Global downturn dents SCG's Q3 results
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Siam Cement Group (SCG) felt the pinch of the global downturn in the third quarter, when its chemical business witnessed a decrease in margin from the same period last year - in line with weakening oil prices.
SCG Chemicals, which contributed 50 per cent of the group’s turnover of Bt104 billion, generated only Bt2.27 billion in net profit, which marked a 30-per-cent decrease year on year. This is despite higher sales volume, which pushed the business’s revenue up by 7 per cent to Bt52 billion.
Despite an increase in year-on-year sales revenue from all five main businesses, SCG’s quarterly net profit slid 13 per cent year on year to Bt6.4 billion, though it was 50 per cent higher than in the second quarter.
In a statement, the country’s largest industrial conglomerate explained that in the third quarter, the average naphtha price had moved up US$22 (Bt676) per tonne from the previous three months to $915, as the price of crude increased by $1 per barrel. However, year on year, the price dropped $41 per tonne, as crude decreased by $3 per barrel.
The average price of ethylene in the period rose by $107 year on year to $1,200 per tonne, but propylene came down by $138. HDPE prices also dropped, by $56 to $1,343, due to the uncertain economic outlook.
Consequently, the HDPE-naphtha margin was squeezed by $66 per tonne quarter on quarter, and by 15 year on year to $428.
In the quarter, only SCG’s cement and building-materials businesses showed growth in net profit compared to the same period last year.
Despite a 1-per-cent increase in sales revenue to Bt14.6 billion, the paper business showed a 7-per-cent drop in net profit. The distribution business’s sales value also expanded, by 14 per cent to Bt32.5 billion, but net profit fell by 31 per cent.
The group’s cement business posted a 29-per-cent increase in revenue to Bt17.7 billion, attributable to a higher domestic sales volume as well as consolidation of the recently acquired RMC business in Indonesia.
Cement business also saw a 33-per-cent rise in net profit to Bt2.45 billion.
Building materials witnessed 18-per-cent growth in revenue to Bt10.5 billion, thanks to continued domestic market growth momentum.
For the first nine months, SCG’s overall consolidated net profit declined by 31 per cent year on year to Bt16.7 billion, due to weak chemical margins, inventory loss in the second quarter and the shutdown of Bangkok Synthetics.
