Bangkok: Siam Cement PCL, Thailand’s biggest industrial conglomerate, posted a 5% fall in second-quarter profit on Wednesday as the recession hurt cement and paper earnings, but that was much better than expected.
Wider petrochemical spreads for the second quarter helped limit the drop in earnings. Siam Cement earns up to half its profit from petrochemicals, analysts said.
However, chemical spreads may narrow in the second half of this year when new petrochemical capacity emerges in China and West Asia, they said, and the outlook for the global economy remained highly uncertain.
Against that, a recovery in domestic demand could lift earnings and, over the longer term, Siam Cement’s investment in alternative energy would help reduce costs, they added.
Siam Cement still expected 2009 sales to fall 20-25%, in part due to lower prices of petrochemical products, president Kan Trakuhoon told reporters.
The company was in talks about buying three or four businesses and expected to conclude the deals in 2010, he added. This is part of the company’s plan to expand in Southeast Asia.
Its April-June net profit came to 6.84 billion baht ($201 million), below a year-earlier profit of 7.2 billion baht but above the 5.2 billion baht forecast by six analysts polled by Reuters.
Siam Cement, which also makes paper, cement and building materials, posted a 5.2 billion baht net profit in the first quarter.
Its net profit for the first six months fell 16% to 12 billion baht while sales for the period dropped 29% to 112 billion baht.