The Siam Cement Public Company Limited ($SCC)

Good morning, ladies and gentlemen, and warm welcome to everyone here in the room and also online who are joining us this morning for the analyst conference for the first quarter of 2026. My name is Wachara, Head of Investor Relations, and I'll be your moderator today. We are pleased to welcome all guestes here today. And for those joining online, please enter your name and your company so that we can accommodate you accordingly. Today's presenters are as follows: SEG's management will be led by Thammasak Sethaudom, the CEO of SEG. He will lead you through the consolidated results and highlights. And the management team from each business unit will highlight the key operational issues, beginning with the Chemicals business, Khun Sakchai, the CEO of SCG Chemicals. He will provide you with a deep insight into the global industry's deep volatilities in Q1 and also highlight SCGC's high agility and adaptability. Khun Surachai, the President of CGS, he will detail CGS' solid and exceptional performance in cement businesses for the first quarter and Khun Wiroat, the President of SCG Smart Living and Distribution Retail. He will highlight the business building materials sector and the performance of the listed SCG Decor. And SCG's financials and SCGP's results will be summarized by Khun Chantanida, the CFO of SEG. And now onwards to today's presentation. Please, Khun Thammasak.

Good morning, everyone. Today, we have a lot of contents to discuss, and we allocate a lot of time for PC. I know many people will ask him. So I will brief on the Q1. So first quarter, I have to say this is a very chaotic and the situation has changed on a day to day basis since the war began in Iran. And this will ultimately, as IMF point out, it actually dragged the global GDP down. So if you read the MF report, so instead of the 3.2% for this year could drop to 2.5% or even at 2%. This is the cost of war that everyone knows. But behind the scene, behind this figure, we see a volatility, we see an uncertainty just impacting the global energy and supply chain on a day to day basis. And we see a higher inflation that's undeniable. In terms of the SCG, we take a short term immediate measure of course, we run something called a day to day war room. So every day, bringing the those who procure feedstock, raw materials, production, marketing, those who take care of the customer and top management to make a decision on the day to day basis. So basically, we try to get more feedstock and expedite the non hormes sourcing, especially in the chemical business. You could see that a number of new cargo that we can acquire during the first few months after the war. And also, we have to protect the customer, especially those using our high value added. By definition, high value added is not commodities. meaning that not commodity, meaning that the customer our customer will find more difficult to switch to the other supplier. So that's why we really have to put priority for this customer. So we take care of all this HVA customer carefully and also the other local customer. Again, we are accelerating the energy cost reduction, internal efficiency. You could see that all of the alternative fuels has been increased to negate the increased cost of coal and solar and renewable energy. And also, we manage the transportation, especially the EV because there is a point of time where diesel may be an issue. And I still believe that diesel will be an issue in further into the future. So that's why we are acquiring more EV freight for our logistics. That is the immediate measure we implement. However, we never forget about our 2 year plan, 2 year target. So we still focus pretty much on carefully spending our capital expenditure, especially we prioritize energy saving because that even quicker return if we implement the energy saving project and supply chain. And you will see that we have higher cash on hand. And more importantly, we have strengthened the long term competitiveness through a transformative measure. So this is the actually the key highlight for today's discussion also on especially on the chemical, the ethane project is the long term competitiveness enhancement project. But yesterday, we announced another competitive enhancement on the olefin and polyolefin national champion joint venture. So this is one we will explain more, okay? Let's see the results of the Q1. Adjusted cash EBITDA, we registered close to THB 50 billion for the first quarter, and that's a 66% increase on the Q on Q. Adjusted profit is THB 1.8 billion. And if you look at the reported profit is THB 6.2 billion for the first quarter. Cash on hand increased from THB 5.2 billion to sorry, THB 52 billion to THB 67 billion. So basically, our cash on hand increased. Net debt decreased by almost THB 3 billion and net debt to EBITDA now declined to 5x. So everything in line with our target. In more detail, this is the THB 15 billion adjusted cash EBITDA. Chemical now represent 25%. So if you remember, 2025, chemical represent only 8%, now jumped to 25% and if you look at our business unit on a Q on Q basis, chemical, Cement and Green Solutions, Smart Living, Ceramic and packaging, every business sector adjusted cash EBITDA increase across the board. So if you look at in detail, this is the highlight. Chemical really focus on agility, day