The Siam Cement Public Company Limited (SCC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the SCG Analyst Conference for the Second Quarter of 2026. I'm [ Sikachi ] from SCG, Investor Relations Specialist, and I will be the moderator for today's session. We are pleased to welcome all the guests who joined our session both online and offline. For those who join online, please kindly change your name and your company, I will accept you to the meeting room. Today, our management are here to provide you the continued earnings momentum for the second quarter as well and the business update, followed by outlook. After the presentation, we will open the floor for the questions. Today's presenters comprise of SCG management, led by Khun Thammasak, the CEO of SCG, who will walk you through for the consolidated results and outlook. And SCGC management led by Khun Sakchai, the CEO of SCG Chemicals. Next, Khun Wiroat, President and CEO of SCG Cement - Building Materials will be also presenting for the SCG Decor. And lastly, Khun Chantanida, CFO of SCG, who will present the financial parts and also SCG Packaging. And now let's start for today's presentation, beginning with Khun Thammasak.

Good morning, and welcome back to analyst conference discussion today. So I just want to spend a little bit of time to look back at Q2, right? What really happened and what did we do right, probably what did we do wrong that we have to adjust? So Q2 is very challenging time, as everyone knows, because of the disruption in the Middle East. You could probably remind everyone that the closure of the Hormuz actually cut 50% of the feedstock to Asia, 5-0, right? So at the beginning of the quarter, we were really afraid that there's going to be a major disruption. Actually, it did, it's a major disruption. And if you remember, we are implementing something called a daily war room, basically trying to adjust on the day-to-day and week-to-week basis to create our supply chain resiliency. So that is something that we have done. And basically, what we try to do during those times is to procure the feedstock from non-Hormuz. That's very obvious, Hormuz closed, we have to find another 50% from non-Hormuz. And in the meantime, we have to protect our customers, especially customers who really rely on our high value-added. This is a specialty product. They cannot easily buy from somebody else. If we really cut the supply to this customer, they're going to have a big impact to their operations. So that's why we need to support and protect this customer. And we had to make several tough decisions to shut down the complex, especially on the chemical. Those are the daily, weekly actions that we have done. So in a nutshell, chemical, we basically do the portfolio management and supply chain optimization. But the detail is, basically, make a decision whether to buy this feedstock or not, whether to run which product, how to protect the customer, and our value chain. We are geared towards the high value-added products that also really help us to steer through these very turbulent times. And we delivered the homework almost last minute, the divestment of the stock of the Chandra Asri. Last year we said, probably it could complete by mid of this year, and things turned out to be more difficult. And then at the very, very last moment, we could execute this and delivered the homework of close to THB 25 billion by cash into our balance sheet. On the Cement and Building Materials, basically, last year, we did stop loss and shut down nonperforming operations, took the write-off, if you remember, that THB 5.3 billion, took the write-off last year. And we analyzed that this year, there will be recurring gains, because we don't need to shore up those loss-making. This year, we will gain about THB 1 billion per quarter ongoing. So you could see this is why our Cement-Building Materials and other business are performing quite okay. Penetration of the Low Carbon Cement really helped us. You look at the energy price going up, we convert into the Low Carbon Cement using the biomass and renewable energy, our energy cost going down. So that's really helpful. And now you start to see that FT increase. So it makes a lot of sense to use the renewable energy. So we see our energy costs reduced compared to the normalized cost increase due to the index. Packaging, margin actually recovered and another homework that packaging team has delivered, [Foreign Language] already announced in the analyst conference of the SCG Packaging, actually we turned around the Indonesian operations from loss into the profit. So that's another homework that we have done. Packaging still enjoyed a robust growth in Thailand and in Vietnam because of the relocation of production into ASEAN. In terms of financial, which is the result of our immediate action, we ended up net debt (sic) net debt/EBITDA decreased from 5x (sic) [ 5.5x ] to 3.7x, which [Foreign Language] will explain more in detail. And net debt decreased by THB 39 billion, which is another good thing to our balance sheet. We became stronger in terms of our balance sheet and strong cash on hand and continue to deliver something that we promised is deleveraging strategy. So that is the immediate action. A lot of things that we have done on the day-to-day, week by week, numerous things. However, we have not deviated from our 2-year goal. Our 2-year goal is to transform, to build a competitive asset, right? So the projects that haven't created any EBITDA or profit now, but it will create the profit and EBITDA at the end of next year. So that is the ethane. Wiroat will explain progress of this. So we already know that if we complete this ethane project, earlier is the better, because ethane is very, very competitive even in this -- especially in this kind of situation. And it speaks to our non-Hormuz diversification of the feedstock. So that's why we are pushing up [Foreign Language] from state Vietnam are pushing up on the ethane project and made a good progress. Our