Fitch revises Siam Cement's outlook to stable

Fitch Ratings (Thailand) Limited has revised Siam Cement Public Company Limited's (SCC) Outlook to Stable from Positive. The ratings have been affirmed at National Long-term 'A(tha)' and National Short-term 'F1(tha)'. The agency has also affirmed SCC's senior unsecured debenture at 'A(tha)'.
In addition, Fitch has assigned SCC's new senior unsecured debentures No.1/2012 due 2016, amounting up to THB25bn, a National Long term 'A(tha)' rating. The proceeds from the new issue will be used to refinance SCC's maturing debentures and for business expansion.

The Outlook revision reflects weaker-than-expected profitability driven mainly by weak chemical product-to-feed margins. The difficult operating environment for chemicals is likely to depress SCC's EBITDA margin and delay deleveraging in 2012-2013. As a result the prospect for rating upgrade over the next 12-18 months has decreased.

SCC's ratings are supported by its well-diversified revenue sources in the chemical, cement, paper and building material businesses. Its leading position in the domestic cement and paper businesses should support SCC's cash flow generation as the operating environment for chemicals remains difficult in 2012. Product diversification within the chemical division also helps alleviate risk from demand contraction in any particular chemical chain.