to day decision making count because every day, if we miss it, that means a lot of opportunities, very decisive decision as in need to optimize to maximize our operation. And that's why we see a performance improvement. Construction related, we increased the EBITDA margin in our subsidiary business, CGS, Subar Living, DNR and SGT or attribute to the cost reduction, the major cost reduction that we have implemented, especially on the low carbon cement, alternative fuels. Packaging, you see a big turnaround in Indonesia operation performance, and that reflects the commitment that we management had gave you since last year that we need to fit this, and we are on the right path to make it into the profitability again. In terms of the financials, we have a very strong cash on hand, and we can lower our net debt. Of course, we enjoy the benefit that we take the restructuring effort last year. Last year, we took THB 5.3 billion write off onetime. And this year, we lowered the expense by THB 4.3 billion. So this is something that we believe the benefit from last year effort. So if you look at in terms of the revenues, actually, sales revenue not increased because we shut down the Rayong Olefin in March. So that's why if you look at the total revenue is actually not increased. And in terms of the breakdown by destination, ASEAN still represent 83% of our total sales. ASEAN is the area that still have a vibrant growth, and this is almost 85%. Basically, this is a big chunk for our operation. And just to point out one thing that China, we sell back to China about 3%, okay? Adjusted cash EBITDA, as I report, is a quick turnaround to almost THB 15 billion. And there are many, many reasons, seasonal demand of the construction material, inventory gain at the SCGC and improved performance of the SCGP, especially in Indonesia and also improved performance of the SCG Decor. Reported EBITDA registered at THB 17.5 roughly billion. And adjusted profit registered at THB 1.8 billion. And if you look at the reported profit is THB 6.2 billion. So this is the result of the Q1 effort. So may I pass to [indiscernible].

So look at the chemicals, what happened in the first quarter. Actually, in this year, the overall capacity from China will be less than the last year. What we have in the beginning, the petrochemicals industry in this year, probably the situation will improve a little bit. Anyway, come to the months of the war, actually started at the end of February and whole month in March that would be affected by the war. And look at the feedstock price in the world increased significantly. That also make the product price also increase significantly, not only the pricing but also availability and also the supply chain resilience in almost all country. Chemicals, we normally we use the domestic feedstock about 20%, 30%. And the less import and the major source of import from them is about up to 50%. So unfortunately, the whole month in March, we were canceled in terms of the orders feedstocks, mostly from that make us to have to announce for majeures in IOC because the feedstock that we plan for IOC and MOC in Thailand is very much rely on the almost cargoes. And so then we try our best to look forward to secure the cargoes from non most. Anyways, as we may know, not only Thailand, we rely on almost cargoes. The countries such as Korea, Japan and other country in South Asia is also rely on almost cargoes. So all we all know several of the asset damaged by war. And for the Asian chemicals producer, we affected by the feedstock choppage, especially from the Middle East producer. This is the summary of the dam capacity in Middle East so far, it's about 20% of the global ethylene capacity is operations. if you remember, normally, we're talking about the capacity, the supply over demand, we're talking about 20%. So it means if the 20% capacity loss if you would like to fulfill global demand, every tractor have to run 100%. That's why in the short term in the second quarter that make polyolefin market very, very tight. Look at the spread actually, the average Q1 that actually dominated by the month in March. You look at the, let's say, the naphtha price in March increased almost 80% from February. So in March, the average price from 600 something up to almost 1,000 and the naphtha price still keep increasing peak over 1,100. But on average in April, it's about 1, 150. So look at the HDP naphtha gap average in first quarter 324, but you look at only March, it increased to 400 in April increased to 545. And PP, the same level. So March 347 and April 20 on average in first quarter, 285. PVC, EDC C2 gap also the same. especially EDC price increased significantly. At the same time, PVC price increased, but not in line with the cost increase because of the acetylene PVC from China's capacity and selling to the market. So you see that the gap of the industry improved significantly. But look at the breakeven cost of the petrochemicals. I always say we have to look at 2 key factors, breakeven gap and also the feedstock price because petrochemicals, the feedstock price is higher, it made the conversion cost is higher. So it means HDPE naphtha at the cost about 1,000 or 1,100. That is why the breakeven gap about 550. So see April, market gap is 545 that just all the producers try to increase the price just based on the additional cost. this