SCG gunning for increased market share after takeover

Secure central market

Three months after acquiring Song Gianh Cement with a 100% buyout from Vietnam Construction Materials JSC (VCM), SCG continues to entrust Thanh Hung Ltd. Company (Le Duan, Dong Giang, Dong Ha city, Quang Tri province) with the role of main distributor of Song Gianh Cement’s products.

Despite fierce competition and the emergence of new brand names in the cement market, Song Gianh Cement still holds certain market advantages in Quang Tri and other central provinces thanks to consumers’ familiarity with its products earned over many years. Furthermore, Song Gianh Cement has rather flexible and competitive prices.

According to Thanh Hung, in the first six months of this year, Song Gianh sold 20% more products than in the same period last year. “At this rate, it is highly possible to achieve the sales target of 100,000 tonnes of cement this year,” said Tran Thi Tuyet, director of Thanh Hung.

SCG’s representative confirmed the statement, as well as its plan to focus on improving quality and step up marketing activities to further promote Song Gianh Cement’s position in the central market.

At the same time, STARCEMT brand of Van Hoa Cement factory continues to report growing sales and increased market share, as well as maintains brand recognition in Ho Chi Minh City and the south western region.

Relentless acquisition

Earlier this year, SCG Cement-Building Materials, a subsidiary of SCG, acquired 100% stake (approximately US$156 million) in VCM.

VCM owns Song Gianh Cement Factory, with a capacity of 1.4 million tonnes of clinker per year and five crushing plants, providing two million tonnes of cement per year for the central region under the brand name Song Gianh Cement.

In addition, Van Hoa Cement Factory, with a capacity of 1.6 million tonnes of clinker and four crushing plants situated at convenient locations in Ho Chi Minh City and the south western region, produces premium brand cement STARCEMT at a stable output of 1.8 million tonnes of cement per year.

With current productivity at above three million tonnes, SCG says there is high likelihood they will reach maximum capacity.

After this acquisition, the total cement production capacity of SCG in Asia reached 10.5 million tonnes per year, in addition to 23 million tonnes per year in Thailand.

In several events promoting Thai-Vietnamese investment in 2016, SCG representatives announced plans to raise capital through expanding investment in available projects in Vietnam and paying attention to mergers and acquisitions in the cement and construction material industry in order to secure SCG’s position in Vietnam.

One of SCG’s largest deals was the acquisition of Prime Group. In December 2012, SCG acquired 85% of Prime Group for US$240 million.

In 2011, SCG also acquired Buu Long Cement in Dong Nai and invested an additional US$5.5 million to increase the plant’s capacity to 200,000 tonnes per year.

According to several cement enterprises, with their current market share and financial assets, Thai businesses have a lot of advantages in acquiring and making business plans for Vietnamese cement factories.

Luong Quang Khai, chairman of the Board of Vietnam Cement Industry Corporation (Vicem), said Vietnamese cement manufacturers will have to step up their game and prepare for increasingly intense competition on their own turf.