Siam City Cement (SCCC): Fair 1Q09 earnings

Siam City Cement (SCCC): Fair 1Q09 earnings
Published: 18 May 2009

Siam City Cement (SCCC) was still able to post an acceptable 1Q09 net profit of Bt805mn (EPS Bt3.50), although pressured by numerous negative factors with a result up 19% qoq from the high season, but down from last year by 21%. Sales were Bt5,128mn, down 2% qoq and 10% yoy from lower domestic cement demand as sales slumped by 12.5% yoy in the 1Q09 period and exports contracted by 15.2% yoy. The 1Q09 EBITDA margin was up to 31% from 21% in the previous quarter and 28% in the previous year from lower energy costs and a stable selling price. In addition, cost controls also supported the EBITDA margin.

SCCC management expects domestic cement demand to fall by 10-15%, if there is no progress in the government mega projects. SCCC will emphasize cost cutting and will invest $50 million in developing a 25MW power plant using recovered waste from kilns 5 and 6, which will amount to 25% of SCCC electricity consumption. The 2009 sales are forecasted to fall by 8% to Bt19,614mn. The net profit is expected to slip by 4% to Bt3,046mn (EPS Bt13.24), as energy costs - both diesel and coal - are now considerably lower, while sales prices have not tracked the lower commodity prices. The 1Q09 sales and earnings account for 26% of full year forecast.