Siam City Cement expects flat growth in 2007 sales

Siam City Cement expects flat growth in 2007 sales
Published: 13 February 2007

Siam City Cement PCL, Thailand’s second-largest cement maker by capacity, Tuesday said its cement sales this year are likely to be flat due to a continued private slowdown investment in Thailand. 
"For domestic sales, we may not see much growth (from last year), while export sales may improve," Managing Director Leo Mittelholzer said at a briefing for reporters and analysts. 
Siam City Cement’s main export market is Vietnam, where the company hopes to sell more than 2.5Mt of cement this year, he added. 
However, any strengthening of the baht against the dollar will hurt the company’s export revenue. Senior Vice President Andreas Leutenegger said every appreciation of THB1 would cut the company’s annual export income by around THB150 million.
The baht rose 17% against the dollar last year to THB35.09 by mid-December, before the central bank imposed measures to limit certain capital inflows. Since then, the baht has declined 1.9% from last year’s high. Dealers expected the baht to underperform regional currencies this year. 
In 2006, the company reported total sales volume of 12.9 million tons, of which domestic sales accounted for 7.6 million tons. 
Overall domestic cement consumption this year is forecast to remain flat at 27.5Mt, while total exports are expected to increase to 15.3Mt, from 14.7Mt in 2006, said Mittelholzer.    
 Investments Of THB15B-THB16B Planned For 2007  
Mittelholzer said Siam City Cement plans to invest THB1.5 billion to THB1.6 billion this year, mostly in plant maintenance and the construction of a new dry mortar and special cement production plant. 
Other planned investments include aggregating operations and using alternative fuels and raw materials in a bid to bring down operating costs, he said. The company is using industrial waste in place of fossil fuels, and by aggregating operations it is able to more cheaply procure materials for ready-mixed cement products. 
Siam City Cement implemented a cost management program to improve its product margins and lower energy expenses, which account for two-thirds of its cement production costs, Mittelholzer said. He added that the program enabled the company to cut operating costs significantly in 2006, but didn’t provide figures. 
Siam City Cement Tuesday posted a 5.2% on-year decline in 2006 net profit to THB3.86 billion. Leutenegger said the loss was mainly due to higher cost of sales amid rising oil prices in 2006. 
The result was slightly lower than KTB Securities’ 2006 net profit estimate of THB4 billion.
The company recorded total revenue of THB23.96 billion in 2006, up 5.5% on the previous year, adding however that cost of sales jumped 9% on year to THB18.36 billion. The company didn’t provide an earnings outlook for 2007. 
Earlier this month, Siam City Cement’s board approved a dividend payment of THB7.50 a share for its performance in the second half of 2006. The dividend will be paid by April 14 to shareholders on record as of Feb. 22.
The company has already paid a THB6.50-a-share interim dividend for its first-half operations.