The continued robust petrochemical business contributed most to SCG’s results, but the improved performance of its packaging and cement units played a big part in the surprise upside.

Kasikorn Securities said SCG’s consolidated first-quarter net profit of Bt13.62 billion was 24 per cent higher than its projection, because of 5-per-cent growth of the country’s cement demand in the three-month period.

Most analysts had expected cement consumption to edge up by only 1-2 per cent in the first quarter.

Roongrote Rangsiyopash president and chief executive officer of SCG, said the government’s infrastructure investment projects had started to affect the country’s cement consumption, although the commercial and residential segments had continued to show flat and negative growth during the first quarter.

“Notably, we saw a lot of sales activities in late March, which I guess was due to [buyers] building up their inventories prior to the long [Songkran] holiday.

“We may have to wait for April and May’s sales figures,” said the chief of SCG, which controls about 40 per cent of the domestic cement market.

SCG expects local cement demand to grow by 3-5 per cent this year. The upper end of the forecast hinges on the government’s capability to push ahead its infrastructure projects.

SCG logged flat sales of Bt110 billion in the first quarter, chiefly due to the fall in petrochemical prices. Profit for the period, however, was up 19 per cent from the previous quarter.

Exports declined 8 per cent to Bt29.57 billion, accounting for 27 per cent of the group’s sales, due to the decline in chemical prices and the start-up of its cement plants in Cambodia and Indonesia, which reduced its shipments from Thailand.

SCG’s higher-than-expected profits came from its investment in research and development, which helped its products fatten profit margins during the upcycle.

Its packaging business has acquired some companies, and expanded into the “end-packaging” segment.

The profit contribution from associated companies in the petrochemical business was also better.

The upcycle in the petrochemical business will continue for two to three more years, he said.

The chemical business contributed two-thirds of SCG’s profit in the first three months, or Bt9.11 billion, up 84.5 per cent year-on-year, followed by the cement-building business materials business at Bt3.29 billion (down 7.5 per cent) and the packaging business at Bt1.26 billion (up 42.9 per cent).

Most equity research houses – from Bualuang Securities and KGI to Trinity and PhillipCapital – had forecast SCG to report net profit of about Bt11 billion in the first quarter.

Roongrote said domestic cement prices slid by more than 1 per cent in the first quarter.

Competition in cement and building materials in the region has stiffened, partly due to the increased participation of Chinese players, which hurt producers’ profitability.

SCG’s cement plants in Cambodia have reached near full capacity, and 80 per cent in Indonesia.

The group expects its new cement projects in Myanmar and Laos to take three to six months to reach full capacity after their commencements next quarter and in middle of next year.

SCG was seeking partners to invest in the Vietnamese cement industry rather than building a greenfield plant there. The market in that country is facing a cement glut.

SCG’s stock yesterday closed up 0.82 per cent to Bt492.