Siam City Cement: Lower 2H

Siam City Cement PCL said Wednesday it expects to maintain sales growth at 10% on year in the second half of 2004, but its net profit will likely be squeezed due to higher operating costs on rising oil prices.  Siam City Cement, Thailand’s second largest cement producer, recorded sales of 6.72 billion baht and net profit of THB1.37 billion in the second half of 2003. Chantana Sukumanont, the company’s executive vice president, said that despite slow cement demand in the third quarter due to the rainy season, several government infrastructure projects will help keep the company’s sales growth target intact.  The sales growth target in the second half should remain at 10 per cent year-on-year, similar to the first six months of 2004, she told reporters.  Around 80% of the company’s customers are involved in infrastructure projects.  "However, net profit may slightly decline in the latter half of this year as we estimate operating costs to increase by 20% due to soaring fuel costs," Chantana said.

Chantana said the company is looking to use alternative fuels in a bid to trim costs.  She also said every THB1 increase in diesel prices raises the company’s transportation cost by THB0.03 a kilogram of cement.  An increase in cement prices is unlikely as prices are already at the ceiling set by the government, which isn’t expected to raise the limit, she added.

Separately, the company’s unit Siam City Concrete Ltd. signed an agreement with Amata Facility Service Ltd. to set up ready-mixed-concrete plants in Amata Nakorn and Amata City Industrial Estate, in Thailand’s eastern seaboard area. Amata Facility Service is a unit of Amata Corp. PCL, an industrial estate operator.  Construction on the plants is expected to start in September and completed in three months.