SCG announced its Q3 and 9M/2024 results, addressing ongoing economic challenges. Thammasak Sethaudom, President and CEO of SCG, said, "For the period of 9M/2024, SCG achieved revenue of 266.13 trillion VND (10.66 billion USD), close to the previous year, driven by sales volumes from SCG Chemicals and SCGP. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, including dividends received from associates) amounted to 27.1 trillion VND (1.09 billion USD), a decrease of 10% compared to the same period last year. Profit for the Period was 4.79 VND (192 million USD), down 75% from the same period last year due to operational expenses for the Long Son Petrochemicals (LSP) project, reduced chemical product price spreads, and a decrease in the share of profits from associates. Excluding extraordinary items, profit decreased by 46% compared to the same period last year. In Q3/2024, revenue was 91.57 trillion VND (3.68 billion USD), with EBITDA at 7.06 trillion VND (284 million USD). Profit stood at 515 billion VND (21 million USD), down 81% from the previous quarter, which was attributed to the foreign exchange effect from the Baht appreciation, the downwards chemicals inventory price adjustment, decreased equity income from associate companies, and seasonal dividend.
SCG expects its revenue for 2024 to increase by 3% from the previous year, despite severe global economic volatility, a prolonged global petrochemical downturn, the Middle East conflict, increased competition from Chinese products in the domestic market, and fluctuations in the Thai baht. These challenges pose obstacles to business operations and are likely to persist for an extended period. As a result, SCG is focusing on conducting its business with increased caution and prudence. The company has set key targets, including: 1) reducing overall organizational costs by 3.57 trillion VND (144 million USD) by 2025, 2) lowering working capital by 7.14 trillion VND (287 million USD) by Q1/2025, 3) discontinuing unprofitable businesses, such as SCG Express and the digital technology business OITOLABS in India, with other operations also under review for potential discontinuation, and 4) executing asset divestments to enhance agility and focus on maintaining financial stability. Additionally, SCG is improving production efficiency to sustain a competitive EBITDA level, including initiatives to increase the proportion of alternative fuel usage in its Thai cement plants to 50% within this year and employing automation in tile production to achieve greater precision, speed, and reduced material waste. However, SCG continues to invest in ASEAN countries. Over the past nine months, sales have grown by 10% compared to the previous year, driven by contributions from Vietnam and Indonesia.
In the long term, green initiatives and Inclusive Green Growth approach present business opportunities and advantages. Therefore, the company is accelerating investment in the ethane project at Long Son Petrochemicals (LSP) to reduce raw material costs, with an investment budget of 700 million USD. This move enhances competitiveness within the global petrochemical industry and helps reduce carbon dioxide emissions in the production process. SCG is also promoting high-value green innovations such as Generation 2 Low Carbon Cement, which has been continuously well-received, achieving an 86% replacement rate of conventional cement with Low Carbon Cement. Additionally, the company is advancing green polymers under the SCGC GREEN POLYMER brand which shows consistent growth.
As of 30 September 2024, SCG’s total assets amounted to 660.86 trillion VND (26.88 billion USD). Of these, the total assets of SCG in ASEAN (ex-Thailand) were 294.71 trillion VND (11.99 billion USD), or 45% of SCG’s total consolidated assets.
For SCG in Vietnam, the company reported Revenue from Sales of 25.67 trillion VND (1.03 billion USD) for 9M/2024, representing a 17% y-o-y increase. This growth was primarily driven by the increased sales from SCG Chemicals (SCGC).
