Siam City Cement (SCCC): In-line results

Siam City Cement (SCCC): In-line results
23 February 2009

Siam City Cement (SCCC) reported a 4Q08 net profit of Bt675m, up 63.6% YoY but down 5.5% QoQ, in-line with the market’s expectation. The company reported extra items of Bt35mn, including FX gains of Bt11mn, gains from the reversal of asset impairment of Bt41m, and loss on sale of assets of Bt87m.

Stripping out these extra items, its normalised profit was Bt711m, up 72.2% YoY but down 8.1% QoQ. The YoY improvement was mainly from the absence of compensation for employees during a plant shutdown. Meanwhile, the QoQ drop was notably due to the high seasonal expenses for the year-end quarter. The full-year net profit was Bt3.2bn, down 1.8% YoY, as the drop in cement sales volume outpaced the increase in cement selling price.

Revenue was down YoY, but up QoQ: SCCC’s 4Q08 sales were Bt5.2bn, down 4.8% YoY but up 1.8% QoQ. The YoY drop was due to the reduction in cement sales volume. According to the Bank of Thailand, domestic cement sales volume fell 14.0% YoY in 4Q08 as a result of muted construction activities. Moreover, the company’s export cement sales volume dropped by half YoY after it closed two kilns at the beginning of 2008. Meanwhile, revenue was stable QoQ, as the increase in cement selling price helped offset the drop in cement sales volume.

EBITDA margin, up YoY but down QoQ: The 4Q08 EBITDA margin was 22.2%, up 6.4ppts YoY but down 1.2ppts QoQ. The margin expanded YoY, thanks to the absence of sizeable compensation for employees during a plant shutdown of around Bt160m and the allowance for doubtful debts of Bt120m like it had in 4Q07. Meanwhile, the margin was squeezed QoQ, dragged down by the high seasonal operating expenses during the year-end quarter.
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