SET-listed SCG Packaging (SCGP) is keeping its revenue target of 160 billion baht for 2023, driven by higher market demand later in the year, though the company posted lower earnings over the first nine months.
From January to September, revenue decreased by 13% year-on-year to 97.5 billion baht, with profit falling by 25% to 4.03 billion baht.
"The results occurred because sales fell, product prices dropped for exports to Indonesia and prices declined for packaging paper and pulp," said Wichan Jitpukdee, chief executive of SCGP.
In the third quarter, revenue decreased by 17% year-on-year to 31.5 billion baht, with profit diving by 28% to 1.32 billion. Among the factors was a dip in exports to China.
Mr Wichan expects business circumstances to improve in the fourth quarter as consumption for food and beverage packaging should increase, while demand for packaging paper is showing signs of recovery.
China's economic stimulus measures have started to yield positive results in the manufacturing sector and there is an upward adjustment in packaging paper prices, which is favourable for exports in Asean, he said.
Mr Wichan said he predicts growing demand for packaging in Indonesia, which is scheduled to hold elections early next year, hopefully stimulating consumer spending.
Geopolitical conflicts, including the ongoing Russia-Ukraine war and the Israel-Hamas attacks, are having an effect on SCGP's business, he said.
"The war can affect global crude oil prices, leading to higher costs in the packaging sector, which depends on raw materials such as polyethylene [PE] as it is derived from petroleum," said Mr Wichan.
PE is used for making flexible packaging.
The impact of the Russia-Ukraine war caused oil prices to skyrocket last year.
From January to September, SCGP spent 5.3 billion baht on investment, much lower than its annual target of 20 billion. The company earlier announced planned allocation of 100 billion baht for its five-year business expansion from 2021-25. The plan is expected to help SCGP earn 200 billion baht in revenue in 2025.
SCGP is preparing to propose a 2024 investment plan to the SCGP board in December, he said.