Weak cement sales seen hitting Siam Cement Q1

Weak cement sales seen hitting  Siam Cement Q1
Published: 23 April 2007

Siam Cement PCL (SCC), Thailand’s biggest industrial conglomerate, is expected to report a 33 per cent fall in first-quarter net profit on Wednesday as a weak domestic economy hit its construction and cement businesses.  
 
Higher petrochemical spreads for the quarter lent support for  Siam Cement, which makes almost half its profits from petrochemicals, but the rising cost of naphtha raw material would render full-year earnings nearly flat from last year, analysts said. 
 
"First quarter earnings should be disappointing compared with quarterly earnings over the past three years. This was due to a slowing domestic economy and political uncertainty," said  Kim Eng Securities analyst Surachai Pramualcharoenkij.  
 
Net profit for January-March net profit is forecast to fall to 6.4 billion baht, according to a Reuters poll of five analysts, from 9.55 billion baht in the same period a year earlier, but would be up 37 per cent from 4.68 billion baht of the fourth quarter.  
 
The weak quarterly earnings were due partly to lower earnings at its 20 per cent owned PTT Chemical , which had a shutdown for maintenance and expansion for most of the quarter.  
 
Overall sales in the quarter likely fell 2 percent to 62.6 billion baht, according to broker Kim Eng Securities, with cement sales down 7 per cent, paper sales 2 percent lower and petrochemical sales inching up 1 percent.  
 
The spread on polyethylene (PE), one of its main petrochemical products, and naphtha raw material was $681 per tonne in the first quarter, up 21 percent from a year earlier year, but was 6 percent lower than the fourth quarter, it said. 
 
Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) of its key petrochemicals would rise 20 percent to 5.6 billion baht, accounting for 47 per cent of EBITDA seen at 11.8 billion baht, broker  Syrus Securities said.  
 
EBITDA at its cement operations would fall 24 percent to 2.75 billion baht, while EBITDA at its paper business would be 13 per cent lower at 2.19 billion baht, it said.  
 
Siam Cement has said it would book an after-tax gain of 46 million baht from the sale of its 24 per cent stake in battery maker Siam Furukawa in the quarter.