Siam Cement likely to report flat 2007 net profit

Siam Cement likely to report flat 2007 net profit
Published: 22 January 2008

Siam Cement PCL is expected to report a flat 2007 net profit, with higher production costs and sluggish domestic demand offsetting one-time gains.  
 
Thailand’s largest industrial conglomerate by revenue is likely to post a net profit of THB29.66 billion ($893m) for 2007, virtually unchanged from THB29.45 billion in the previous year, according to the average forecast of eight analysts polled by Dow Jones Newswires.  
 
Siam Cement, whose core businesses are cement, chemical and paper, is scheduled to release its yearly earnings midday Wednesday.  
 
"A rise in fuel and raw material costs is the key factor limiting the growth of  Siam Cement’s earnings in 2007," said Vichitr Kuladejkhuna, an analyst at DBS Vickers Securities.  
 
Higher costs for crude oil, feedstock for petrochemical production, as well as rising prices of pulp likely weighed on the company’s profit margins in 2007.  
 
Meanwhile, poor domestic demand for cement, following a slowdown in construction activities, should have limited revenue growth, analysts said. 
 
"Stripping out extra gains of THB4.5 billion from the divestment of steel and aromatics affiliates,  Siam Cement’s normalized profit is forecast to be THB25.40 billion, down 15% on year," said KGI Securities analyst Sirima Dissara. 
 
The company’s earnings were also under pressure from the baht’s appreciation, she said. 
 
The poll forecasts  Siam Cement’s 2007 revenue to be up 3.1% at THB266 billion. 
 
Looking ahead, the high level of material and fuel costs coupled with the strengthening trend of the local currency, are likely to continue to weigh on  Siam Cement’s earnings in 2008, said Prasit Ratanakitkamol at Asia Plus Securities.  
 
The poll forecasts  Siam Cement to report a net profit of THB24.46 billion this year.