Analyst Conference Q1/13 Wednesday, April 24, 2013

Transcription

1 Analyst Conference Q1/13 Wednesday, April 24, 2013

2 Business restructuring slide 2 SCG SCG Cement - Building Materials SCG Chemicals SCG Paper SCG Investment 1. Mr. Kajohndet Sangsuban President SCG Cement-Building Materials and VP - Domestic Market 2. Mr. Pichit Maipoom VP - Operations 3. Mr. Aree Chavalitcheewingul VP - Regional Business

3 AGENDA slide 3 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

4 Revenue from Sales Increased 6% y-o-y and 10% q-o-q, following volume growth in most businesses. slide 4 +6% y-o-y MB +10% q-o-q 120, , , , ,286 99, ,439 80,000 60,000 40,000 20,000 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13

5 EBITDA Increased 25% y-o-y and 10% q-o-q, as a result of the recovery in chemicals margins and continued cement growths. slide 5 MB 15,000 EBITDA +25% y-o-y 12,000 9,000 10, ,178 2,686 11,520 11, , % q-o-q Dividend from Associates 6,000 9,835 9,492 11,382 11,462 12,427 EBITDA from Operations +26% y-o-y 3,000 +8% q-o-q 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 NOTE: EBITDA = EBITDA from Operations + Dividend from Associates

6 Equity Income Significant y-o-y improvements as the non-chemicals associates were affected by the flood in Q1/12, while q-o-q growth was 88% following improved contribution from chemicals associates. slide 6 MB 2,500 2,000 Non-Chemicals Chemicals +423% y-o-y +88% q-o-q 1,799 1, , , , , Q1/12 Q2/12 Q3/12 Q4/12 Q1/13

7 Profit for the Period The 47% y-o-y earnings growth was driven by the recovery of chemicals margins, normalized equity income, and FX gain of approximately 1,000 MB. slide 7 +47% y-o-y MB 10, % q-o-q 8,796 8,000 6,000 5,972 6,416 6,912 4,000 4,280 2,000 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13

8 Revenue from Sales The chemicals business accounted for 49% of Q1/13 sales, while the cement building materials business was another 37%. slide 8 Q1/12 102,884 MB Q1/13 109,439 MB (+6% y-o-y)

9 Profit for the Period The cement building materials business amounted to 46% of the Q1/13 earnings. slide 9 Q1/12 5,972 MB Q1/13 8,796 MB (+47% y-o-y) Other 9% Other = Mainly SCG Investment and Corporate

10 Segments: Export Destinations in Q1/13 ASEAN destinations were 44% of the exports from Thailand. slide 10 Revenue from Sales Export Destinations Global Export 16% E.Europe 2% S.America3% EU3% N.America 1% M/E 4% Africa 4% ASEAN Export 11% Oceania 6% S.Asia 8% N.Asia 8% China/HK 17% ASEAN 44% ASEAN Operations Export Destinations - subsidiaries outside of Thailand. - from Thai subsidiaries

11 ASEAN Drivers in Q1/13 Three countries (Indonesia, Vietnam, Myanmar) accounted for 59% of SCG s exports into the ASEAN region. slide 11 Sales from ASEAN Operations Export to ASEAN (from Thailand) MB 35,000 30,000 25,000 20,000 15,000 10,000 5, ,700 19,000 13,400 14,600 16,700 22,500 31, Q1/13 Percentage of total sales from ASEAN Operations: 3% 5% 5% 7% 7% 7% 8% 8% +36% y-o-y 8,280 Singapore 9% Malaysia 10% Philippines Laos 5% 7% Cambodia 10% Vietnam 12% Indonesia 33% Myanmar 14%

12 EBITDA on Assets, and EBITDA Margin slide 12 Percent (%) 35 EBITDA on Assets Q1/13 EBITDA Margin (%): EBITDA on Assets = EBITDA / Consolidated Assets EBITDA margin = EBITDA from Operations / Consolidated Sales

13 AGENDA slide 13 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

14 Net Debt Increased by 4.0 Billion Baht from Q4/12. slide 14 Billion Baht Q1/13

15 CAPEX and Investments Amounted to 5,566 MB, of which approximately half was for capacity expansion projects. slide 15 Billion Baht Q1/13 - CAPEX includes debottlenecking, expansion projects, and major turnaround. - Investments are acquisitions and purchase of shares. - Prime Group (Vietnamese ceramics) acquisition translates to the Q2/13 CAPEX & Investment of 5,300 MB.

16 Interest and Finance Costs The interest and financing cost of 685 MB includes the FX gain of approximately 1,000 MB, while interest cost in Q1/13 registered 4.1%. slide 16 MB 16,000 15,006 14,000 14,030 12,995 12,000 11,487 10,000 8,000 6,000 9,216 10,038 8,101 5,876 4,762 5,169 5,273 6,089 5,649 4,670 6,048 6,321 4,000 2, Q1/ NOTE: Interest & financial charges include FX gain/loss transactions.

