ASEAN Sustainable Business Leader
Agenda:
1. Company Profile
2. Business Updates
3. Financials and Capacity
Indonesia Conference
Aug 11, 2016
1. Company Profile
P. 2
ASEAN Sustainable Business Leader
Core values and global recognition
Employee’s Core Values
• Adherence to Fairness
• Dedication to Excellence
• Believe in the Value of the Individual
• Concern for Social Responsibility
DJSI
Global Recognition
industry leader (2011 - 2015)
P. 3
Dow Jones Sustainability Index (DJSI):
SCG’s rankings in 2015
Year
Gold
Silver
Bronze
2015
SCG*
Cementos Argos,
Grupo Argos
LafargeHolcim
2014
SCG*
Cementos Argos,
Grupo Argos
Holcim
2013
SCG*
Cementos Argos,
Grupo Argos, Holcim
Lafarge
2012
SCG*
Duratex, Owens Corning,
TOTO
Asahi Glass, CRH,
Holcim, Italcementi
2011
SCG*
CRH, Holcim,
Owens Corning
Asahi Glass,
Italcementi, Lafarge
2010
Panasonic Electric Works *,
SCG, Holcim
CRH, Italcementi,
Lafarge, Owens Corning
Boral, Geberit,
Weyerhaeuser
2009
Panasonic Electric Works *,
SCG, Holcim, CRH
Boral, Lafarge
Italcementi
2008
Holcim *, SCG, CRH,
Panasonic Electric Works
-
Italcementi, Lafarge
2007
Holcim *
SCG, CRH,
Italcementi,
Asahi Glass
Note: *Industry Leader
Panasonic Electric Works
P. 4
SCG’s background
 Founded in 1913.
 Listed in 1975 on the SET.
 Market cap of $17 Billion (Aug/16)
 Free float of 70%.
 Key figures (H1/16):
 Net Sales 218.9 Billion Baht ($6.2 Billion)
Chemicals
 EBITDA
51.1 Billion Baht ($ 1.4 Billion)
 Net Profit
29.5 Billion Baht ($ 0.8 Billion)
 Assets of 523.0 Billion Baht ($14.9 Billion)
 +54,000 staffs (1/3 are regional staffs).
Packaging
P. 5
SCG’s ASEAN expansion
Cement and Building Materials:




Fully integrated cement plants.
Synergy with building materials and services.
Expansion of distribution networks.
other opportunities
Chemicals:
 Flexible feedstock cracker (Vietnam - to begin ground break)
 40% capacity debottleneck (Chandra Asri - completed).
 other opportunities
Packaging:
 Increased packaging solutions.
 Improve productivity in the fibrous chain.
 other opportunities
P. 6
ASEAN expansion progress: Sales Segments in Q1/16
Export Sales by countries
ASEAN Sales by countries
P. 7
Staff Training: Systematic roadmap
*
*
*
* = international programs
*
*
P. 8
External learning programs
Program
AMP – Advanced Management Program
EDP – Executive Development Program
MAP – Management Acceleration Program
MDP – Management Development Program
Marketing Excellence Program
Note: as of Mar/16
Current
Since
Classes
Staffs
Harvard
Wharton
IMD
1982
2007
2015
33
7
1
89
14
1
IMD
Columbia
2014
2007
1
4
45
177
Duke CE
2015
2
96
Wharton
Duke
1980
2011
36
4
1,531
225
Kellogg
2006
9
615
P. 9
Corporate scholarship program
Total of 524 scholarships granted since 1973
MBA
Engineering and Specialist
Note: 392 scholars are active, others have mostly retired
Current 54 students: MBA 8, Engineering 26, Specialist 20
as of Jan/16
P. 10
2. Business Updates
P. 11
Consolidated Segments
H1/15
223,094 MB
Revenue from Sales
CementBuilding Materials
39%
Chemicals
46%
H1/15
24,950 MB
CementBuilding