The Long Son Petrochemicals (LSP) project, Vietnam’s first fully integrated petrochemical complex, officially commenced its commercial operations on September 30 and produced 74,000 tons of plastic resins, with sales volume during the trial period. However, in Q3/2024, if excluding a non-recurring financial gain from unwinding the interest rate swap (IRS) at LSP of 1.56 trillion VND (61.5 million USD), SCGC’s Loss for the Period was approximately -2.63 trillion VND (-105 million USD), resulting from the foreign exchange effect from the Baht appreciation, and decreased equity income from associate companies. For LSP, Loss for the Period in Q3/2024 without IRS was approximately -1.56 trillion VND -1.56 trillion VND (-62.9 million USD). During 9M/2024, LSP realized fixed costs of downstream operations, mainly depreciation and interest. In the fourth quarter of this year, additional fixed costs from upstream productions will be realized after commercial operations. Due to the current situation with the continued global petrochemical industry downturn, global oversupply, and low demand for petrochemical products, LSP has made the decision to temporarily shut down its operations. The project will resume its activities once the petrochemical market shows signs of recovery. This strategic decision reflects the project’s ability to adapt to market dynamics and navigate challenging conditions. By temporarily suspending operations, LSP aims to position itself for future success when the petrochemical market rebounds.
In the meantime, SCGC is actively progressing an investment project to improve the production process of LSP. This project aims to enhance the long-term competitiveness of the business by increasing LSP's operational flexibility. It involves importing ethane gas from the United States as a raw material, alongside the current use of naphtha and propane. Ethane has an average price approximately 40% lower than naphtha and propane over the past three years, enabling better cost management and mitigating raw material price fluctuations. Additionally, the increased use of ethane will reduce carbon dioxide emissions and minimize by-products. LSP's core strengths lie in its ability to accommodate gas-based raw materials, with a central utility system ready for ethane gas storage tanks and pipelines. The investment budget of 700 million USD will mainly be used for constructing ethane gas tanks and supporting facilities. The project is expected to be completed by the end of 2027, and once operational, LSP will produce olefins and polyolefins to meet the high demand for consumer goods in Vietnam. The project will be managed to align with raw material prices, product demand, and the global economic situation, ensuring maximum competitiveness and production efficiency across all SCGC’s factories in Thailand and Vietnam.
For SCG Decor (SCGD), the company is advancing its market expansion in Vietnam to achieve continuous growth. Recently, the company has accelerated the conversion of its ceramic tile production line to large-sized porcelain tiles with a production capacity of 2.5 million square meters. Additionally, SCGD is expanding its distribution channels to offer a diverse range of products that meet customer needs. In a recent development, SCGD has partnered with VAN PHUC TRADING to open the first V-Ceramic store in southern Vietnam, specializing in the sale of ceramic tiles and sanitary ware.
In addition to promoting sustainable economic growth for Vietnam, SCG is dedicated to environmental, social, and governance (ESG) initiatives, in line with its business purpose of "Inclusive Green Growth". SCG Color Roof has become Vietnam’s first concrete roof company to achieve the Singapore Green Label. To be certified as a green product, SCG Color Roof underwent a rigorous testing and assessment process to meet stringent criteria related to product quality, health, environmental impact, and product life cycle. This recognition highlights SCG’s commitment to ensuring the highest standards of quality while fulfilling its environmental responsibilities for customers’ benefits. SCG also empowers youth through the Packaging Speak Out 2024 competition by SCGP which has officially launched in Vietnam for the third year. In collaboration with the Ho Chi Minh City Student Assistant Center (SAC), this year’s innovative competition encourages young Vietnamese designers to create cutting-edge and sustainable packaging solutions under the theme "Packaging for a Brighter Tomorrow".
In terms of reducing social inequality, SCG’s efforts included the 17th SCG Sharing the Dream project, which awarded 100 scholarships in Vietnam worth 1.5 billion VND (approximately 59,000 USD), and the Learn to Earn project, which provided opportunities for young people to secure better jobs. The company also supplied clean water to the community in Quang Nam through the Loving Water for the Future project and donated 2.1 billion VND (approximately 82,700 USD) to the communities affected by Typhoon Yagi. Through these initiatives, SCG underscores its commitment to sustainable development and community upliftment in Vietnam.
