Siam City Cement says rising costs to damp 2005 profit growth

Siam City Cement says rising costs to damp 2005 profit growth
Published: 06 July 2005

Thailand’s second-largest cement maker Siam City Cement PCL expects its net profit growth this year to be lower than last year’s, despite rising sales, mainly because of higher production costs, said a company executive Tuesday. 
The unit of Holcim recorded net profit growth of 26% last year to total revenue of THB4.14bn. 
Siam City Cement Executive Vice President Chantana Sukumanont told a news conference that energy costs, which account for about 70% of the company’s total costs, have risen 15% since the beginning of the year, pushed up by rising oil prices. 
However, the company has been unable to increase its product prices due to strong competition in the cement industry, and a government request to key industrial sectors to maintain prices at current levels in the face of rising fuel costs, she said. 
"Our costs are higher, but we can’t raise our prices. This will certainly cut into our margins and profit growth," Chantana said, adding that the company’s profit margin in the first quarter was around 31%. 
She said the average wholesale price for the company’s cement is around THB1,850/t - unchanged for three years. However, consumers may see retail cement prices rise by THB1-THB2 per bag in August as a result of rising transportation costs.