Materials
26%
Packaging
7%
Other
11%
Other = Mainly SCG Investment and Corporate
CementBuilding Materials
38%
Chemicals
45%
Packaging
17%
Packaging
15%
Profit for the Period
H1/16
218,872 MB (-2% y-o-y)
Chemicals
Subsidiaries
39%
Chemicals
Equity Income
17%
H1/16
29,515 MB (+18% y-o-y)
CementBuilding
Materials
19%
Packaging
8%
Other
5%
Chemicals
Subsidiaries
45%
Chemicals
Equity Income
23%
P. 12
Consolidated Equity Income
Chemicals associates
68% Dow Chemicals JV
25% C4-chain JV
MB
7% Others
11,000
10,293
8,683
9,000
7,199
7,000
6,774
6,546
2,774
5,000
6,108
6,851
Non-Chemicals associates
69% Kubota JV
31% Others
2,795
5,485
3,000
1,561
3,772
1,000
1,289
3,313
2,167
3,094
1,832
(606)
-1,000
2011
2012
2013
2014
2015
H1/16
P. 13
Chemicals: ASEAN portfolio
Flexible products (metathesis)
Thailand
Crackers (SCG 2/3, DOW 1/3)
Flexible feedstock cracker
Indonesia
Cracker (SCG 30%)
ROC (1999)
MOC (2010)
CAP (1995)
De-bottleneck
Rayong Olefins
Map Ta Phut
Olefins
1.7MT C2 + C3
Chandra Asri
40% capacity
increase
1.2 MT C2 + C3
0.9 MT C2 + C3
1.3 MT C2 + C3
Downstream
Subsidiaries
PE
PP
PVC
Others
Associates
 Dow
 Mitsui
Chemicals
 Mitsubishi
Rayon
 BST
Downstream
Subsidiaries
PE
PP
SM
BD
Associates
Michelin SSBR
(2017 start)
Vietnam
Cracker
Long Son Petrochemicals
(LSP)
>$4.5 Billion
>1 MT C2 + C3
Project Details
JV basis
Located in Southern Vietnam
Update: finalizing structure for
financing and construction.
P. 14
Chemicals product outlook
PE (C2)
consumer goods
PP (C3)
capital goods
PVC
construction related
MMA (C4)
consumer / capital goods
BD (C4)
rubber substitutes
PTA
textiles industry
(food packaging)
(electronics, automotive)
olefins
aromatics
P. 15
Extended chemicals cycle: HDPE – Naphtha
peak cycle driven by
+90% global utilization
$/ton
1,000
900
extended peak
800
extended peak
700
PE – Naphtha
margin
13% global
cap increase in
2010-2011
600
500
US crisis
400
Asian
crisis
300
$400/ton trough
$80 oil & 28-33 Baht FX
$300/ton trough
$20-30 oil & 38-40 Baht FX
200
trough floor is supported by
cash conversion cost (non-feed)
100
0
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
P. 16
Chemicals: Ethylene world supply growth
supply growth 4%
vs
demand growth 4%
%
10
9
8%
8
7
Base on existing
construction
6
5%
5
4
4%
4%
4%
4%
3%
3%
3%
3
3%
3%
4%
4%
4%
4%
2%
2
1%
1
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
3.5
10.5
6.9
2.0
5.0
3.4
5.0
5-6
6-7
6-7
6-7
6-7
Incremental supply growth (MT):
2.8
4.4
Note: as of June/15
4.6
4.7
4.7
P. 17
Chemicals: Ethylene world capacity
Naphtha + conventional gas = 90% of capacity
New capacity by region
(2016 - 2020)
Ethylene world capacity
191 MT in 2020
Europe
6%
Middle East
22%
Conventional
Gas
Naphtha
33%
South East
Asia
37%
North
America
20%
54%
19%
N. Asia
5%
5%
CTO + MTO
and Others
New shale
gas cracker






near Mongolia (coal reserves) with water scarcity.
5x greater water usage than conventional.
2.5x higher investment cost than conventional.
deleted from China’s investment tax promotion.
8 crackers = 5% of the world’s capacity.
