Cambodia’s largest cement maker cites worldwide economic crisis and
lower prices from overseas competitors as main reason for recent sales slump
Photo by: HENG CHIVOAN
Workers operate machinery last week at the Kampot Cement factory in Kampot. The Kingdom’s largest cement maker has seen sales drop by almost one-third this year until May.
SALES volumes at the Kingdom's largest cement producer fell by almost a third in the first five months of 2009, as the construction slump continues to hurt demand within the industry.
Praksosery Wathana, the head of business correspondence at Kampot Cement, said the drop had hit all producers, and admitted the firm was unlikely to meet its sales target of 3 million tonnes by the end of the year.
He said Kampot Cement has cut production in response to lower sales. The firm produced 1 million tonnes of cement in 2008.
"This is affecting not only my company but other cement companies, too, and that's why we've cut production to avoid oversupply," he said.
"We are already competing very hard with imported cement sold at a cheaper price."
He said that despite the cuts, Kampot Cement would not lay off any of its 300 workers.
Kampot Cement was set up in January 2008 in a joint venture with Thailand's largest industrial conglomerate, Siam Cement Group, which owns 90 percent of the company. The remainder is owned by local firm Khaou Chuly Group.
"We don't want to cut production - so to deal with the current downturn we need to cut operating expenses," he said, adding that planned cuts did not include staff.
Mary Kann, the director of Land Gold Cambodia, a construction company, said that since construction costs have dropped by a fifth since December 2008, a number of smaller buildings and office spaces were being built.
"Our construction sector has not been very severely impacted - it is still good," she said. "But it is not too big as it was before."
A leading property expert, Sung Bonna, who is the head of Bonna Realty Group and president of the National Valuers' Association, said activity in the construction sector has increased slightly since May, but the rise is due to offices and houses rather than development projects.
Khaou Phallaboth, the president of Khaou Chuly Group, told the Post late last year that the depressed construction market would need 3 million tonnes of cement annually worth US$270 million.
However, he said that when the market recovered, demand would be twice that.