Thailand's SCG post 21% decline in Q4 sales, dismal show by Chemicals business

21-Feb-09

Siam Cement Group (SCG), one of Thailand's largest conglomerates, posted a 21% YOY decline in Q4 total sales to 55.1 bln THB (approx. US$1.5 bln) and a net loss of 3.5 bln THB (US$97.6 mln) due to stock losses of approximately 5 bln THB (US$140.2 mln). Mr. Roongrote Rangsiyopash, Vice President and CFO of SCG, said that in the Q4 - 2008, SCG was affected by the unprecedented stock loss which was the result of the drastic plunge in global commodity prices brought on by the economic slowdown, weak demand, and further compounded by inventory deleveraging. Examples of products used/produced by SCG which experienced deep price drops are naphtha, ethylene, propylene, polyolefins, wastepaper, and pulp. For FY 2008, SCG's total sales amounted to 293.2 bln THB (US$8.2 bln), a 10% YOY increase. However, net Profit decreased 45% YPY to 16.8 bln THB (US$500 mln). This was due largely to the slow down of the global economy, which resulted in a massive and rapid decline in market demand, lower margin and stock losses. Negative equity incomes from chemicals associates also contributed to the drop as well. In FY2008, SCG Chemicals business reported net sales of 136.5 bln THB (US$3.8 bln), a 5% YOY increase due to higher product prices in the first nine months. However, net Profit dropped 64% YOY to 6.1 bln THB (US$171 mln) from stock loss and decreased margins in the last 3 months, lower equity income from associated companies.