6 yrs required from planning to startup
P. 18
Chemicals: Propylene world supply growth
PP spread < PE spread
%
10
9
8
7%
6%
7
6%
6%
6
5%
5
4
4%
3%
5%
4%
3
4%
4%
5%
4%
3%
3%
3%
2
2%
1
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2.8
5.9
4.1
2.1
4.4
3.8
6.2
5-6
5-6
4-5
3-4
3-4
Incremental supply growth (MT):
1.8
2.4
Note: as of June/15
3.3
4.1
4.8
P. 19
Chemicals: Propylene world capacity
Naphtha + refinery = 77% of capacity
Propylene world capacity
140 MT in 2020
New capacity by region
(2016 – 2020)
Middle
East Europe
4% 3%
South East
Asia
North
America
12%
20%
Refinery
29%
Naphtha
61%
48%
North Asia
(mainly PDH)
14%
9%
PDH
CTO & MTO
& others


Liquid based (naphtha & refinery) are 77% of the world’s
capacity, and are global price setters
PDH (shale + LPG) amount to 18 MT or 14% of the world’s
capacity
P. 20
HDPE – Naphtha price gap
Note: Prices refer to SEA regional prices
P. 21
PP – Naphtha price gap
Note: Prices refer to SEA regional prices
P. 22
ASEAN cement markets
Demand 2015
Capacity 2015
Capacity 2018
MT
100
Semen Indonesia
Indocement
Lafarge Holcim
Others
(Chinese 4, Thai 2)
80
SCG
Siam City
TPIPL
Others
60
23
16
13
8
36
26
16
25
new cap is mainly from
existing players.
103
103
92
88
70
56
60
60
Export
50
54
Export
40
40
20
Import
Import
1 MT
3
Import
3
6
3 MT
2 MT
4
4
6
7
14
8
0
Laos
Demand Growth
H1/16
FY2015
na
+5% to +7%
Cambodia
Myanmar
Thailand
Indonesia
Vietnam
+17%
+9%
+2%
+11%
+1%
0%
+3%
+2%
+16%*
+8%
$58 - $68
$50 - $60
$50 - $52
$52 - $53
$50 - $56
Market price: ex-factory (Q2/16)
US$ / ton
$70 - $82
P. 23
SCG’s cement plants
Leveraging new capacity across ASEAN
Existing:
North Thai plant
Mawlamyine Plant
Khammouan Plant
55 km to Thai border
Yangon
330 km to Yangon
Central Thai plant
Thailand
23 MT
Cambodia #1
1.1 MT
Vietnam
0.2 MT
Recent startup:
Cambodia #2
0.9 MT
Oct/15
Indonesia
1.8 MT
Nov/15
Phnom Penh
KampotPlant
130 km to Phnom Penh
Under Construction:
Myanmar
1.8
MT
Sept/16
Laos
1.8
MT
mid-2017
South Thai plant
P. 24
Indonesia: SCG’s cement plant location in West Java
Jakarta
Kalimantan
Sumatra
Sulawesi
Jakarta
65 km.
Java
SJW
Bogor
65 km.
100 km.
Bandung
Sukabumi
Plant
P. 25
Indonesia: Integrated business
Market Comparison (2015)
Indonesia
60 MT
Segmented Strategy
RMC
Jayamix
(subsidiary)
+
Building
Materials
(subsidiary)
Bulk
(majority of volume)
Bulk
20%
Thailand
40 MT
Bulk
65%
Bagged
80%
Distribution
Bagged
Kokoh
(subsidiary)
+
Networks
Bagged
35%
P. 26
SCG’s Building-Materials portfolio
Housing Products
Ceramics Tiles (floor & wall)
1. Roofing Tiles
Types of tiles
• Fiber Cement roof tiles
• Concrete roof tiles
• Ceramic roof tiles
2. Fiber Cement Products (ceiling and wall)
SCG’s capacity 225 mill sqm.
Thailand
Vietnam
Indonesia
Philippines
106
75
32
12
P. 27
Cement: Thailand’s domestic market segments
Total market growth (y-o-y)
Q1/15
Q2/15
Q3/15
Q4/15
FY15
Q1/16
Q2/16
H1/16
-2%
2%
-1%
2%
0%
5%
-3%
1%
-6%
1%
-3%
0%
-2%
0%
-7%
-3%
10%
11%
11%
12%
11%
21%
9%
15%
-7%
-3%
-7%
-4%
-5%
-2%
-10%
-6%
Segments
Commercial
(approx 20%)
Government
(approx 30%)
Residential
(approx 50%)
P. 28
Packaging Business: name change = business model change
• Tertiary (1.0 MT)
Packaging Chain - Rengo’s 30% JV.
• Secondary
• Primary (520 mill sq.m.)
Baling station
Recycled Paper
Packaging Paper
(across ASEAN)
(Imported + Local)
2.3 MT
Fibrous Chain
• Dissolving Grade Pulp (textile)
- Nippon Paper’s 30% JV.
