Siam Cement is expected to report a 2Q08 net profit of Bt6.4bn, down 27.5% YoY and 10.2% QoQ. Stripping out extra gains from the sale of its stakes in The Siam Yamato Steel and The Aromatics (Thailand) of Bt2.4bn in 2Q07 and the sale of its stake in Pacific Plastics (Thailand) Limited of Bt200m in 1Q08, its normalised profit is forecast to be Bt6.4bn, flat YoY, but down 7.6% QoQ. The stable result YoY would be from SCC’s somewhat improved performance as cost pass through helps offset the lower dividend income from the reduction of its stakes in related companies.
Meanwhile, the slight decline QoQ would be mainly from seasonal effect as the second quarter is usually the low season for cement and building material sales.
The cement business is expected to be down QoQ on weaker demand during slow season SCC’s 2Q08 cement EBITDA is expected to be Bt2.7bn, up 12.7% YoY but down 12.0% QoQ. The YoY increase would be powered by the adjustment in domestic and export cement selling prices, whereas the QoQ decline would be from lower domestic cement sales volume as the second quarter is typically the slow season. Thanks to the price adjustment, the EBITDA margin of the cement unit is expected to expand slightly to 23.2% in 2Q08, up 0.1 ppts YoY. Meanwhile, the newly-adjusted cement selling price would help support cement margin expansion in 2008.