is the volumes what we saw. And you look at in the first quarter, the first quarter, both Thailand and Vietnam more or less probably a little bit lower than Q4 last year because of LSP. LSP, Vietnam production more or less the same, but the sales volume in March lower than average. And that sale lower than production, that inventory will carry over to the second quarter. So it means LSP in the second quarter will show the sales increase. All in all, Thailand's PE and PP, we even sell higher than the last quarter. Value chain is the same. We also both in Thailand and ASEAN operations combined sales volumes higher than the last quarter or even higher than the same quarter last year. This is the financial performance of SCG Chemicals, the first quarter's adjusted EBITDA without LSP is THB 2,739 million. Once we say adjusted EBITDA of the chemicals mean excluding the stock adjustment and NRV. This is only the pure performance of the first quarter. And it includes LSP, adjusted EBITDA would be THB 2,253 million, a little bit lower. So reported, you will see the last low Q1 is THB 6.1 billion. That's because of the stock adjustment and look at net profit is aligned with the EBITDA adjusted earnings LSP still minus THB 363 million and including LSP, that is minus THB 3 billion. But if you look at including everything stock adjustment and will be reported net profit is THB 1,178 billion. This is the outlook in the second quarter. As I mentioned, the global ethylene capacity is about 20%. Actually, it's not 20%. It's just combines the some is the capacity damage in the Middle East, some is the Asian ethylene capacity could not utilize full capacity because of the shortage of the feedstock. For example, ROC. And also, we also just announced to we plan to temporarily shut down our LSP in Vietnam. So it seems global supplies in the second quarter are still very tight. And also the naphtha and crude prices are very volatile. And even though in the past week, once the pace close to final, it make energy price drop down. Every time that the war escalated, does make again, the feedstock price, the crude oil price is appreciated significantly. That's why chemicals, we adopt the crisis mode, we have to gather and make decision day by day because the feedstock, what we secure most of the supplier who have the physical feedstock, they also try to mark up and put the premium on their products. And also it's not only difficult to secure the feedstock, but we have to carefully manage the cost of the feedstock. When also EDC prices surge. And as I mentioned, at the same time, the PVC supply side from China. China, there are huge capacity of the acetylene based PVC. That is right now, they ramp up the capacity. That's why they make the PVC price up, but some ceiling. This is the effort we have done and also going forward, in terms of the feedstock sourcing, we put out our effort to find the non horm feedstock. At this moment, one cracker in Thailand, definitely, we can run long. And also, if we would like to resume the second cracker, that very much depend on the feedstock availability and also affordability of the feedstock. Right now, we carefully to manage the feedstock sourcing and also carefully look at the economics of the crackers is possible to resume the second cracker. And MO, we keep running full and feedstock, I mentioned that is no worry. And IOC, we will do it. We look at the situation, but the plant condition lead to resume. LSP, we just announced to shutdown because of the also the feedstock availability. At the same time, we also have worked something that is also benefit to the team to our new project, LSP. We just utilized this shutdown period to do some turnaround and also tie in work in order to accelerate the ethane project in the future. Of course, HVA contributes a lot to SCG Chemicals at this moment. As Khun Thammasak mentioned, commodities probably right now is really volatile and also demand supply in the country is the are not the same. But HVA is customers they need this kind of the products. For example, in automotive, in the pipe industry and also some of the high quality packaging, multilayers of the food packaging that they must rely on this kind of product. The switching source of supply not easy. Anyway, we also try our best to prioritize our product portfolio to support the customer. Of course, Thailand customer in Thailand is the first priority. Not only we utilize our capacity in Thailand to Thai customer and Thai consumers, we also import some portion from Vietnam to fill up the gap. That's why now we can confirm we can commit to our customer in Thailand, we keep supplying 100% as the past to the Thai customer. LSP updated, of course, we just mentioned we're going to shut out temporarily in the mid of May. And look at the progress of our 2 stall [indiscernible], that is on time right now, 54% completed and also on budget. We plan to finish the 2 storage tanks in the first half of next year. Of course, not only the storage tanks, the others plan modification that also can do we plan to do about the mid of the next year. That also will take a few months. And also another important is the vessel Ethan VLEC, the large vessels that is under building in Korea. That also on plan and will be completed almost the same time as our plan modification. That's all I just pass to you [indiscernible] .

