Siam City Cement: 1Q earnings expected to fall

Siam City Cement: 1Q earnings expected to fall
Published: 11 May 2010

Siam City Cement (SCCC) is expected to report rather disappointing 1Q10 earnings of B760m (EPS Bt3.30), up 8% QoQ on seasonal effects, but down 6% YoY on lower cement prices.

SCCC sales volume should be up just 2.3%, below market, which was up by 7%, on price competition in 1Q10. In the terms of sales value Bt5,048mn is expected, up 1% QoQ, but down 2% YoY. The gross margin should be down to 43.4% from 47.5% last year on lower cement prices.

According to cement dealers, the cement sales price for bagged cement has still not recovered after the cement leaders, Siam Cement, Siam City Cement and TPI Polene, lowered bagged cement prices by Bt200-300/t, depending on type, in the Jan- Mar period.

However, the stability in cement prices has resulted in a forecast that prices will improve in the future driven by cost-push and resulting in dealers ordering more stock.

The SCC sales volume has been forecasted to improve in the second quarter, thus SCCC sales volume will rise by 5% and see a slight rise in selling prices for the rest of the year. Overall, the 2010 prospects are for estimated sales to increase by 7% to Bt21,451m and the net profit to Bt3,475m (EPS Bt15.11), up 18%. This high increase in earnings will be driven by the waste heat recovery project that will lower energy costs to compensate for higher coal prices.