Thang Long Cement strives to become a sector leader

Wednesday, Feb 11, 2015 08:00

Shifting from debt in 2012, Thang Long Cement JSC produced 2.48 million tonnes of cement and clinker last year to post a year-on-year growth before interest and taxes of estimated 30 per cent. The company has set a goal of becoming a leading cement group in Viet Nam by 2030. Viet Nam News spoke to Mukhamad Saifudin, general director of Thang Long Cement JSC, about this target.

Positive signs were seen last year in the domestic economy and real estate market. How have they influenced your company's performance?

In 2014, in line with macroeconomic stability and policy improvements, the domestic cement market showed better signs than the year before. One encouraging sign was that the domestic cement demand increased by about 10 per cent compared with 2013, according to the Viet Nam Cement Association (VNCA). It means the cement industry saw positive growth last year.

Despite positive growth in 2014, cement manufactures in Viet Nam still had a lot of excess capacities. For our company, we had to implement several measures to improve our productivity, product quality and product diversification. Our sales volume last year reached about 2.48 million tonnes of cement and clinker, and then we successfully earned revenue of about VND2.5 trillion (more than US$117.3 million). Our earnings before interest and taxes (ebitda) increased by an estimated 30 per cent over the previous year.

Your company currently accounts for only 3 per cent of the local market share. Is that a modest ratio for a foreign-invested cement company?

I would like to start from the beginning. Thang Long Cement JSC was established in 2001 by the Hanoi General Import and Export Co (Geleximco), an experienced company in the field of industrial production in Viet Nam. In December 2012, the company officially changed ownership after the Semen Indonesia Group acquired a share of about 70 per cent.

The participation of Semen Indonesia (PTSI), with more than 50 years of experience in the cement business, has provided Thang Long Cement with more comprehensive support. After officially becoming a strategic shareholder of Thang Long Cement, PTSI brought some of its best managers here and made improvements to the operational performance and financial condition of the company.

It's true that our company now makes up only approximately 3 per cent of the domestic market share, but we are confident that we can expand. In the near future, we will increase our capacity to 6.3 million tonnes a year, an increase of 274 per cent.

What competitive advantages does your company have over other firms operating in the local cement market?

In terms of technology, our plants are using the most modern cement manufacturing technology and equipment designed by Polysius of Germany, one of the world's best cement plant manufactures, which has helped us ensure our products' stability and quality.

Our plants are both located in strategic locations in HCM City and Quang Ninh Province, which are close to sources of raw materials and river and seaports.

The important thing is our products. Over the years, we have paid attention to ensuring product stability and diversifying our products so that we can meet the demands of both domestic and international markets. We have recently broken into tough Asian markets such as Singapore and Philippines.

We have also exported our products to other outlets including South America, PNG, East Timor, Indonesia, Bangladesh and Cambodia. In 2014, our export volume was over one million tonnes, including 440,000 tonnes of cement.

The last but not least, is support from our shareholder which are Geleximco with its experience in Viet Nam industrial environment and Semen Indonesia as a biggest cement company in South East Asia and its more than 50 years experience in cement industry.

What challenges has Thang Long Co encountered over the years?

Even though cement demand has grown compared to last year, cement manufacturers in Viet Nam are producing approximately 30 million tonnes more than local demand, resulting in harsh competition among enterprises. I think this is the most challenging aspect for cement manufacturers here.

Thang Long Cement has focused on optimising its market share, both in the domestic and export markets, and we are looking for new customers. Export demand will remain so existing inventories will be consumed. Viet Nam is one of 10 biggest cement exporters in the world, and this is an advantage for Thang Long Cement. Moreover, it has helped enhance the Thang Long Cement brand on the global market.

How do you evaluate the cement market in 2015?

The cement industry will take off this year, but inventories will remain high. In my opinion, domestic producers still have to co-operate and compete with each other in order to ensure efficient operations. This year, our company will concentrate on cost control and enhancing measures to stabilise production and market expansion.

We'll prioritise sales and marketing activities in the local market to maximise our share here. With the Semen Indonesia Group, Thang Long Cement will expand in developing export markets to offload our excess capacity. This combination will create a great opportunity for us to meet the high demand in both the domestic and export markets.

Last but not least, we have a long-term vision to 2030 to "become a leading cement group in Viet Nam," and now we're trying to take the right route to complete that target. — VNS

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