For cement and Clean Sol, I would like to begin with the highlight that we have done in the first quarter. We continue to reduce our production cost by investing in decarbonization project that we can use more alternative fuel and support our grid road map. Our [indiscernible],ich we can use, we can use 40% in alternative fuel and 40% in RE. But AF capability can be ramped up to 60%. It means that we still have room to improve and reduce our cost reduction further. Currently, biomass prices are trending upward, resulting in a lower saving compared to coal. Therefore, RDF will be the key alternative fuels for cost reduction in this year. This is an example of alternative fuel uses at Tung Cement plant in the south of Thailand. We increased RDF and biomass by investing in color bypass and eternal combustion chamber technologies. It could reduce our energy costs this enable our cement plant to achieve 55% alternative fuel usage. The figure is higher than average. And similar projects at Geno and Taongementant in Salaburiince nearly completion in the quarter 3 of this year. During the energy crisis, we leverage our strong location advantage with our cost to our market to keep cost competitive. And at the same time, we optimize distribution with flexible supply source supported by our nationwide cement and ready mix concrete network. So we can reduce energy cost pressure through efficient logistics and collaboration with our dealer to ensure reliable and timely delivery. For the low carbon leadership, we strengthened our leadership through a global expansion in sustainable construction material, and we received a top award for our low carbon cement product, decarbonization project from TKDA. So you can see in the graph in the quarter 1, our low carbon cement penetration rate is higher than 80%. And let's move to the financial part. Revenue in the quarter 1 registered at THB 21 billion, increased by 5% Q on Q and 1% year on year. For the EBITDA, EBITDA in the first quarter was THB 4.4 billion increased by 45% Q on Q and 70% year on year, mainly driven by revenue expansion and our cost saving effort. For the profit in the quarter 1 registered at THB 2.1 billion, increasing significantly by 7% Q on Q and 48% year on year. This is in line with our EBITDA growth. Move to the situation market situation in Thailand. Cement demand in the first quarter decreased by 1% year on year due to soft demand, especially in the residential segment. But if you look at the infrastructure segment, so we can see 1% growth in the first quarter. However, in the overall situation in ASEAN, the market improved compared to the same period last year, particularly in Vietnam and Cambodia. So you can see a 2 digit growth. For the business outlook, we will continue our cost reduction program focusing on 2 key areas. First, we will increase the use of alternative fuel and renewable energy to lower our production costs. Second, we will improve our production process by using AI to reduce waste and improve our production efficiency. For the new product development, we continue to increase high value product to improve our margin. And at the same time, we also expand smart value products to reach more customers. For example, we offer resistant concrete that is suitable for our customer in the Southern and Northeastern area. For the green product, we accelerate the adoption of low carbon cement, the third generation through more prototype testing projects. So you can see we have a testing project in parking lot in Bangkok project. And we are also positioning Vietnam as a key export hub of low carbon cement due to cost efficiency for exporting. So that's all for Mark. May I pass to [indiscernible].

