SCG announces Q1/2024 operating results

Moving forward, the global economy may be impacted by tensions in the Middle East. SCG is prepared to handle this volatility by adjusting business plans, managing supply chains effectively, and continuing steadfastly along the Inclusive Green Growth strategy. This includes increasing the share of clean energy that helps reduce costs, expediting green innovations to address global megatrends, and expanding into high-potential markets. Additionally, the Vietnam petrochemical complex is set to supply plastic resins to the global market in the third quarter.

Thammasak Sethaudom, President and CEO of SCG, said, "SCG’s Q1/2024 operating results have demonstrated improvement. Despite global economic fluctuations and the downturn of the petrochemical industry, SCG effectively manages costs and consistently delivers green innovations to the market, resulting in a revenue of 85.52 Trillion VND (US$ 3.48 Billion), an increase of 3% q-o-q. Additionally, EBITDA (Earnings before interest, taxes, depreciation and amortization) stood at 8.69 Trillion VND (US$ 354 million), up 16% q-o-q, with the Profit for the Period of 1.67 Trillion VND (US$ 68 million). This success is attributed to the development of green innovations that resonate with customers by fulfilling functional needs and contributing to carbon reduction, such as Low Carbon Cement, green polymers and sustainable packaging. This is evident from the sales of SCG Green Choice reaching 45.27 Trillion VND (US$ 1.84 Billion), accounting for 53% of total sales. At the same time, significant cost reduction has been achieved by employing environmental-friendly production processes, with Thai cement plants increasing the share of alternative fuel usage to 47%. Additionally, The Siam Cement Public Company Limited (SCC) has been listed on the Singapore Stock Exchange since April 1, providing a new avenue for foreign investors to purchase SCC shares. The response has been favorable.

SCG is accelerating progress towards its Inclusive Green Growth strategy, aiming to lead the green business sector while fostering a Net Zero society by developing green innovations to meet the high demand and further growth in the global market. SCG has recently launched Low Carbon Cement (Generation 2), which can reduce carbon emissions by 15-20% and will be available for sale shortly. Additionally, as economies in many countries and regions tend to recover, SCG is preparing by expanding investments in high-growth markets, such as SAMEA (South Asia, Middle East, Africa). The Long Son Petrochemicals (LSP) project is set to resume operations at full capacity, gearing up for plastic resin production in the third quarter."

SCGP (SCG Packaging) fosters quality growth throughout the supply chain, starting from the use of recovered paper materials and enhancing the efficiency of raw material management. SCGP promotes comprehensive eucalyptus cultivation to secure quality raw materials and support carbon sequestration across 31,770 rai, capturing 152,181 tons of carbon dioxide equivalent per year. SCGP continues to add value to eucalyptus woodchip through ongoing research and development, with an investment of USD 3 million in collaboration with Origin Materials, a leading technology company from the United States, to develop "Bio-based Plastic from eucalyptus woodchip". Additionally, SCGP is enhancing production efficiency by increasing the use of clean energy, incorporating Machine Learning and Artificial Intelligence technologies to optimize production, reducing energy consumption and costs. Furthermore, SCGP is building partnerships across sectors to prepare for the growing trend of the green business.

SCG Cement and Green Solutions continues to diversify cement innovations to suit various applications. The adoption of 'Low Carbon Cement' has recently increased to 85%, with the introduction of Low Carbon Cement (Generation 2) scheduled for May 5. This innovation can reduce carbon dioxide emissions by 15-20% compared to international standards. This year's goal is to convert all cement production processes in Thailand to Low Carbon Cement (Generation 2) while further advancing other low-carbon products.