• Hygienic Food Application
Tree farmed
eucalyptus
Woodchip
Pulp
0.47 MT
• Printing and Writing
(mainly contract farm)
P. 29
Packaging Business: product prices
Key Drivers:
 Food & Beverage
 Electrical & Electronics
 Export & E-commerce
 Urbanization
Note: regional prices
P. 30
3. Financials and Capacity
P. 31
Segmented Financials
Sales & Assets (MB):
Sales (MB)
Consolidated
Cement
Building Materials
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
H1/16
120,353 128,201 148,865 192,395 218,265 258,175 267,737 293,230 238,664 301,323 368,579 407,601 434,251 487,545 439,614 218,872
24,183 27,269 30,552 36,658 41,630 44,123 44,087 49,999 46,661 48,954 54,249 67,558
13,046 16,129 18,147 20,542 22,227 22,745 21,281 23,351 26,873 30,719 34,171 41,340 174,642 185,423 178,988 88,864
Distribution
53,326 52,191 56,551 68,558 76,070 81,519 86,440 102,672 86,641 96,898 111,920 126,690
Chemicals
38,152 42,394 50,767 75,185 86,084 122,645 130,223 136,527 101,115 144,317 192,929 203,539 209,997 248,118 200,433 97,339
Packaging
26,995 29,305 33,564 38,265 40,306 42,645 43,890 47,110 42,729 51,714 54,839 57,430 59,135 64,614 70,907 37,688
Assets (MB)
Consolidated
Cement
Building Materials
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
H1/16
174,804 167,388 176,566 191,081 199,370 226,264 248,256 285,776 315,992 359,219 373,789 395,573 440,633 465,823 509,981 523,038
59,618 60,624 56,315 54,801 55,953 57,791 60,132 60,770 60,681 61,018 60,115 66,808
16,023 15,338 15,771 18,068 20,259 20,595 19,863 22,654 22,991 24,796 35,845 43,512 155,458 168,662 187,976 195,708
Distribution
7,813
6,864
6,631
7,765
8,560
10,610 11,143 10,903 10,110 12,177 16,234 24,463
Chemicals
54,284 57,762 67,254 75,186 78,656 109,391 123,205 138,504 165,964 165,087 176,036 176,837 192,063 183,884 185,583 183,430
Packaging
25,844 28,720 32,813 39,128 38,575 40,734 46,454 51,089 47,942 50,127 52,463 58,439 65,169 73,987 83,218 84,082
P. 32
Segmented Financials
EBITDA & Profit for the Period (MB):
EBITDA (MB)
Consolidated
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
H1/16
28,884 30,418 37,188 54,626 53,507 57,151 50,008 38,783 47,116 45,949 46,253 45,716 61,265 66,493 82,690 51,145
Cement
7,615
7,917
11,581 13,175 13,235 12,200 10,198 11,272 11,616 10,810 12,781 14,824
Building Materials
3,140
3,605
4,382
5,307
5,387
4,856
3,928
4,085
4,907
5,489
5,060
6,661
Distribution
1,268
1,214
602
1,541
1,546
1,498
1,576
1,739
1,581
1,440
1,532
1,564
Chemicals
6,443
6,452
9,851
23,642 19,653 26,199 22,611 12,598 19,482 16,024 14,394 8,628
20,342 26,142 42,900 30,424
Packaging
8,205
9,536
9,819
9,840
9,496
9,634
7,943
6,660
7,901
9,129
8,811
8,844
9,473
9,718
Profit for the Period (MB)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Consolidated
7,634
Cement
859
2,006
5,313
6,582
7,916
6,652
5,463
6,006
6,214
6,014
7,288
9,163
Building Materials
410
1,521
2,253
2,700
3,071
1,939
950
778
1,617
1,872
1,476
2,949
Distribution
680
586
251
968
1,079
1,021
939
1,211
1,077
1,061
1,075
1,035
Chemicals
2,611
5,285
7,777
20,523 16,656 17,574 16,982
6,136
12,556 22,609 11,190 2,690
11,292 12,461 28,488 20,212
Packaging
3,272
4,079
4,424
4,122
1,658
2,286
3,587
26,274 26,683 24,395 12,984
10,831 5,948
2015
H1/16
14,604 19,954 36,483 32,236 29,451 30,352 16,771 24,346 37,382 27,281 23,580 36,522 33,615 45,400 29,515
3,689
3,574
2,353
3,490
3,331
3,560
16,092 13,180 10,250 5,766
3,448
3,463
2,270
P. 33
HVA progress: High value added products and services
HVA attributes:
5-10% higher margin
Performance
Service & Design
Branding
Solutions provider
HVA’s Revenue from Sales
P. 34
Net debt:
Internal leverage ceiling of 2.5 times (Net debt / EBITDA)
250
•
•
•
•
200
• 90% fixed rate
• 3.8% coupon
Billion Baht
(Net Debt)
1.6x Net Debt / EBITDA
0.6x Net Debt / Equity
45,279 MB cash on hand
98% Thai Baht
Times (x)
(Leverage)
10
9
retail debenture
8
157.8
150
7
162.5
149.5
137.6
120.5
100
164.4
100.5
103.0
122.0
5
112.1
99.9
4
83.6
3
3.1
3.0
2.6
50
1.9
1.8
6
2.0
2.6
2.4
2
2.5
2.0
1.8
1.6
Net Debt on EBITDA
0
1
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
H1/16
P. 35
CAPEX and Investments:
Continued growth with 2016 estimate of 50,000 MB.
