* Q2 net profit 4.28 bln baht vs forecast 4.3 bln
* Plans Myanmar investments as part of ASEAN expansion
* Expects H2 profit to rise on improving petrochem margins
* Shares erase earlier losses, up slightly (Adds analyst, company comments, details)
By Khettiya Jittapong and Pisit Changplayngam
BANGKOK, July 25 (Reuters) - Siam Cement Pcl, Thailand's top industrial conglomerate and a barometer for the country's economy, said it plans to diversify further into the region's fast-growing markets after posting a 43 percent decline in quarterly profit.
Earnings at Thailand's sixth-largest company are expected to rise in the second half when demand improves on the back of rebuilding work as the country's economy recovers from severe floods last year that shut factories at carmakers and disk-drive manufacturers.
To reduce its exposure to the domestic economy, Siam Cement has been looking to expand overseas to drive future growth. Valued at $11.9 billion, the company said last week it planned to invest 200 billion baht ($6.29 billion) in the next five years, more than half of it earmarked for other Southeast Asian countries.
The company plans to invest 10 billion baht in three projects in Myanmar starting next year, including a power plant, a cement plant and logistics operations, CEO Kan Trakulhoon told reporters on Wednesday.
"Our investment targets are still in ASEAN, both M&A and greenfield. We expect demand to continue because of strong economic growth in ASEAN countries," Kan said adding the stimulus measures in China will help boost demand, which should cushion any fallout from the economic crisis in Europe.
For its ASEAN business excluding Thailand, Siam Cement posted a 50 percent rise in second-quarter sales, due to higher income from its cement operation in Indonesia and building material business in the Philippines. The company is in the process of investing about 10 billion baht in a new cement plant in Indonesia, Kan said.
After the earnings announcement, the company's stock erased earlier losses to close up 0.3 percent, while the broader index was 0.08 percent higher.
Siam Cement posted April-June net profit of 4.28 billion baht ($135 million), down from 7.49 billion baht a year earlier due to weak demand and a drop in the value of its petrochemical inventories. The results were in-line with market expectations with 11 analysts polled by Reuters forecasting an average net profit of 4.3 billion baht. Margins in its petrochemical business are also expected to improve in the next few quarters.
"This year is not a good year for the company and we look at its future. We expect demand for cement and paper to pick up in the second half while building materials should do well," said Wichuda Plangmanee, an analyst at Kiatnakin Securities.
Siam Cement, which imports naphtha to feed its petrochemical plants, said in a statement it booked an inventory loss of 2 billion baht from the chemical business after prices fell sharply in line with global oil prices. Petrochemicals made up 49 percent of its second-quarter revenue.
Analysts expect Siam Cement's earnings to hit bottom in the second quarter, typically the low season for cement and paper businesses, while margins of its petrochemical products should recover in the second half.
The company is forecast to post a net profit of 28.4 billion baht for 2012, up slightly from 27.3 billion in 2011, according to Thomson Reuters StarMine. In the first half of 2012, it posted a net profit of 10.3 billion baht, down 39 percent from a year earlier.
The company should also benefit after Thailand's central bank, as expected, left its benchmark interest rate unchanged for a fourth consecutive meeting on Wednesday to support rebuilding an economy that faces growing global risks.
After growth of just 0.1 percent in 2011 due to the floods, the central bank forecast 2012 economic growth of 6 percent, thanks to a jump in consumption, investment and post-flood restoration work.
Siam Cement, 30 percent owned by the Thai royal family's investment arm, the Crown Property Bureau, focuses on three core businesses: cement, petrochemicals, and paper and packaging.
Some 15 of 17 analysts rates Siam Cement "buy" or "strong buy," with one giving "hold" and one a "sell".
($1 = 31.77 baht)
Additional reporting by Wilawan Pongpitak; Editing by Matt Driskill