THURSDAY, March 28, 2024
nationthailand

Higher material costs, dip in domestic sales may hit SCG revenue

Higher material costs, dip in domestic sales may hit SCG revenue

SCG may revise down its projected revenue growth from “up to 5 per cent to “less than 5 per cent” after reporting Bt112.37 billion in revenue for the first quarter, a 5-per-cent drop year on year, the group’s president and chief executive officer, Roongrote Rangsiyopash, said.

The company, however, has decided to maintain its Bt60 billion investment budget for this year for all investment projects underway or in process, including its petrochemical venture in Vietnam, Roongrote said at a press conference yesterday.
“We cannot say how much we will revise down our total revenue growth for this year. We have to see our financial results in the second quarter before revising our revenue target, which was forecast to grow up to 5 per cent this year. However, we accept that our total revenue growth this year will be lower than our estimated growth,” he said.
Last year, the company reported total revenue of Bt478.438 billion, up 6 per cent over 2017. But the net profit of Bt44.748 billion was down 19 per cent year on year.
The company announced a net profit of Bt11.66 billion for the first quarter, a 6-per-cent drop year on year.
“Our total revenue and net profit in the first quarter of this year dropped as the raw material costs in the chemical industry rose, while the rise in the prices of chemical products did not keep pace. This directly impacted our chemicals business, which offers a price in keeping with global demand,” Roongrote said.

Domestic demand drop
In the domestic market, meanwhile, the cement and building materials business along with the packaging business were also impacted when domestic consumption dropped in the first quarter of this year, and is also likely to drop in the second quarter. As a result, the group has to revise its revenue target and lower its estimates, he said.
However, Roongrote is confident that domestic demand will improve in the second half of this year.
Following the market trend, the company has tried to maintain its net profit growth by managing its production costs and also improving work efficiency. This is the way to maintain net profit when the company cannot control product prices, especially those of chemical products whose prices are determined by global demand, Roongrote said. He added that in the cement and building materials, and the packaging business, the group focuses on developing more value-addition through research and development of innovative products, and that could add about one per cent to its total revenue.
“This is the way to do business at this time, when product prices in the global market are fluctuating” he said.
Of its Bt112.37 billion total revenue, up to Bt46.24 billion came from the chemicals business, down 13 per cent year on year, with net profit in the first quarter of Bt6.10 billion, down 25 per cent year on year.
The cement and building materials business accounted for Bt48.31 billion revenue in the first quarter, up 4 per cent year on year, with a net profit of Bt3.04 billion, up 22 per cent in the period.
The remaining Bt21.12 billion of the first-quarter revenue came from the packaging business, a 4-per-cent drop from 2018, with a Bt1.68-million net profit, up 11 per cent year on year.
Up to 24 per cent of the group’s total revenue came from Asean countries, with 15 per cent coming from other countries.
 

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