Siam Cement posts quarterly loss

Siam Cement posts quarterly loss
Published: 28 January 2009

Siam Cement, Thailand’s fourth- largest publicly traded company, posted the first quarterly loss in eight years after sales collapsed and tumbling commodity prices forced it book a record inventory writedown.

The loss was THB3.48bn (US$99.7m) in the three months to Dec. 31 compared with profit of THB5.77bn a year earlier, the company said today.

The Thai economy may enter its first recession in a decade this quarter after anti-government protests and the global recession curbed demand, according to Jan. 23 comments from the central bank. Prices of ethylene and propylene, used to make plastics, tumbled more than half in the three months to Dec. 31 from the previous quarter, according to Bloomberg data.

There was an “unprecedented stock loss, which was the result of a drastic plunge in global commodity prices,” Chief Financial Officer Roongrote Rangsiyopash said today at a media briefing. There were “steep price drops” for naphtha, ethylene, propylene, wastepaper and pulp, Roongrote said.

Sales in the fourth quarter dropped to THB55.1bn, while the company wrote down the value of its inventory by about THB5bnn the three-month period. Full-year profit fell 45 per cent to THB16.8bn, Siam Cement said today in a separate stock exchange filing.

The “earnings were bad because the unusual slide in petrochemical prices caused a big inventory writedown,” Danai Tunyaphisitchai, an analyst at Phillip Securities (Thailand) Pcl, said before the figures were released. “The earnings outlook will remain weak this year on low petrochemical prices and poor demand for cement and building materials.”

The company said it expected 2009 sales to fall 10 per cent from about THB293bn (US$8.4bn) in 2008, in line with falling prices for all its products.

"The projection is mainly based on product prices. It’s very difficult to forecast the trend for petrochemical prices," President Kan Trakulhoon said.