study on the JV with PTTGC is ongoing. I cannot say much because of the -- we need a joint statement, we cannot say anything by ourselves alone. But anyway, it's moving. Another effort that we tried to create a long-term competitiveness on the Cement and Building Materials, we announced merging three business units into one. From Cement and Green Construction, Smart Living, and Distribution and Retail, we merged into the SCG CBM. So basically, I think the main idea is to create a customer-centric organization. And the cost saving is a byproduct. Because in order to serve the customer well, you need to streamline the internal process. You need to create a single phase of contact. You're going to see us moving towards the Key Account Management, Key Installer Management. So KIM and KAM is something that we are pushing forward to create a customer-centric organization. And to deliver that, we have to streamline the back end and we will create the cost saving. That's the promise and Wiroat will explain more. Packaging, we're still moving forward to improve the integration in Indonesia. We have a big paper plant. We had a small, very small -- in the past, very small box plant, and now we acquired MyPack. We improved the integration. When you improve the integration, you have the integrated margin to withstand the volatility, to withstand the competitive pressure in Indonesia. So these are the things that we have done to create a long-term competitiveness. And of course, the packaging is still growing in ASEAN, because this business benefits from this location to ASEAN. ASEAN optimization. As we said, we have to -- now we are seeing the big issue on the Middle East, Hormuz, Red Sea, this is a lot of headache for us, but we start to get used to it. We start to learn how to deal with it, right? But another thing is, I call it the gray rhino, the rhino that's running towards us is the overcapacity in Mainland China. This is something coming, and we need to do something about it. We need to improve our competitiveness. That's why we do the ASEAN optimization, consolidate our asset and create an ASEAN scale to be very competitive in a level similar to the Mainland China. So that's something that is still ongoing. And then we know that if we create the ASEAN scale operation, we can implement AI and robotics in a much, much efficient way. Cleanergy is still growing. Not talk too much, but still growing. The project that we energized and moved online is steadily. So this is another cost that into the future we will put more emphasis on. So this is the result. I think, adjusted cash EBITDA, which is the benchmark we measure ourselves for the Q2 is THB 27.9 billion, up year-on-year 47%. And H1 is almost THB 43 billion and up year-on-year 35%. And if you look at the adjusted profit also, you see improvement on the THB 10.8 billion. And for the H1, it is THB 12.6 billion. Reported profit is THB 17.7 billion. So that's something we already announced. So if you break down where the improvement in the EBITDA comes from, you could see that almost all, the Chemicals -- [Foreign Language], he is very handsome now, looks good, looks good. So you see a big improvement. And this is thanks to [Foreign Language] and Chemicals team to tirelessly have a meeting and daily war room. Yes, he can do that, I think. And this is something very surprising. Once you execute supply chain resilience amidst of those turbulence, you get something good out of it. And for the Cement and Building Materials, still steadily improve the core EBITDA generation. So this is to provide stability for the whole group, so steadily increase. Decor seems to be slightly lower, but because they took the restructuring as they announced in the past few months that they do the consolidation of the Thai operation and ramp up the capacity in Vietnam. So please be patient. It will come. Because we already invest. We already do it. Packaging also steadily increased, and they delivered as they promised on the Indonesian operation, and in long term, we will create a very competitive envelope, not only in Thailand and Vietnam, but also in Indonesia, which is a very promising market. So cash on hand, THB 76.7 billion. So of course, we have more cash because we do the asset divestment and we have better EBITDA generation and [Foreign Language] still controls the CapEx, you will see, she still has a very tight control on the CapEx, but that results in a lot of cash. Net debt has come down. As I mentioned, net debt/EBITDA has come down. And then the Board recommended to pay THB 3.5 per share. You could see, last year we paid interim which is THB 2.5, now it's THB 3.5. That means we're confident that we are quite okay to take care of every shareholder. So very quick on the revenues. So first half, roughly THB 260 billion, that's about 4% year-on-year increase. So mainly from the Chemicals price, of course, and actually more volume from the Packaging, not just the price, volume from the Packaging and sales growth of the Cement. Actually, Cement in Q2 should be the low season, but [Foreign Language] will explain more why he can make more stronger performance. And if you look at breakdown of sales destination, ASEAN is still very important, 27%. And if you zoom to Vietnam, Indonesia, it's the largest market for us. Thailand, 53%. And the rest of the world, China is 3%. I like this one. It's small, but it's proof that we can sell back to China. So this is kind of a little thing I try to observe how competitive we could be. U.S. 1%. Okay. We don't want to increase because Section 301 coming. Next one is on the EBITDA. So you already see everything improved. Our reported EBITDA on the first half is THB 44 billion. So I think this year, in total, we can beat last year adjusted cash EBITDA, because we are so close already. And on the adjusted profit, our reported profit is THB 17.7 billion for the first half and adjusted profit is at THB 12.6 billion. So that is the very quick introduction. May I pass to [Foreign Language].

