SCC expects more growth but margins down

SCC expects more growth but margins down
Published: 18 August 2005

Even though Siam Cement (SCC) expected cement growth in 2H05 to be soft at 6-8%, down from 14% growth during 1H05, the company believes cement demand in the next five years will continue to grow at least 7-8% per year on the back of the mega projects. Meanwhile, they have been increasing the price of ready-mixed concrete. Though they have not increased price much, it has still helped improve EBITDA margin which had been hurt by rising oil prices. However, competitors are now preparing to ask the government for a price increase. While SCC might engage in the strategy later, the process will take time. The impact of high oil prices on its cement business has been more than previously expected, so gross margin assumption for its cement business this year has been revised down from 36.9% to 35.9%.