SET News: Economic Slowdown and Oil Price War Bring Down Thai Listed Companies’ First-Quarter Net Profit

BANGKOK, May 22, 2020 Economic slowdown and oil price war bring down Thai listed companies’ first-quarter net profit. Securities listed on The Stock Exchange of Thailand (SET) recorded total sales of THB 2.68 trillion (approx. USD 83.8 billion) for the first three months of 2020, down 4.3 percent from the same period of last year. Their cumulative net profit in Q1 fell by 60.5 percent year-on-year to THB 98.52 billion, with energy and petrochemical businesses suffering from the oil price war. If not including these two businesses, listed firms’ combined net profit dropped merely 25.2 percent.

SET Senior Executive Vice President Manpong Senanarong said that 671 listed securities, accounting for 97.25 percent of the total 690 securities (excluding those requesting to delay submission of their first quarter financial statement, property funds, infrastructure funds, non-compliance or NC, and non-performing groups or NPG) submitted their financial reports, ended March 31, 2020. Among those securities, 470 securities, representing 70 percent, recorded net profit.

In Q1/2020, SET-listed securities reported total sales of THB 2.68 trillion, a 4.3 percent decline from a year earlier with core operating profits decreasing 52.6 percent to THB 124.93 billion, and net profit dropping 60.5 percent to THB 98.52 billion. Consequently, the profitability was down from the previous year, with gross profit margin reducing to 18.9 percent from 22.2 percent, core profit margin decreasing to 4.7 percent from 9.4 percent, and net profit margin dropping to 3.7 percent from 8.9 percent.

“During the first quarter of 2020, Thai listed securities were impacted by both internal and external factors. The global economic slowdown since late 2019 has caused oil oversupply and triggered the price war among major oil producers. The securities related to Energy & Utilities, and Petrochemicals & Chemicals sectors were considerably affected as a result. The economic slowdown made it difficult for the management of sales and marketing costs, dragging down core operating profit and net profit when compared to the same period of last year,” added Manpong.

Due to the performance issue, listed companies sought higher liquidity reserves by continuously increasing debt, making the debt to equity ratio (excluding Financials industry group) rise up to 1.53 times at the end of the first quarter from 1.27 times in the previous year.

However, some sectors performed well and reported growth in both sales and profit margin which are Food & Beverage sector, such as fresh food, livestock and beverage, as well as the Finance & Securities sector’s growth via personal loan, meanwhile, Packaging sector’s earnings propelled by lower raw material costs.

Mai-listed companies’ total sales reported at THB 42.13 billion, a 1.56 percent drop year-on-year. The core operating profit was THB 1.46 billion, a 27.5 percent decrease, and net profit was reported at THB 717 million, 58.58 percent down from a year earlier.

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