Good morning. First of all, I have to thank you, Khun Thammasak, you already explained almost all what I prepared. Just briefly, this quarter remained highly volatile, mainly due to the conflict of the Middle East. As Khun Thammasak mentioned, all the feedstock cost is shooting to the roof. Naphtha peaked over $1,000, and all the products, including the polymer price, especially HDPE, that's the average price about $1,600. Actually, some markets, it is over $2,000. And all the spreads of the chemicals also expanded. So it's not just only the petrochemicals, the polymers, the products such as the fertilizers, pharmaceuticals, and aluminum is also affected. What we have done in the second quarter, as Khun Thammasak mentioned, we adjusted our portfolios because we could not run fully our capacity because of the shortage of the feedstock. The first priority is we fulfill domestic demand. And also, we try to manage our product portfolio to focus on HVAs to protect our margin. And also because of the shortage of the feedstocks, we could fully run full quarters only one cracker. MOC, higher capacity, but NOC (sic) [ ROC ] shutdown for 3 months, whole quarter. LSP, we ran 1.5 months, that we shut down the mid of May. And we just shifted all the pre-work preparations of Ethane project and also turnarounds from the next year to this period. And also, we will continue doing this until the 3rd and 4th quarters. And the feedstock sourcing is very tough, but no choice, we have to find from the non-Hormuz sourcing. And also the execution in the second quarter, we successfully divestment of share in CAP. That generated cash about THB 24.9 billion. Of course, we will use this cash to deleverage our debt, and also we will spend for the LSP Ethane project. So far, LSP Ethane project is on schedule and on budget. Look at the volumes that we sell in the second quarter, that's dropped down from the first quarter because of the shutdown of the ROC and just half quarter landing of LSP. Anyway, the first half of this year still sell volumes higher than the first half of last year because of LSP landing at least 4.5 months. Vinyl chain also affected because of the feedstocks. That's why the second quarter we ran lower than the first quarter. Overall, first half of this year lower than the last year. These are results of the financial performance. Second quarter's reported EBITDA will be THB 10.95 billion. But looking at the adjusted EBITDA, it is about THB 9.6 billion. That's including LSP. Without LSP about THB 8.9 billion. So with this, the first half of this year reported EBITDA achieved THB 17 billion and adjusted EBITDA is THB 11.8 billion, much higher than the first half of last year. Look at the profit, it is aligned with EBITDA. Reported profit for the second quarter, THB 4.8 billion, and adjusted net profit, including LSP, THB 3.74 billion. Overall, first half of this year, reported net profit THB 5.89 billion, and adjusted profit, including LSP, a little bit positive, THB 646 million. For the outlook, it's still very, very volatile. Look at the end of June, that seemed peaceful talks, that MOUs effective, that make all the feedstock and energy price drop down, but that for only 2 weeks. And then they started war again now that made all the feedstock increasing day by day. Even this morning, the crude oil price, naphtha price starting again at the high level. This is very difficult to manage the situation. But overall supply right now, it seems is better than the second quarter. Several cargoes, they don't pass through Hormuz, they try the new route to the other side. And also the supply chain [indiscernible] that makes the supply side -- the supply situation better than the second quarter. Anyway, we look at the ethylene capacity. And the new capacity this year is about 5.5 million tonnes, especially the second half of this year, the new capacity will come on stream on time. But several capacity consolidation and also the capacity rationalization still going on. Also the old and small capacity in China will be shut down. That will make the supply and demand more balanced. In short, the third quarter, fourth quarter is really challenging. We have to keep close eyes on the market movement and also the changing from the feedstock side down to the customer side. We have to carefully manage the situation well. And PVC, in fact, the third quarter is considered as the low season, but the price is also moving up because of the feedstock pushing. And the demand is quite weak in the third quarter. And normally, the PVC chain will back against the fourth quarter. That's after rain, that's the construction side continue. And ROC, we also plan to start up again. We hope, with the current situation, that is also very difficult to predict what happens. Even though right now we rely on almost 100% no any cargo from Hormuz. Anyway, just this morning, Red