Kampot Cement to cut output in phases

Written by MAY KUNMAKARA AND NGUON SOVAN

Wednesday, 25 February 2009

Kingdom's largest cement company cites property downturn as demand and prices fall Photo by: Heng Chivoan A Kampot Cement factory in Phnom Penh. The company said it would cut productiuon. CAMBODIA'S largest cement producer is set to cut production in two phases on falling demand from the construction industry, the company said. Khaou Phallaboth, president of the firm's Cambodian minority stakeholder, told the Post on Tuesday that Kampot Cement has already cut production by 10 percent since January and plans another 10 percent cut for the year. "It is dependent on the market - now the market has dropped due to the economic downturn, the credit crunch, falling land prices and lower property investment," he said.

"We are reducing our production to avoid oversupply, and we hope that by year's end the economy, will be recovering," he said adding that no layoffs were planned at the plant. "We employ around 300 workers, and we do not plan to cut the workforce because we believe the crisis is temporary." Kampot Cement launched in January 2008 under a US$127 million joint venture with Thailand's largest industrial conglomerate, Siam Cement Group (SCG). SCG controls a 90 percent share, and Cambodia's Khaou Chuly Group holds the remainder. The plant produces one million tonnes of cement, he said. We employ around 300 workers and we do not plan to cut the workforce. Stock Exchange of Thailand-listed SCG reported a 2008 fourth-quarter loss of nearly $100 million in January, its first quarterly loss in 11 years. Chhean Dara, manager of the $50-million Happiness City development in Phnom Penh, said cement consumption at his project has fallen. "Early last year, we were using about 900 tonnes of cement per month but now, we have cut that to 200 to 300 tonnes a month," said Chhean Dara. The managing director of building materials supplier Lay Mong Leng Construction said that lower cement prices have failed to stimulate demand. "Now a 50-kilogram sack of cement is only $4, but early last year, it was up to $5," she said. "It is not only cement sales that have dropped - it is all construction materials." Falling demand for real estate has taken a toll on new building startups, according to the CEO of Bonna Realty, adding that sales were down 90 percent. "We forecast that the real estate market will return to normal in 2010 or later. But even then, it will not rise to the level it was at during its peak," said Sung Bonna.