SCG Smart Living is committed to developing building material products and solutions that meet customers' needs. Among them are the ‘SCG HEIM High Ceiling house,’ a new modern style home designed for contemporary living with relaxation spaces and a double space central hall, while maintaining the trusted construction quality and residential technology of SCG HEIM; the 'SCG Metal Roof Clip Lock 700,' which features clip lock installation and solves the issue of screw head leakage, set to be available in the second quarter; 'SCG Modeena COFF,’ a decorative wall material made from fiber cement, which incorporates 48% of recycled materials from operational process and waste from other businesses instead of virgin fiber to reduce carbon emissions while maintaining strength, durability, and aesthetics. Additionally, SCG is set to unveil its new brand, 'ONNEX by SCG Smart Living,' at the Architect Expo 2024, aggressively entering the smart solution business for homes and buildings. This effort integrates SCG's innovations, technologies and expertise to enhance the quality of living, focusing on energy savings, indoor air quality improvement and safety enhancements, including solar roof systems and solutions for managing energy usage in buildings.

SCG Distribution & Retail continues to aggressively enter continuously high-potential new markets such as the SAMEA region, which boasts an average GDP of over 70% and accounts for over 40% of the world's population. SCG International's office in Saudi Arabia manages end-to-end supply chain operations for the region, leveraging SCG's entire business network, covering cement, building materials, paper and packaging, as well as raw materials and industrial supplies. Plans are underway to transport goods from Saudi Arabia to countries worldwide and to source products from other regions to Saudi Arabia. In the ASEAN market, it manufactures bagged cement products targeting the high-growth economy segment, including brands like 5-Star Cement in Cambodia, ADAMAX in Vietnam, and Bezt in Indonesia. In domestic retail, SCG has raised awareness for SCG HOME. Recently, a grand opening event was held for the Khon Kaen store branch.

SCGC (SCG Chemicals) is advancing to maximize sales of 'SCGC GREEN POLYMERTM,' seizing the opportunity of the petrochemical industry recovery, which shows signs of improvement in the second half of 2024. Sales in the previous quarter reached 38,000 tons, while achieving 218,000 tons of sales in 2023, in line with the target of 1 million tons by 2030. Additionally, SCGC has collaborated with leading partners such as HomePro to introduce 'Closed-Loop Circular Appliances,' presenting the first-of-its-kind recycling process for used electrical appliances to transform them into high-quality green polymers for new products. The launch under the company Sirplaste SA in Portugal marks a step forward with 'SIRPRIME,' a high-quality, odorless PCR HDPE Resin (PCR HDPE), made from 100% household plastic waste, utilizing efficient recycling technology to eliminate odors and contaminants, certified by EuCertPlast and RecyClass standards in Europe. Meanwhile, the ‘Long Son Petrochemicals Complex (LSP)’ in Vietnam is in the phase of thorough evaluation and inspection of machinery to ensure more safety. It is expected to resume testing of the machinery and be ready for commercial production in the third quarter.

SCGD (SCG Decor) highlights four strategies to multiply its sales growth by 2 times by 2030, in response to the gradual recovery of the ASEAN market. These strategies include: 1) Driving growth in the business of surface decorations for tiles and wall coverings through various operations, such as expanding plant investment in the South of Vietnam; increasing high-value added product portfolio; and channel expansion; 2) Expanding the sanitary ware business in ASEAN and investing in new sanitary ware plant, targeting to increase in sanitary ware sales by 2 times or more than 10,000 MB; 3) Expanding into Complementary products and services, reinforcing its position as a leader in end-to-end solutions, and enhancing opportunities to sell Complementary products; and 4) M&P (Merger & Partnership) within the key business areas domestically and internationally. Furthermore, the Company emphasizes investments to enhance efficiency and reduce production costs, including the Hot Air Generator installation projects that reduce energy costs at 2 plants in Thailand, expected to be completed in May this year, along with a SPC vinyl tile production line project, which will start supplying products to the Thai market by the end of the second quarter, with a production capacity of 1.8 million square meters per year.