Billion Baht
80.0
70.0
60.0
50.0
47.0
50.0
45.0
42.4
40.0
34.5
30.0
20.0
23.6
45.2
32.0
27.2
18.4
19.1
18.3
10.0
0.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
H1/16
EBITDA (MB):
45.7
61.3
66.5
82.7
51.1
- CAPEX includes debottlenecking, expansion projects, and major turnaround.
- Investments are acquisitions and purchase of shares.
P. 36
Dividend policy
Payout ratio = 40-50%
Baht / Share
16.0
15.0 15.0 15.0
16.0
15.5
15.0
100 yr
special
dividend
14.0
12.5
12.5
12.0
12.5
11.0
10.0
8.5
8.5
8.0
7.5
6.0
6.0
4.0
3.0
2.0
0.0
1.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1/16
% of
Net Profit
0%
16%
25%
36%
Note: Dividend policy established in 2008
49%
56%
61%
59%
54%
42%
40%
55%
56%
51%
45%
42%
35%
P. 37
SCG’s capacity (2016)
Chemicals - Naphtha Cracker (consolidated)
Ethylene
Propylene
Chemicals - Downstream (consolidated)
HDPE
LDPE + LLDPE
PP
PVC (Thai, Indo, Viet)
Cement - Building Materials (consolidated)
Grey Cement (Thai, Cam, Indo)
Ready-Mixed Concrete
(Thai, Cam, Myan, Indo, Laos, Viet)
White Cement (Thai, Viet)
Ceramic Tiles (Thai, Indo, Phil, Viet)
Roofing Tiles (Thai, Cam, Phil, Viet)
Ceiling & Wall Products
Lightweight concrete (Thai, Indo)
Packaging (consolidated)
Packaging Paper (Thai, Phil, Viet)
Box (Thai, Malay, Sing, Viet, Indo)
Printing & Writing Paper
Machine Glazed Paper (Nippon Paper JV)
Flexible Packaging (Thai, Viet)
1,700,000 tons
1,200,000 tons
920,000 tons
220,000 tons
720,000 tons
886,000 tons
29 million tons
550 batching plants
0.4 million tons
225 M sqm
89 M sqm
100 M sqm
30 M sqm
2,306,000 tons
1,013,000 tons
570,000 tons
43,000 tons
19,000 tons
Chemicals - Associates (equity accounting)
Dow Chemicals JV (50%)
- LLDPE
650,000 tons
- Propylene Oxide
390,000 tons
- Specialty Elastomer
220,000 tons
- PS
140,000 tons
- SM
300,000 tons
- Synthetic Latex
18,000 tons
Mitsui Chemicals JV (20% - 50%)
- PTA (50%)
1,440,000 tons
- PET (20%)
133,000 tons
- PP Compound (46%)
168,000 tons
- LLDPE Cast Film (45%)
15,000 tons
Mitsubishi Rayon JV (47%)
- MMA
175,000 tons
- Cast Sheets
20,000 tons
Chandra Asri JV(30%)
- Ethylene
860,000 tons
- Propylene
470,000 tons
- HDPE / LLDPE
336,000 tons
- PP
480,000 tons
- SM
340,000 tons
Bangkok Synthetic (49%)
- Butadiene
140,000 tons
- SSBR
100,000 tons
P. 38
Thank You
For further details, please contact [email protected]
P. 39