For the Smart Living and distribution and retail, I would like to highlight the strategic milestone. First, we have continued to diversify our portfolio to align with the customer demand. A key innovation is our comfort with achieved temperature deduction of T2 7 Celsius with the new designs. Also, we have integrating our roof and selling solution into heat protection system. Finally, our Smart Value product or SVP continue to gain significant market traction. We are further diversifying our offering. We have introduced a new share of ceramic roof to align with the customer preference. Second, operation efficiency initiative contributes THB 31 million to our profit this quarter. Key success is we use the MSA integration in process production process, which allow us to save cost around 40% over traditional natural sand while maintaining the consistency and quality standard. For the next is despite the current transport shortage driven by the high logistic cost, our plan is more than and more than 400 distributors are strategic located across the country, which maintain resilient supply chain and deliver more efficiencies. Move to our financials. Our sales revenue trend upward this quarter, showing the solid Q on Q improvement. However, we remain behind the year on year benchmark due to the softened demand market demand. And we also saw slightly decreased in adjusted cash EBITDA compared to the previous year. This reflects the market softening. And as I mentioned earlier, in terms of the profit, we achieved significant growth in net profit, both year on year and Q on Q. This gain from the direct result is higher sales from last quarter and operational cost reduction. In terms of the market landscape, Thai building material sector declined 3% year on year. Despite this, public sector remain a growth driver. Regionally, we are seeing similar trend with public sector initiative and FDI remain primary catalyst for the demand. Looking ahead to the next quarter, while we anticipate continued support from the government investment across domestic and regionals, we are maintaining a cautious outlook on geopolitical uncertainties. To navigate geopolitical uncertainties and strengthen our competitiveness, we are prioritized 4 key strategic pillars. First, we accelerate integration of the alternative fuel, renewable energy and alternative raw materials to enhance sustainability and cost resilience. Second, we are deploying AI and advanced digital solution to drive operational excellence. And the third one, we are shifting product mix toward the SVP to align with the customer needs. And lastly, we are mobilized our nationwide distribution network to actually fully optimize supply chain. That for the Smart Living next for the SCG Decor. Moving to SCG Decor. SCG has revenue from sales is THB 5,550 million, down minus 7% year on year from the Thailand slowdown and the Thai baht appreciate for regional performance consolidation. If without the FX impact, revenue from sales would drop only minus 4% year on year. Revenue also improved Q on Q, mainly from a better Thailand sales volume. EBITDA and net profit recorded strong performance amid vol [indiscernible] and soft market demand with EBITDA of THB 780 million improved from Q on Q and slightly declined year on year and the net profit of THB 247 million improved both Q on Q and year on year from the cost saving initiative, which have been done continuously that from my pass...

Good morning. Let me start with a recap of the financial performance of SCG Packaging. They announced quite Impressive financial performance for Q1 despite the lower revenue, both year on year and Q on Q due to the lower volume sales and also the average selling price. But in terms of the profitability and EBITDA, it improved both Q on Q and year on year. Pretty much that's because of the improvement in the packaging paper operation in Indonesia and it's also because of their continued effort in terms of the cost management for the energy mix and the productivity improvement. Let's move on to the financial position of SCG for Q1. Our financials remain solid, pretty much because of the our continuous effort in emphasizing on the financial discipline and deleveraging. As you can see from the net debt amount, it was down to THB 277 billion. from THB 280 billion at the end of last year. But looking back probably almost 2 years, it has been reduced quite significantly. Working capital this quarter increased a little bit, and that's because of the higher price of the both feedstock and also the finished product. Cash on hand, as people mentioned, it was about THB 67 billion at the end of Q1. But I would like to put a note here that within this THB 67 billion, we have reserved about THB 10 billion for the redemption of the SCGC debenture, which was due April 1. So excluding that amount, cash on hand roughly going to be about THB 56 billion, which is still very strong and increased about THB 4 billion from the end of last year. In terms of net debt to EBITDA, as I mentioned, we focus on the deleveraging. And you can see that the peak of net debt to EBITDA was about 5.5x. It has come down to 5x. And if we use the net debt to adjusted cash EBITDA, the ratio will be 4.7x. This is another part of the financial discipline that we are very careful in terms of the spending. Capital expenditure for the first quarter was THB 5.5 billion. And you can see from the pie chart on the right side in terms of the distribution, both by business and by spending type. The full year estimate, we still remain committed at about THB 30 billion in terms of the CapEx spending. Let's move back to [indiscernible].