Sea also faced the difficulty because Houthis in Yemen last night attacked 2 vessels of Saudi Arabia. That also makes the tankers. Now they try to reroute to the Cape of Good Hope, that will take another 2 weeks. That is very volatile, and we have to adjust our supply chain based on situation. And also last quarter, we already announced we will start the projects with [ GC ]. That is still going on, and we will announce at the end of this quarter. Overall ethylene capacity, actually, before the war resuming, we saw the capacities of the global ethylene improved a little bit. That's, in fact, overall capacity in Middle East could not start because of the severe damage by war. Anyways, overall capacity improved. It reduced only 12% during the war, that is 20%. That's all on my part. Pass to [Foreign Language], please.

Good morning [Foreign Language]. Today, I'm pleased to walk you through our CBM transformation. Our core objective is very simple, it's enhance organizational efficiencies and unlock the business value and elevate customer experience. To understand why we -- let's first look at the market headwind, for the regional overcapacity in ASEAN has led to intense price undercutting, and economic uncertainties continue to drag down the construction market. Despite this challenge, government infrastructure investment and active BOI incentive are driving momentum. So in response, we are actively elevating SCG CBM competitiveness to 2 strategic pillars. One is we have integrated our offering into 3 pillars from the SCG, from the Cement, Building Materials, and System & Solutions to meet living demand for the customer. And we have removed operational redundancy and streamlined our workforce to achieve more efficiencies. Move to the next slide. Our transformation being executed to 2 segments. One is B2B, another one is B2C. For the B2C side, our core strategy is delivering customer product and service offering to the Key Account Management that Khun Thammasak mentioned earlier. We have shifted to the One Face To Customer with increased speed to respond. And furthermore, we are developing one single project data platform to manage the project seamlessly. For the B2C -- if we look at the B2C, our main objective to enhance customer accessibility and convenience. We are integrating our living housing system covering everything from roof, wall, fence, and landscape systems across our sales channels to provide a comprehensive solution for the customers. Also, we have Key Installer Management to ensure our service to customers. For the next CBM transformation framework, we are targeting a further THB 3,000 million in EBITDA value creation for productivity improvement by 2028. Here is our performance in the first half year. First half year, we have focused on the increased business opportunities, achieved 50% year-on-year growth through cross-selling our product portfolio and increasing subsidiary coverage by up to 200 branches. Second, we are executing plan to enhance efficiencies and expect to deliver approximately THB 1,000 million for this year. In terms of the financials for our revenue demand for the second quarter, our sales revenue saw strong momentum, reached 3% year-on-year growth, primarily by our expanding international trade. For the EBITDA side, the Q2 this year, adjusted cash EBITDA reached 12% year-on-year, driven by our strategic cost management initiative and that we stopped bidding since last year and exited some business bidding from the last year. In terms of the profit, improved both quarter and half year followed by EBITDA performance. For the business highlights, the Smart Value Products, we have officially launched QMAXX, it's a pricey brand -- not pricey brand, it's a smart value product, QMAXX cement offering through reliable quality with optimized value. And another one is HVA, we launched a new product. We call it SCG DECAAR Wall Molding into standard and seamless premium decoration. And another one is market expansion. Our showcase at the Sydney Build Expo in Sydney this year marks our entry to the global market with SCG's cutting-edge innovation for residential living. For the market situation, the market dynamics. First, looking at Thailand. Public infrastructure initiatives remain our primary growth engine, helping total market stability. Meanwhile, the surging renovation sector is accelerating recovering the Thailand building material market segment. And looking at the regional market, Indonesia is a standout growth market in this quarter, heavily supported by the government residential stimulus package and infrastructure. Vietnam continued its upward this quarter, driven by ongoing infrastructure and FDI inflow. To conclude our presentation, look ahead to business outlook and effort and priorities. First, regarding the outlook in Thailand, government investment and public budget disbursement