Siam Cement reports 24% rise in profits for the quarter on higher petrochemical sales

24-Jan-08

Thailand's biggest industrial conglomerate - Siam Cement PCL has reported 24% hike in profits for the quarter. This better than expected hike can be attributed to higher petrochemical sales that outweighed rising feedstock costs. SCC, which earned 50% of its quarterly profits from petrochemicals, reported that its October-December quarter net profit rose to 5.77 billion baht from 4.67 billion baht a year earlier, when it booked extraordinary costs from selling a non-core business. Sales rose 11% in the quarter, with petrochemical sales rising 17.2% to 35.22 bln baht. Quarterly petrochemicals earnings before interest, tax, depreciation and amortisation (EBITDA) fell 36% to 3.31 bln baht SCC estimates an improvement in domestic cement demand this year, but the bottom line will be affected by dwindling petrochemical margins that will continue to irk earnings. The margin between polyethylene (its main petrochemical product), and the main feedstock naphtha seems likely to come under pressure. The weakening petrochemical spread this year is estimated to be higher than US$500, but marginally lower than last years margins (US$659 per ton). The company has posted consolidated sales of 267.7 bln baht (US$8.08 bln) in 2007. The company expects a 10% rise in sales this year. SCC plans to spend 40 billion baht this year, as against last years spend of 27 billion baht last year, on expansion of its core paper and petrochemical businesses and on energy savings programs.