We look at Q2. So basically, when we look at second quarter, turbulent is still there and things can change drastically on the day to day basis. So this is something that we cannot we have to be very careful and vigilant that what I try to say. We still implement the daily war room that to guide for the quick decision because every day is car. And that we will respond across the business unit. Active communication to customer, I think we believe that the best way we can do is to improve the communication so our customer can adjust and we have to safeguard the supply chain. As mentioned, the financial discipline is still very important in the very high uncertain world. So we are careful, and we still continue our journey to reduce the debt, improve the return. We have to take care of our stakeholders. As you know, there are many angles that we have to take into account, not just our own operation or our immediate customer. For the chemical, which is the business that's subject to global volatilities, at the moment, we can run straight of the MOC. So that's a good news with the MOC is highly loaded with the HVA and that's straight into the Q2 and Q3. For LSP and ROC, we stay ready if the situation turned back, especially in the Hom. So we believe that Hommost situation can stay like this or even have a situation within the next months, that's still possible. So we have to be careful. For the construction related, the key point, the key strategy is to make it resilient and one way to make it resilient is to reduce the energy cost and adjust the product to serve the individual market. We know that the inflation already hit into the market, and we have to offer a solution, a way a clever design to reduce the impact or even help our customer to reduce the cost because we have technologies to do that. We have demonstrated many times that if we codesign with the customer, we can help reduce the cost. We expect 2026 growth through Thailand government's project. And for packaging, resilient margin, especially through the customer centricity and disciplined portfolio and also, again, Indonesian improvement that we have to focus. Again, our long term competitiveness is our main focus for this year and next year. So we expedite the LSP. This is definitely no regret move. We're speeding up and the cement in Vietnam, which is a high growth area. We are working tirelessly to deploy our low carbon technologies that will give us a very strong advantage in Vietnam also. Packaging strengthen the integration for competitiveness and especially in Indonesia, you know that we make a ser of acquisition in the past year and to improve the integration level, and that will create a sustainable business model into the future. the clean energies, I think this is another bright spot, but we intentionally give more time to this. So that's why we just briefly touched on the clean energy. But rest assured that the energy, the clean energy is the long term issue for every country and that's the business opportunity for us also. The key transformative project mentioned in the LC yesterday to study to form a new JV. This is a new JV. This is not like not a merging of the 2 companies. It's take the asset of the 2 company and merge, okay? And that's why we have to give more time to be. Jacob.

So we just announced the studies of the projects that DC and SCG chemicals, we are we will enter into nonbinding MOUs actually to explore potential formation of joint ventures of the olefin and polyolefin business in Thailand, I have to say, in Thailand. And it's not just the 2 companies merging, but both sides just bring in the asset in the olefin and polyolefin chain to be we intend to form a new company with those assets. And this is just the initial nonbinding step to study opportunity to look at the asset by the both sides, what I mentioned, we focus on the olefin, polyolefin business in Thailand. But for SCC, we also will study the asset of our joint venture partners. But this is not yet officially confirmed those assets will be under this scope because our partners aware on these activities. But so far, we haven't got any consent from the partners. You look at the I just want to touch on the synergies and the strength of the both sides. Of course, you look at the PT PTT Group, they are very experienced and have very strong in the upstream. Actually, PT Group, they have business from the exploration down to the refineries and petrochemicals. And also both sides, we have been in this business quite some time and both sides also try to improve the operational excellence in the operations. SCG Chemicals proven in the track record in terms of the product innovation and also product portfolio. So we always inform and also our activities and also our success in the past in terms of the SVA. And so far, we like our asset in Thailand with the HVA products portion over 60%. So these capabilities together with this very strong upstream, we combine both strengths that will be stronger. So that's just in short and summaries of both sides strength. And look at how important of petrochemical industry in Thailand. during this war, this crisis, you remember starting the crisis and many issues, many industry in Thailand, they are suffering with the shortage of the feedstock. And petrochemicals is see that is on the upstream side, but over 70% of the industry rely on the petrochemicals raw material. You see start from the food packaging. Once the short of the petrochemical of the polymers that the food packaging will be troubles. And our countries, everyone knows the champions of the food supplies. we can distribute the products worldwide because of the good packaging. And not only the packaging industry, you will see the automotive automotive or the plastic components that made up the plastic lacing and many things, consumer goods and also even the health care business. And during this time is also some of the material handling of the health care or even the hospitals also really serious on how could they get the right devices and packaging to continue to support them for their patients. That is very important industry. That's why to be to have the strong and competitive petrochemical industry in any country is very important, not only in Thailand. So to combine the strength, the intention just want to make the petrochemical industry in Thailand in the world class, not only competitive in Thailand or in the regions. As I mentioned, both sides, feedstock availability, feedstock competitiveness plus the product innovation and also the great supply chain, both sides, we can make optimization and also assetization in some situation that makes both sides will be strong throughout the cycle. So not only is the petrochemicals itself and if strong the downstream business, it will be strong. And petrochemicals is the upstream, as I mentioned, of the many downstream industry. And the last stakeholders and very important is customers. The customers also will be in terms of the supply abilities and also the product innovation, quality improvement and that make the overall Thailand economics will be in a good shape if such important petrochemicals can be competitive. That's all of my presentation. Thank you.