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The Siam Cement Group (SCG), Thailand's leading conglomerate, predicts a lower net profit this year even though sales revenue will beat a previously projected Bt300 billion.

The group has also moved forward its remaining Bt84 billion worth of investment projects, now scheduled for completion in 2010. However, it is carefully reviewing Its US$4-billion (Bt138 billion) petrochemical complex in Vietnam, due mainly to financing obstacles.

In the first three quarters, SCG reported sales of Bt238.168 billion, up 20 per cent year on year. While the group's operating profit recorded flat growth year on year, its net profit dropped 18 per cent to Bt20.251 billion.

President and CEO Kan Trakulhoon said the price of petrochemical products had became softer in this quarter, in line with the decreasing oil price and lower paper demand.

The spread of high-density polyethylene in this quarter is about $500 a tonne, down from $690 in the third quarter.

For polypropylene, the spread is now $500 a tonne, down from $790.

Despite robust third-quarter growth in cement exports, the effects of the financial meltdown may soon change lower global demand.

He said he worried that total cement sales would decline next year, particularly  demand in the domestic market.

"Thailand is the only country in the region that has shown negative growth in cement demand for three straight years, due mainly to the political chaos and property slowdown," he said.

Kan said the US financial crisis had only a slight direct effect on SCG's performance, since the group had previously reduced its export proportion to only a few per cent to the US and 7-8 per cent to Europe.

Exports comprise 33 per cent of group revenue.

"However, it will indirectly hit our exports in other parts of the world, so we're forecasting our fourth-quarter operating results will decline from the previous quarter," said Kan.

SCG recorded third-quarter sales of Bt79.313 billion for an operating profit of 6 per cent, up 15 per cent and 6 per cent, respectively, year on year.

Kan said the operating profit was boosted by strong cement exports and cost saving from installation of waste-heat power-generation facilities in all of its cement plants.

However, its third-quarter net profit fell 21 per cent year on year to Bt5.94 billion, because there was a non-recurring after-tax gain of Bt1.92 billion from divestment in the previous quarter.

Broken down by business unit, SCG Chemicals' operating profit fell 10 per cent year on year from lower sales volume and a loss from subsidiary Siam Mitsui PTA.

SCG Cement reported a year-on-year increase of 16 per cent in sales and 29 per cent in operating profit.

SCG Paper recorded an increase of 12 per cent year on year in sales and 69 per cent in operating profit, thanks to higher selling prices and greater production capacity from its new plant in Khon Kaen province.