Siam Pulp sees weak sales, plans bonds

Thailand“s Siam Pulp and Paper Plc (SPP) said in August that it expected weaker sales in the second half because of falling pulp and paper prices. The company said, however, it would go ahead with pl…

Thailand“s Siam Pulp and Paper Plc (SPP) said in August that it expected weaker sales in the second half because of falling pulp and paper prices. The company said, however, it would go ahead with plans to issue bonds worth up to THB 10 billion in the next couple of months. “The bond amount and maturity are being considered,” SPP president Somboon Chuchawal told reporters after a shareholders“ meeting. In July, the company“s board approved the issuance of up to THB 10 billion worth of 10 year-bonds in the domestic market. Somboon said SPP, a unit of Siam Cement, Thailand“s largest industrial conglomerate, would use the bonds to help refinance debt. Somboon added that SPP was hoped that operating profit would not drop as sharply as sales in the second half. “Despite lower sales, our operating profit may be flat or fall a little as material costs are falling as well,” he added. In the first half of 2001, Siam Pulp made a group net profit of THB 1.82 billion on sales of THB 13.75 billion. Somboon said pulp prices had fallen to around US$ 400 per ton from US$ 700 late last year, while paper prices had dropped to US$ 650-670 per ton from US$ 850. He said the company had no investment plan this year but was still interested in buying a stake in Phoenix Pulp and Paper. Phoenix shareholders Siam Commercial Bank and Ballarpur Industries, which hold 19.84% and 24.98% respectively, said they want to sell their holdings. So far this year, SPP shares have gained 61%, compared with a 19% rise in the benchmark index and a 37% gain in the pulp and paper sector.