17 Net Debt on EBITDA slide 17 Times (x) Net Debt to Equity = 0.9X

18 Interest Coverage Ratio slide 18 Times (x) Note: -Interest Coverage Ratio = EBITDA / Interest Expense -Interest Coverage Ratio excludes the effect of FX gain/loss.

19 Financial Highlights & Outlook slide 19 Highlights: CAPEX in Q1/13 amounted to 5,566 MB, but is expected to total 40,000 50,000 MB in FY2013. Net Working Capital increased 8,615 MB q-o-q to 59,009 MB, primarily due to decreased AP and higher AR. Cash & cash under management of 41,721 MB at the end of Q1/13. Full subscription to the Apr 1/13 debenture issuance of 25 Billion Baht (4-year, 4.00%) which replaced the 20 Billion Baht matured debenture (4-year, 5.15%). The acquisition of Prime Group (Vietnamese ceramics) will result in the Q2/13 CAPEX & Investment of 5,300 MB. Outlook: Solid financial position, with healthy fundamentals in all businesses. Continued efforts in existing core businesses within ASEAN. Approximately two-thirds of SCG s net FX exposure remains hedged since H1/12.

20 HVA Progress slide 20

21 AGENDA slide 21 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

22 SCG Cement-Building Materials Sales breakdown in Q1/13 slide 22 Q1/13 Sales: 43,237 MB Domestic business: 1.Structural: 33% Grey cement RMC Mortar White cement Lightweight concrete 2.Housing: 13% Roofing products Board & Wood sub Home improvement 3.Logistics and others: 17% International business: ASEAN operations** Exports from Thailand Trading business Ceramic tiles: Thailand Indonesia Philippines All exports Note: * Excluded ceramic tiles ** ASEAN operations - subsidiaries outside of Thailand

23 Q1/13 Market Insight slide 23 Domestics: Continued strong demand in upcountry. Domestic cement demand grew approximately 10% y-o-y from better economic condition. Growth of Building products was softer, as there was the tremendous flood renovations which took place in Q1/12 of last year. Regional: The Indonesian RMC operations were affected by the rainy season. Cambodian construction market was supported by construction of government road and residential segments. Growth of Vietnamese construction market remained soft. Strong Myanmese demand for construction product, driven by infrastructure (2013 SEA Game) and tourism related accommodations.

24 Domestic Cement price Domestic cement price remained relatively stable q-o-q at 1,800-1,850 Bt/ton. Total Q1/13 domestic demand grew approximately 10% y-o-y. slide 24 Baht/Ton Average Domestic Price of Grey Cement (Net ex-factory) Sales Mix Q1/13 Bagged Mixed Cement 28% Masonry Cement 5% Bulk Portland 55% Bagged Portland 12% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

25 Cement exports Export volume dropped 0.6 MT y-o-y, in light of the domestic volume growth. slide 25 MT Export volume and Average price (FOB) $/Ton

26 Ceramic Tiles From the operations in Thailand, Indonesia and the Philippines. slide 26 Sales volume & prices for all ASEAN subsidiaries Average Price +6% y-o-y +10% q-o-q Sales volume

27 Revenue from Sales Grew 14% y-o-y as a result of increased domestic volume of cement and RMC. slide 27 MB +14% y-o-y +13% q-o-q

28 EBITDA and Profit for the period The y-o-y growths were limited, due to higher production costs (electricity and wage) in Q1/13, and the 240 MB non-recurring gain last year in Q1/12. slide 28 MB EBITDA +4% y-o-y +32% q-o-q Profit for the period +6% y-o-y +39% q-o-q EBITDA Margin*: 17% 14% 15% 13% 15% * EBITDA margin = EBITDA from Operations / Consolidated Sales

29 Updates and Outlook slide 29 Updates: Final contractor selection for the Indonesian cement plant, which are expected to start up in mid Consolidated of Prime Group (Vietnamese ceramics) in Q2/13. JV with Nichirei Logistics (Japan) in temperature sensitive logistics, with services beginning mid Outlook: FY 2013 domestic cement demand growth of approximately 10%. The Thai New Year in the second quarter is the slow season for cement and building materials.

