Siam Cement PCL (SCC), Thailand’s biggest industrial conglomerate, reported a less than expected 14 percent fall in quarterly earnings on Wednesday as a weak domestic economy hit its construction and cement businesses.
Higher petrochemical margins for the quarter lent support for Siam Cement, which makes almost half its profits from petrochemicals, but the rising cost of naphtha would render full-year earnings nearly flat from last year, analysts said.
SCC said its January-March net profit fell to 8.2 billion baht ($253 million) from 9.5 billion baht a year earlier, beating an average 6.4 billion baht forecast by five analysts surveyed by Reuters.
The profit was up 75 percent from 4.68 billion baht in the fourth quarter.
The weak quarterly earnings were due partly to lower earnings at its 20 percent owned PTT Chemical , which shut down for maintenance and expansion for most of the quarter.
Overall sales in the quarter were up 2 percent at 65.3 billion baht, with cement sales down 2 percent, paper sales 1.5 percent higher and petrochemical sales inching up 0.6 percent.
The spread on polyethylene, one of its main petrochemical products, and naphtha was $681 per tonne in the first quarter, up 21 percent from a year earlier, due to tight global supply.
Naphtha, a raw material used to make plastic, averaged $585 per tonne in the quarter, up $34 per tonne from a year earlier, the firm said.
Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) at its key petrochemicals business rose 4 percent to 5.6 billion baht, making 42 percent of EBITDA from operations of 13.3 billion baht, which rose 7 percent, it said.
EBITDA for its cement business fell 11 percent to 3.2 billion baht, while EBITDA on its paper business was 4 percent lower at 2.4 billion baht, it said.
Siam Cement said it had an after-tax gain of 90 million baht from the sale of its 24 percent stake in battery maker Siam Furukawa in the quarter and asset liquidation at TV tube maker CRT.
The firm’s full-year 2007 net profit is forecast at 29.7 billion baht, with revenues dipping 2 percent to 252.6 billion baht, according to 16 analysts polled by Reuters Estimates with softer petrochemical spreads expected.
SCC, Thailand’s third most valuable firm with a market value of $8.7 billion, has stakes in more than 100 petrochemical, cement and paper and related business, including subsidiaries in the Philippines, Indonesia, Cambodia and Laos.