SCC earnings remain strong

SCC is expected to announce impressive 2Q04 earnings results with a normalised profit of Bt6,008mn (EPS Bt5.01) down 16% qoq, but strongly up 71% yoy. These impressive earnings are due to strong petrochemical prices with high margin spreads, as well as higher demand for cement driven by strong local construction. SCC has also continued to lower debt and servicing costs resulting in lower interest expenses.

SCC prospects remain bright due to (1) the cement business is expected to benefit from larger government spending on infrastructure projects and high private investment. SCC management expects cement demand to grow at 1.5 - 2x GDP growth. Thus, cement demand should grow at around 10% pa.