will remain key driver for construction market demand. And regionally, we expect to see the continuous expand in both Vietnam and Indonesia, driven strong by public infrastructure investment and active private sector projects. And to capitalize on this opportunity, we are focusing on 5 key pillars. One is, we have active transition to our One Face To Customer model. This structure is designed to streamline customer interaction, eliminate organization silos, and drive overall customer satisfaction with more speed and response. We have deepened our market penetration by shifting from traditional product sales to delivering complete system and end-to-end solutions. And we are sharpening our competitive edge by scaling cost efficiencies, especially for the use of AF, alternative fuel utilization with technology like we plan to invest in chloride bypass and ethanol combustion, so we can reduce cost and lower CO2 at the same time. We are continuously refining our product mix to maximize market capture like SVP and HVA. We are actively accelerating both production and export of Low Carbon Cement from the facility in Vietnam to capture growth in regional and global demand. For the SCG Decor, this quarter, adjusted cash EBITDA is THB 617 million, and adjusted cash net profit is THB 117 million. Excluding cash restructuring expense, adjusted cash EBITDA would have been THB 800 million and adjusted profit would have been THB 268 million, supported by effective cost management and financial cost management. For the first half, we reported adjusted cash EBITDA of THB 1,378 million and adjusted cash net profit of THB 349 million. With the total revenue in the first half is THB 10.9 billion. If we exclude cash related and nonrecurring items, the SCG Decor adjusted cash EBITDA would have been THB 1,566 million, while the adjusted cash net profit would have been THB 500 million. That's all for my part.

Good morning. Let me start with a quick recap on the SCGP performance. I think overall, the SCGP had quite an impressive Q2 and in fact, impressive first half of this year. Revenue for Q2 was about THB 32 billion. Domestic demand improved in Thailand, Vietnam and Indonesia, while they are able to increase the selling price. So that has resulted in the improvement in the revenue both year-on-year and Q-on-Q. EBITDA and net profit follow the improved revenue growth. EBITDA for Q2 was THB 5.8 billion and net profit was impressive at THB 2.3 billion for the quarter. Such improvement was led by the turnaround of our packaging operations in Indonesia and also the improve in the business of the fibers and the ongoing cost optimization that the business has been doing during the past few years. For the first half, revenue was about THB 62 billion. It dropped slightly year-on-year because of the softer volume towards the end of late Q1. But EBITDA and net profit followed the same trend of the Q2, improved both year-on-year and half-on-half. First half EBITDA was THB 10.4 billion, while the net profit was THB 3.8 billion compared to THB 1.9 billion of last year. Moving on to the financials. SCG in terms of the financial position remains very strong with the continued deleveraging. I think we are moving in the right direction. But surely, we will not lower our guard. We will continue to place emphasis on the financial stability and the financial discipline. Our net debt, as [Foreign Language] mentioned, has reduced significantly by THB 39 billion from the end of Q1. That's come from two factors. One is the very strong EBITDA from operations. And second is the success of the divestment of Chandra Asri, 14.8%, as [Foreign Language], that resulted in cash coming in around THB 25 billion. So with that, our net debt/EBITDA declined significantly from 5.5x in '24 and '25 down to 3.7x, which is considered very, very good. And net debt to equity also came down from 0.7x down to 0.6x. Cash on hand is very strong at about THB 77 billion. Working capital increased a little bit to THB 87 billion. That I think is considered normal following the increase in the sales revenue of all the business units. But if we look at the net working capital in terms of days, it has come down from 68 days to 66 days. That was a good sign. On the interest cost, it came down from 3.3% in the first half of last year to 3%. So with the lower interest cost, lower net debt, that resulted in the lower interest burden for SCG. CapEx. As [Foreign Language] mentioned that we still control on the CapEx. First half is about THB 11.1 billion. Look at the pie chart on the above right-hand side, 34% of the CapEx from CBM, and that's pretty much on the maintenance and savings project. 28% from the chemical business, so pretty much on the LSP Ethane project. So we still maintain our target of the capital expenditure roughly about THB 30 billion for this year. So that's the end of my presentation.

