Saturday, October 25, 2008

Vietnam's PetroChemical future uncertain

Thailand's biggest industrial conglomerate - Siam Cement Plc, forsees an uncertain future for its US$ 4 bln petrochemical complex planned in Vietnam. The project might no longer be financially viable due to tight global liquidity, that could adversely affect ability to secure loans from banks by the company. Discussions are on with the Vietnamese government for investment privileges, even as SCC is currently in the process of site commitment. Despite a round of discussions initiated with banks to get loans, the scenario seems difficult. If the funding does not come through, despite the group's financial strength, the project might become unviable. 
SCC's Q3 profits dropped 21% from year ago levels, on rising expenses. Profits fro the quarter to Sept 30 fell to 5.94 bln baht despite a 15% yoy increase in total sales to 79.3 bln baht. Sales for the first three quarters rose 20% yoy to 238 bln baht while net profit fell 18% to 20.25 bln, despite an extraordinary gain of 4.45 bln baht booked in Q3 from a non-core business divestment. Crude oil and coal, the company's main fuels, rose to record highs in July, increasing production and transport costs of all of SCG's core businesses: cement, petrochemicals, paper, and building materials.