on high value-added packaging products, which offer high margins, Roongrote said.