Okay. Now let's look out, second half of this year, what is going to happen. Actually, no one knows that what's going to happen, but something that we start to see -- I talked to many people, everyone pointed out to the same thing that second half will be more severe than the first half. First half is tough, but second half could be tougher. This is something that all the industry players are pointing out, because it's not just Hormuz, now it's spread into the Red Sea and the strategic inventory is depleting. So of course, they can push the oil up to Suez, to Good Hope, and come through Asia. And [Foreign Language] already said it's 2 weeks more, costs more. So it's not like a totally, let's say, blocked Bab el-Mandeb will be the end of the world. No, actually, it's not. They can still go up to Suez, right? But definitely, the energy price will be going up, the freight cost will be going up, because it's longer distance. That's the reality. Volatility is still there, even bigger volatilities. Energy price volatility and security of the crude, that will be issue. But I just want to point out another gray rhino that's coming in is Super El Niño. This is coming, which we have to prepare. We have to manage the water. It will not happen this year. I mean, the impact will not be visible this year. But if we have done the right thing this year, we will avoid the big water shortage next year. That's the meaning. So I put out just to say that we are working on this and calling for action, the collective action, especially on the Map Ta Phut and the Eastern Seaboard. IMF pointed out that cost of war, cost of inflation, higher debt, global debt will slow down the global economy, which is the key concern for everyone. You see the growth at 3%, but you have to look at the AI drive growth. If you deduct that one, you see the real sector growth even worrisome. So this is the reality we are seeing. And U.S. started to utilize the Section 301, that I think we need to deal with it. The good thing is, ASEAN is still growing. So we are living in ASEAN, that means we're still growing, so that Vietnam still growing, Indonesia still growing, Thailand still growing, Malaysia still growing, Philippines is still okay. So we are living in a more economic vibrant area comparing to Europe and the others. So that's the good thing we have. What should we do? As I mentioned, we have to deal with the disruption. We have to deal with the volatilities. We start to get used to it. Every time we hit the disruption and volatility, we start to learn the bottlenecks of our operation, and we can debottleneck it. So we start to learn that non-Hormuz is important. We start to learn that, that channel could be utilized, this and that. So every time we are experiencing disruption, if we adjust quick enough, and if we look at a medium term, we can debottleneck our supply chain constraints. That will help us. So of course, we want to speed up the AI. AI and robotics will be very important. So we are full speed on the AI. We will implement a major AI project to enhance our end-to-end operation. Financial discipline, [Foreign Language] already emphasized. Into the turbulence, you need a ship that can withstand, and in terms of the business, that means a stronger balance sheet. And of course, we still take care of the shareholder as we are stronger to do that. That is the immediate action. We never waver on our 2-year target because we know that if we complete this competitive strategic project, on the right-hand side, within the end of next year, we're going to be much, much better than today. So we're steadfast moving towards the ethane. We follow up to speeding up and hope that we can provide you more. The progress now is pretty impressive on the tank as you see. Discussion with the PTTGC is still ongoing. I cannot say much at the moment. [Foreign Language] still tirelessly creates a customer-centric organization that will not only streamline, but also fast respond to the customer. We're still growing. One of the most vibrant area of the Cement and Building Materials growth in the region is Vietnam. We have doubled down in Vietnam to capture and create. [Foreign Language] creating a long-term growth platform in Cement and Building Materials in Vietnam. That's what we are working on. Packaging continues to grow in ASEAN and expanding in Indonesia, in Vietnam, in Thailand, of course. ASEAN optimization, robotics and, of course, Cleanergy. You could see that we are not adding any unnecessary items into it. But these are the very, very important items. There are some items we cannot announce in detail, but we are working on it. So objective is, by the end of next year, we have, as an analogy, some six-pack, not only one pack, but anyway, it's coming.