SET-listed Siam Cement Group (SCG), Thailand's largest cement producer and industrial conglomerate, posted a smaller profit in the first nine months this year, largely because of higher petrochemical product prices, while demand remained weak, says president and chief executive Roongrote Rangsiyopash.
Weak economic outlook also made the company invest less than expected for the second consecutive year.
SCG posted total revenue of 337.5 billion baht in the first nine months, up 4% year-on-year. Net profit dropped 3% from the previous year to 42.5 billion baht.
"Slow demand when the market was not very active and higher prices of our petrochemical and construction products deterred buyers," Mr Roongrote said.
He said total cement demand in Thailand has fallen by around 6% this year because of the weak economy and recent floods that cut construction demand and purchasing power.
However, cement demand in Asean helped offset the lower domestic demand.
For the third quarter alone, the company had a total revenue of 112.4 billion baht, up 7% from the same period of last year, while net profit was at 11.8 billion baht, down 16%.
Weak Thai and global economic outlooks resulted in the company lowering investment this year, missing the target of 50 billion baht planned earlier, said Chaovalit Ekabutr, chief financial officer and vice-president of finance and investment.
"We have spent around 40 billion baht to invest in expanding business and also in merger and acquisition [M&A] so far this year and we think our investment spending is expected to miss the target of 50 billion baht set previously because of weak economic outlook," Mr Chaovalit said.
He added the 10 billion baht of left over budget could be spent on maintenance and increasing project efficiency this year.
He said this has been the second straight year that the company's spending missed the target after spending only 37 billion baht in 2016, which was also below the target of 50 billion baht set last year.
But Mr Chaovalit said the company will still set an investment budget of 50 billion baht for next year, with the expectation that the economic situation will improve, allowing the company to spend more for expansion.
This year, the company has continued its feasibility study project on a possible expansion into biodegradable plastic and other biochemical products, which is expected to be location in the Eastern Economic Corridor.
"The project is aimed at increasing added value to our upstream and midstream petrochemical products," he said.
Mr Chaovalit said the SCG is also studying the possibility of investing in a petrochemical complex in Indonesia.
SCG set its 2017 revenue growth target at 3-5% from 423 billion baht the previous year. Mr Roongrote did not provide a growth forecast for 2018.
Siam Cement Group (SCC) shares closed yesterday on the Stock Exchange of Thailand at 480 baht, down 10 baht, in heavy trade worth 4.49 billion baht.