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[February 2009]
Global Downturn Hits Siam Cement Group Latest Results
Siam Cement Group (SCG) in Bangkok, Thailand has announced decreased profitability for FY2008 due to effects of the global economic slowdown, in addition to the stock losses in the fourth quarter. The group, however, remains optimistic about its ability to cope with the current economic crisis, citing its strong financial position, increased liquidity, continued development of its high-value product and service, cost competitiveness and the expanded overseas market position.
Kan Trakulhoon, President and CEO of SCG, announced the unaudited consolidated financial statements for SCG and its subsidiaries for fiscal year 2008, which showed total sales of 293,230 million baht (MB), an increase of 10% y-o-y. However, net profit decreased 45% y-o-y to 16,771 MB. This was due largely to the slowdown 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 the fourth quarter of 2008, SCG reported total sales of 55,062 MB, a 21% decrease y-o-y. The net loss was 3,480 MB due to stock losses of approximately 5,000 MB.
The total assets of SCG as of 31 December 2008 amounted to 285,717 MB while the net debt stood at 120,521 MB. As a result, both the debt-to-equity and net debt-to-EBITDA ratios remained strong.
Roongrote Rangsiyopash, Vice President and CFO of SCG, said that in the fourth quarter of 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 de-leveraging. Examples of products used/produced by SCG which experienced deep price drops are naphtha, ethylene, propylene, polyolefins, wastepaper and pulp. In accordance with the Thai accounting standard, the value of SCG’s inventory at the end of Q4/08 must reflect the quarterly drop in market prices. Despite the measures to drastically reduce inventory, stock losses in Q4/08 still reached approximately 5,000 MB.
The SCG Cement division recorded net sales of 49,999 MB, an increase of 13% y-o-y due to increased export selling prices. net profit increased 10% y-o-y to 6,006 MB, thanks to the savings from Waste-Heat Power Generation and export sales during the first nine month.
ENDS