SCG Cleanergy, the end-to-end Clean Energy Business, continues to grow in line with the global megatrend shifting towards cleaner energy usage, coupled with government support, resulting in expansion in the clean energy market in Thailand. Currently, the total production capacity has increased by 13% from the end of 2023, reaching 511 megawatts, through collaborations with both the public and private sectors in new electricity trading projects. This year, the target is to increase production capacity by 200 megawatts for electricity trading with the private sector. In the area of innovative battery technology for storing heat from clean energy, in partnership with Rondo Energy from the United States, SCG Cleanergy has the potential to handle marketing in ASEAN, thereby providing an opportunity to introduce this technology into the ASEAN market initially and potentially expand to other suitable regions later. Simultaneously, The Siam Refractory Industry Company Limited has collaborated with Rondo Energy to develop the production of 'Thermal Media' for the first time, which is a core material for use in heat batteries. This collaboration has enabled the expansion of Thermal Media production capacity to 12,000 tons per year by the end of last year, to support the growing heat battery business.

The Company’s unreviewed operating results for Q1/2024 are as follows:

SCG's unaudited Operating Results for Q1/2024 registered the Revenue from Sales at 85.52 Trillion VND (US$ 3.48 Billion), an increase of 3% q-o-q, due to higher Revenue from Sales from most businesses. EBITDA reached 8.69 Trillion VND (US$ 354 million), up by 16% q-o-q, attributed to the better performance of the businesses related to cement and construction which had green product offering and efficiency initiatives. Similarly, Profit for the Period amounted to 1.67 Trillion VND (US$ 68 million), mainly due to improved profitability in most businesses.

Revenue from Sales decreased by 3% y-o-y, mainly from businesses related to cement and construction as well as reduced sales volumes in the Chemicals business. However, EBITDA increased by 4% mainly from higher contributions of the businesses related to cement and construction, while the Profit for the Period decreased by 85%. This was because Q1/2023 included non-recurring gain from fair value adjustment in SCG Logistics of 8.23 Trillion VND (US$ 335 million), which was a non-cash transaction, as well as lower Chemicals performance.

Revenue from Sales of SCG Green Choice in Q1/2024 reported 45.27 Trillion Billion VND (US$ 1.84 Billion) or 53% of total Revenue from Sales. The sales of SCG Green Choice products contributed to a reduction of 230,000 tons of CO2 emissions.

Revenue from operations outside of Thailand, including export sales from Thailand, registered 37.57 Trillion VND (US$ 1.53 Billion) in Q1/2024, or 44% of total Revenue from Sales.

SCG’s financial position remained consistently robust, with cash and cash equivalents at the end of Q1/2024 totaling 54.09 Trillion VND (US$ 2.2 Billion), compared to 46.85 Trillion VND (US$ 1,908 million) at the end of Q4/2023.

SCG’s total assets as of March 31, 2024, amounted to 638.61 Trillion VND (US$ 25.77 Billion), of which 46% represented assets in ASEAN (excluding Thailand).

For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in Q1/2024 recorded a 12% increase y-o-y, amounting to 17.02 Trillion VND (US$ 693 Million). This growth was primarily driven by improving market conditions in regional operations, especially in Vietnam, largely attributed to sales from Long Son Petrochemicals Company Limited (LSP). This contributed to 20% of SCG’s total Revenue from Sales. This figure includes sales from both local operations in each ASEAN market and imports from Thai operations.

The company reported Revenue from Sales for Q1/2024 at 8.28 Trillion VND (US$ 337 Million), marking an increase of 19% y-o-y. This rise was mainly due to an increase in sales from Long Son Petrochemicals Company Limited (LSP).

SCG is reinforcing confidence in the Long Son Petrochemicals (LSP) project through additional factory testing. This will ensure readiness for the production of high-quality plastic pellets in the third quarter this year, which will be supplied to the global market and drive Vietnam's economy.

From SCG's dedication to the ESG 4 Plus strategy, it has been honored as one of the top 10 outstanding Foreign-Invested Enterprises in the Golden Dragon Awards 2023-2024. This marks SCG's third recognition as a top FDI enterprise, making significant contributions to Vietnam's national economy.

In its ongoing effort to address social inequality, SCG engaged in meaningful activities during this Lunar New Year to uplift the military and local communities, including the renovation of public infrastructure and gift presentations to various groups in need. This reaffirms SCG's commitment to elevating the quality of life for sustainable development and mitigating social disparity.