30 AGENDA slide 30 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

31 Q1/13 Market Insight improved margins supported by seasonal demand during new year. slide 31 Market Insight: Crude oil prices moved up slightly to $113/bbl and naphtha prices also increased 2% q-o-q to $961/ton from improved demands of derivative products and gasoline blending. Ethylene and propylene prices climbed 9% and 5% q-o-q to $1,395/ton and $1,306/ton, respectively. Following seasonal demand, HDPE and PP prices moved up 6% and 5% q-o-q, which outpaced feedstock prices. This resulted in higher margins of both HDPE-N and PP-N at $521/ton and $581/ton, respectively. Benzene margin remained strong at $420/ton, up 1% q-o-q. BD prices were still under pressure from the drop of both synthetic and natural rubber prices. MMA price maintained at the same level q-o-q. PVC price increased 7% q-o-q to $1,027/ton due to cost push from both ethylene and EDC prices which were up 9% and 40% respectively, as a result margin declined by 10% to $405/ton.

32 HDPE and PP Naphtha Price Gaps HDPE gaps increased by 39% y-o-y to $521/ton following stronger y-o-y demand. PP margins also moved up to $581/ton or a gain of 42% y-o-y from the extreme low in Q1/12. $/ton 1,200 1,000 HDPE-N Gap +39% y-o-y +16% q-o-q PP-N Gap +42% y-o-y +12% q-o-q slide Naphtha PP-N HDPE-N Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date HDPE-Naphtha Spread ($/ton) 437 PP-Naphtha Spread ($/ton) 502 Note: Prices refer to SEA regional prices

33 PVC higher prices of EDC, from softer demand of caustic, and higher ethylene prices resulted in PVC margins to drop by 4% y-o-y and 10% q-o-q to $405/ton. $/ton 1,750 1,500 PVC Gap - 4% y-o-y - 10% q-o-q slide 33 1,250 1, Ethylene PVC VCM EDC 0 PVC-EDC/C Spread ($/ton) 464 Prices refer to FE regional prices Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date

34 Benzene & Toluene BZ-N margins were stable q-o-q, but BZ prices are on the downward trend from weaker SM demand. slide 34 $/ton 1,800 1,600 1,400 1,200 1, Benzene Gap + 171% y-o-y + 1% q-o-q Benzene Toluene Naphtha Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date BZ-Naphtha TL-Naphtha BZ-Spread ($/ton) 265 TL Spread ($/ton) 275 Note: Prices refer to SEA regional prices

35 Price Gaps of Associates MMA-Naphtha: BD-Naphtha: PTA-PX: Remained in the low level as demand was still weak. Squeezed margins due to the drop of both synthetic and natural rubber prices. Margins have seen the worst of the trough, but a recovery remains to be seen. slide 35 MMA-Naphtha $/ton BD-Naphtha $/ton 3,000 2,500 2,000 1,500 1, MMA-Naphtha PTA-PX BD-Naphtha PTA-PX $/ton Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date Note: BD and MMA prices refer to SEA regional prices, PTA prices refer to Asian regional prices

36 Polyolefins Sales Volume volume increased 7% q-o-q, supported by strong seasonal demand during the Chinese New Year and gained 3% y-o-y from better economic outlook. slide % y-o-y Ton 600, % q-o-q 500, , , , , , , , , , , ,000 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13

37 PVC Sales Volume PVC sales volume moved up 5% q-o-q following the Q4/12 turnaround of the VCM plant. slide 37 Ton 250,000 Domestic Operations + 3% y-o-y + 5% q-o-q 200,000 ASEAN Operations 172, , , , , , , ,000 27% 29% 30% 26% 30% 27% 30% 100,000 73% 72% 50,000 73% 71% 70% 74% 70% 73% 70% 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13 Note: *ASEAN Operations = Sales volume from PVC operations in Vietnam and Indonesia

38 Revenue from Sales revenue grew 9% q-o-q and 1% y-o-y, following increased volume and better product prices. slide 38 MB 75,000 60,000 45,000 52,900 3% Domestic Operations ASEAN Operations 49,339 4% + 1% y-o-y + 9% q-o-q 52,051 49,249 53,478 3% 3% 4% 52,900 53,478 3% 4% 30,000 15,000 97% 96% 97% 97% 96% 97% 96% 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13 Note: * ASEAN operations = Sales revenue from PVC operations in Vietnam and Indonesia

39 EBITDA the jump of 262% y-o-y and 77% q-o-q was owed to better margins of all products from the subsidiaries. slide % y-o-y MB 4,000 3,000 EBITDA Dividend 2,868 3, % q-o-q 3, , ,000 1, ,830 2, ,925 2, , Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 2, Q1/12 Q1/13 EBITDA 1% 1% 6% 4% 5% 1% 5% Margin Note: EBITDA = EBITDA from Operations + Dividend from Associated Companies

40 Profit for the Period profit rose 112% y-o-y while equity income from associates turned positive q-o-q from improved margins. Inventory gain for Q1/13 was 250 MB (200 MB for subsidiaries). slide 40 MB 4,000 Subsidiaries and Others + 112% y-o-y 3,000 2,000 1, ,000 Equity Income 2,629 2, , , , Q1/12 Q2/12-1,005 Q3/12 Q4/12 Q1/13 2, , , Q1/12 Q1/13-2,000 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13

41 Outlook slide 41 Lower naphtha prices, following renewed concerns of global economic outlook and seasonal maintenance of refineries. Seasonal drop in global demand for polyolefins, coupled with regional world-scale cracker start-up in Singapore. MOC will have 45-day turnaround in Q4/13. BD price remains challenging, as price drop of synthetic and natural rubber will likely linger. Stable MMA margins. Difficult PTA margins due to low demand for polyester. PVC margins treading sideways.

42 AGENDA slide 42 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

43 Packaging Paper AOCC prices were maintained, due to Chinese demand softness during the Chinese New Year, while Packaging Paper prices increased slightly q-o-q. slide 43 $/Ton 600 Q1 Apr/13 Packaging Paper Wastepaper (AOCC) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr Note: regional prices

44 Packaging Paper: Domestic sales volume increased 9% q-o-q from improved seasonal demand in all segments. slide tons 000 tons % y-o-y % q-o-q % y-o-y +9% q-o-q (23%) 52 (12%) (21%) 53 (12%) (65%) (67%) (65%) (67%) 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 ASEAN Operations* Thailand Export Thailand Domestic 0 Q1/12 Q1/13 Note: *Sales Volume from Philippines and Vietnam

45 Fibrous (Printing & Writing Paper) Long-fiber and short-fiber pulp prices increased owing to tight supply from maintenance downtime of short-fiber production in Brazil, coupled with rising pulp demand after Chinese New Year. $/Ton 1,200 Q1 slide 45 Apr/13 P&W Paper 900 Long Fiber Short Fiber Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr Note: regional prices

46 Fibrous (Printing & Writing Paper) Domestic sales volume improved q-o-q, mainly due to recovered demand from year-end and rising demand from Book Fair in March. slide tons % y-o-y +8% q-o-q 000 tons (24%) (23%) stable y-o-y +8% q-o-q Stable 96 (76%) (77%) Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 0 Q1/12 Q1/13 Domestic Export

47 Financials Q1/13 results improved q-o-q from stronger seasonal demand as well as PPPC s recovery from fire at control room. slide 47 MB 16,000 14,000 13,985 14,456 14,585 14,404 15,074 +8% y-o-y MB 4,000 Revenue from Sales (MB) 13,985 15,074 12,000 Revenue from Sales (Left) +5% q-o-q 2,789 3,000 Q1/12 Q1/13 10,000 8,000 6,000 4,000 2,000 2,215 1,010 2,370 EBITDA (Right) 1,101 2, Profit for the period (Right) 1, % y-o-y +40% q-o-q 1, % y-o-y +124% q-o-q 2,000 1,000 EBITDA (MB) 2,215 Profit for the period (MB) 1,010 2,789 Q1/12 Q1/13 1,342 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 0 Q1/12 Q1/13 16% 19% EBITDA Margin

48 Business Segments Performance improved q-o-q in the Packaging Chain and the Fibrous (Printing & Writing) chain, while performance in the Fibrous (Printing & Writing) chain decreased y-o-y from lower selling prices. slide 48 Packaging Chain Fibrous Chain MB 12,000 10,000 8,000 9,671 10,180 10,365 +7% y-o-y +2% q-o-q MB 12,000 10,000 8,000 +9% y-o-y 6,000 4,000 2, ,490 1,706 2,146 Q1/12 Q4/12 Q1/13 +44% y-o-y +26% q-o-q 6,000 4,000 2, ,314 4,709 4, Q1/12 Q4/12 Q1/13 +11% q-o-q -11% y-o-y +130% q-o-q EBITDA 15% 17% 21% Margin EBITDA 17% 7% 14% Margin Revenue from Sales EBITDA

49 Outlook slide 49 Outlook: Expected continued strong demand of packaging within the region, despite the slow economic recovery in the USA and Europe. Packaging Chain Wastepaper: Regional prices expected to hike from growing Chinese demand, while domestic prices should maintain sideways. Oversupply within the region continued to put pressure on paper prices. Domestic and regional demand continued to grow in-line with economy and consumption. Fibrous (Printing & Writing) Chain Continued challenging as overall demand growth trailing GDP growth albeit slight growth in the region. Regional pulp prices could further increase from cost-push, while domestic paper prices are under pressure from regional oversupply and Baht appreciation.

50 AGENDA slide 50 I. Consolidated Results - Q1/13 Consolidated Results - Financial Updates II. SCG Cement - Building Materials III. SCG Chemicals IV. SCG Paper V. Summary

51 Summary slide 51 Thank You For further details, please contact