Siam Cement 4Q profit projected to dip, positive 2015 outlook

Siam Cement is expected to report lower 4Q14 earnings as a result of an inventory loss in its petrochemical unit and the impact of the economic slowdown. Going forward, a promising outlook for petrochemicals and growth revival in cement demand are among factors to watch this year.

Maybank Kim Eng Securities (Thailand) forecasts net income is projected to fall one per cent QoQ and six per cent YoY to THB7.74bn (US$237.89m). Krungsri Securities, which calls 4Q14 the weakest quarter, notes that a smaller net profit can also be attributed to the seasonally weak cement and construction materials sales in Thailand and lower paper sales due to accumulated inventory.

Solid growth expected
Despite an expected fall in 2014 net profit, both agencies are hopeful Siam Cement will pick up and register a more solid growth in 2015 due to the Thai government's launch of infrastructure investment projects and a recovery in its petrochemical unit.

Siam Cement expects to see its cement business show about six per cent growth as a result of the Thai government's anticipated implementation of various public infrastructure and transportation investment plans which should lead to a rise in construction-material prices.

Together with an expected rise in the cement production in Indonesia in 3Q15 and in Cambodia in 2Q15 as well as the US$49m gain on the sale of its 10 per cent stake in the Michelin Group, its is expected to record total profit of THB41.32bn, a 27 per cent YoY growth in 2015.

Siam Cement is due to release its fourth quarter earnings report Wednesday.