Thai Siam Cement net profit to double in 2004

25-Jan-05

Siam Cement PCL's net profit is expected to almost doubled in 2004 as against last year, propelled by rising petrochemical prices, strong demand for cement and one-off gains from a major asset sale. Siam Cement's core businesses are cement, petrochemicals and pulp and paper production. The petrochemical business accounts for 40% of Siam Cement's earnings before interest, tax, depreciation and amortization, or EBITDA. The petrochemical segment contributed the most to Siam Cement's outstanding performance last year in the face of widening profit margins of petrochemical products. The record-high margin between the selling price of the company's main product, polyethylene, and the cost of naphtha, widened to US$650/metric ton in Q4-2004 as compared with US$380/ton in the same period in 2003. The company's plan to shut down its olefins plant for maintenance in Q2-2005 may also moderate gains from the cyclical upswing in petrochemical prices. Siam Cement is likely to maintain its earnings growth momentum this year when petrochemical prices reach their peak cycle. Construction activity is also expected to pick up further thanks to mega-projects planned by the government, and reconstruction in southern tourist resorts that were devastated by last month's tsunami.