Siam Cement Group (SCG), Thailand's top industrial conglomerate, expects revenue of 435 billion baht this year for a higher net profit than last year on an anticipated rebound in its core petrochemical business.
Mr Kan expects 7% revenue growth and a higher net profit for SCG this year after 2012’s historically poor showing.
The 2012 net profit fell by 14% to 23.6 billion baht after earnings from the petrochemical unit plunged 76% to 2.69 billion.
This was despite overall revenue surging 11% to 408 billion baht last year.
Kan Trakulhoon, the president and chief executive, said SCG projects a 7% increase in revenue in 2013.
The slower rate will be due mainly to a scheduled turnaround for its Map Ta Phut Olefins (MOC) plant in the fourth quarter, causing petrochemical sales to shrink 1-2% from 204 billion baht earned last year.
The 45-day MOC shutdown will trim SCG's overall petrochemical capacity by 5-6% including downstream plants.
The MOC's annual capacity is 1.7 million tonnes or 60% of SCG's overall petrochemical output.
"2012 was the worst year in several decades for the petrochemical industry, although new supply was only marginal. But we're starting to see a gradual turnaround," said Mr Kan.
Spreads of naphtha and high-density polyethylene have rebounded to US$487 a tonne, hitting $500 at some points this month, compared with averages of $437 for all of last year and $449 in the fourth quarter.
The polypropylene-naphtha spread averaged $502 last year and $519 in the fourth quarter, improving to $562 this month.
"Normally, the petrochemical business is weak this time of year, when it gets close to Chinese New Year," said Mr Kan, adding that spreads of all products are projected at $500 a tonne this year from $480 last year.
He said exports account for 28% of SCG's revenue, while other Southeast Asian operations contribute another 8%.
Asean sales totalled 31.2 billion baht last year, up by 39% from 2011.
"As a net exporter, we'll feel some effect from the current strong baht. However, our net profit this year will be higher than last year for sure," said Mr Kan.
Fourth-quarter sales rose by 14% year-on-year to 99.9 billion baht but fell by 4% quarter-on-quarter.
Net profit jumped 116% from the same period in 2011 to 6.9 billion but slid 8% quarter-on-quarter.
SCG will this year invest up to 50 billion baht of a planned 200 billion baht earmarked for the next five years.
Half this year's capital expenditures will be allocated to Thailand and the rest mainly for Asean.
Cement consumption will grow by 7-10% this year to over 30 million tonnes, slower than last year's rate of 12%.
With maximum capacity of 23 million tonnes, SCG anticipates its exports will decline from last year's 5.7 million tonnes as domestic demand surges.
SCG's board yesterday approved a debenture issue worth a maximum 25 billion baht with four-year maturity, partly to replace those worth 20 billion baht to be redeemed in early April.
The board also agreed to propose to a shareholders' meeting in late March the lifting of the company's ceiling on issuances by 50 billion baht to 200 billion.
Shares of Siam Cement (SCC) closed yesterday on the SET at 452 baht, down six baht, in heavy trade worth 1.31 billion baht.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter