Besides the loss, the plant shutdown will force lower sales, a reduced product spread in addition to the extra costs associated with making plant modifications, Tisco said in a paper released this week.

The first-quarter results should be the company's worst this year and Tisco expects the company's fortunes to turn around in the second quarter to about a Bt1.13-billion profit before extra items.

"The 'cyclohexane project', a downstream project that uses benzene as a feedstock, should

help lift earnings. We stand by our forecast of a net profit of Bt4 billion for 2006," Tisco said in its research.

Last year, ATC posted a net profit of Bt5.24 billion, down nearly half from Bt10.3 billion from 2004. The 2006 forecast would be another drop - 23 per cent from 2005.

The company shut down its aromatics and reformer plant in order to make adjustments and integrate the cyclohexane unit with its existing facilities. The plant shutdown will reduce the company's sales volume to approximately 450,000 tonnes this year from the normal level of 650,000 tonnes.

Tisco estimated that ATC's revenue in the first quarter would decline 23 per cent year on year and 30 per cent quarter on quarter. Combined with a narrowing of the product spread to US$110 (Bt4,200) per tonne and the extra expense of Bt120 million for plant modifications, it estimated an operating loss of Bt90 million. "But due to foreign exchange gains of Bt300 million, we expect ATC to report a net profit of Bt210 million for the quarter, a decline of 92 per cent year on year and 70 per cent quarter on quarter," the report said.

Tisco predicted ATC would benefit from the foreign exchange gain on its currency-swap agreements due to the baht strengthening against the US dollar since the fourth quarter of last year. This was the only reason the company posted a net profit in the quarter.

In 2004, ATC entered into a currency-swap agreement valued at $225 million at an exchange rate of Bt41.546 per US dollar in order to hedge its currency exposure for a Bt12-billion bond issued in mid-2003. The currency swap has a five-year tenure and matches the repayment date for the bond, with instalments of $25 million payable twice a year.

The cyclohexane project should help the company's bottom and top line with its annual production capacity of 150,000 tonnes. Cyclohexane is a raw material for caprolactam, used to make synthetic rubber and plastic resins.

Normally this has a wider spread than benzene at $100-$115 per tonne. Using benzene to produce cyclohexane should act as an earnings catalyst for ATC. "We forecast a net profit of Bt1.13 billion for the second quarter, with a product spread of $131 per tonne, assuming the new product mix includes cyclohexane," Tisco said.

On Wednesday, ATC shares closed at Bt28.75, down Bt0.50 from Tuesday.