Chemical sales hike SCG net in Q3 by 57%

AIRA Securities said in a research note that the conglomerate could break the full-year record achieved last year, since its nine-month earnings had already reached Bt43.6 billion – close to the figure of Bt45.4 billion for the whole of 2015.
 However, SCG’s cement and building-materials business, which depends largely on the domestic market, continued to slide |with lower sales volume and lower prices registered in the third quarter. 
 “We have to wait for a while to see how it [the market] will perform in the fourth quarter. Rainfall has continued and people are still mourning, and consumption and spending might slow down to some extent,” said SCG’s president and chief executive, Roongrote Rangsiypach.
 Nevertheless, government infrastructure projects continue to be on track, although cement consumption by the private sector remains sluggish, he pointed out. 
 Chief financial officer Chaovalit Ekabut said domestic cement prices had dropped by about Bt120 per tonne from a year ago, but demand in most neighbouring countries was good, with Myanmar starting to bounce back to positive growth, Cambodia experiencing double-digit demand growth, Vietnam in near double digits, and Indonesian demand growing by 3 per cent.
 Meanwhile, Roongrote said SCG expected to announce the conclusion reached on its Long San petrochemical complex project in Vietnam by the end of this year.
“[We] expect no further delay,” he added.
 Chaovalit said the project cost would be revised upward, since the current figure of US$4.5 billion (Bt157 billion) was based on an estimate made in 2012 and there had been a change in the scope of the project due to the significant growth of the Vietnamese market over the past four years.
 During the first nine months of the year, SCG booked a net profit of Bt43.606 billion, up 28 per cent year on year, driven primarily by the chemicals business. 
 Earnings before interest, tax, depreciation and amortisation rose 14 per cent to Bt71.768 billion, while sales revenue dropped 3 per cent from the same period last year to Bt323.829 billion on lower chemical prices – which fell in line with the world’s oil prices – and softness in domestic demand for cement.
 In the third quarter, overall domestic cement demand decreased 5 per cent year on year and 4 per cent quarter on quarter. 
 Domestic demand for cement contracted 1 per cent during the first nine months, compared to the same period a year ago.
 SCG’s third-quarter domestic cement sales volume was relatively in line with that of the industry, with a realised price range of Bt1,700-Bt1,750 per tonne, representing a noticeable year-on-year fall and a slight quarter-on-quarter drop.
 Meanwhile, Roongrote said SCG had recently decided to diversify into the express small-parcel delivery market through a joint venture with Yamato Asia,a subsidiary of Japan’s top door-to-door delivery firm Yamato Holding. 
 SCG wants to complete its logistics business, which has until now largely been on a business-to-business basis, by extending it to consumers, he explained.
 “By having Yamato [as a partner], we will have more skills in delivering goods directly to consumers. It is the first step in ensuring [the offering of] quality products and services,” he said.
 On the capex front, due to a slight delay in some projects, SCG’s capital expenditure and investment totalled only Bt26.4 billion in the first nine months of the year, making it unlikely to reach the Bt50-billion target set for the whole year, the chief executive said, adding that the company would however defer any unused budget to next year.