The delay in state budget spending and low asphalt prices in the global market reduced first-quarter earnings and profit of SET-listed Tipco Asphalt Plc (Tasco), but the company remains upbeat about a return to normal growth levels this year.
Revenue dropped by 37% in the period to 5.76 billion baht, down from 9.17 billion year-on-year, while net profit plunged by 99% to 7.8 million baht, compared with 1.12 billion baht in 2023, the company said.
Managing director Chaiwat Srivalwat partly attributed the significant drop to the government's delay in budget allocation for fiscal 2024, which started on Oct 1 last year, following the general election and the time-consuming process to form a new coalition government.
Asphalt prices in the Southeast Asian market were also low between January and March while asphalt demand from China decreased, following its economic slowdown, he said.
Mr Chaiwat believes the situation should get better as the new state budget is expected to be spent in the fourth week of this month after the 3.4-trillion-baht budget bill was given the greenlight by the House of Representative in March.
Tasco will earn revenue from road repair projects signed with highway officials.
The state budget for road repair and maintenance programmes in fiscal 2024 has increased by 2.3%, reaching 169 billion baht, up from 166 billion baht in fiscal 2023, according to the firm.
In the international market, the drop in asphalt demand from China will be offset by new purchase agreements made with Australia and New Zealand, which want premium-grade asphalt, as well as sales of asphalt to the Indonesian market.
Mr Chaiwat expects sales of asphalt in 2024 to be on a par with those of last year at 1.2 million tonnes. The volume is not high because of the slowdown in the Asian market.
Tasco cannot procure inexpensive heavy crude oil, a raw material for making asphalt, from Venezuela though it already placed a purchase order, he said.
This caused the firm to lose the opportunity to save expenses after the US Office of Foreign Assets Control issued General License No.44 (GL44) in October last year to ease the sanctions related to petroleum exports from Venezuela. GL44 is set to expire at the end of this month.