2011 Leader: Building Materials & Fixtures Sector Ranked Gold Class: 2011, 2010, 2009, 2008 DJSI member since: 2004 Ranking by SAM

Transcription

1 2011 Leader: Building Materials & Fixtures Sector Ranked Gold Class: 2011, 2010, 2009, 2008 DJSI member since: 2004 Ranking by SAM Meetings with Investors in Tokyo Hosted by UBS Apr 3-4, 2012

2 Agenda Slide 2 History Strategy Sustainability Business Updates Financials Appendix

3 Background Slide 3 Founded in Listed in 1975 on the SET. Market cap of $13.8 Billion (360 Bt/sh) Free float of 70%. Employ 37,900 staffs. Asset of Billion Baht ($12.1 Billion) Key figures (FY2011): Net Sales Billion Baht ($11.9 Billion) EBITDA 46.3 Billion Baht ($ 1.5 Billion) Net Profit 27.3 Billion Baht ($ 0.9 Billion)

4 Organization chart Slide 4 Board of Directors Governance and Nomination Committee Remuneration Committee Audit Committee Internal Audit Office President & CEO Management Committee CFO & Investment Corporate Administration SCG Cement SCG Building Materials SCG Chemicals SCG Paper SCG Distribution SCG Investment

5 Shareholders Slide 5 Local Retail / Inst 34% Local Crown Property Bureau 30% Local 64% Institution / Retail 34% Crown Property Bureau 30% Foreign 36% Foreign Board 25% NVDR 11% Feb 21, 2012 (Foreign Board 25%) (NVDR 11%) Foreign + NVDR 36%

6 Operational history Slide s 1970 s s 1980 s s onwards Organic growth in construction materials Takeover of ailing industries Entry of new industries Crisis of 1997 Restructure ASEAN & HVA Historic roots Opportunistic partner of choice Cement Construction Materials Steel Chemicals Automotive Electrical Ceramics Paper & Packaging Today Chemicals Cement Building Materials Paper Distribution Investment

7 Business segments today FY2010: 301,323 MB Building Materials 10% Cement 16% Distribution 11% Revenue from Sales Chemicals 46% Distribution 12% Building Materials 9% Cement 14% Chemicals 51% Slide 7 FY2011: 368,579 MB Paper 17% Paper 14% FY2010: 27,387 MB Recurring Profit for the Period FY2011: 27,281 MB Distribution 4% Building Materials 6% SCG Investment 16% Cement 20% Chemicals Subsidiaries 21% Paper 12% Chemicals Equity Income 21% Distribution 4% Building Materials 5% SCG Investment 17% Cement 25% Chemicals Subsidiaries 19% Paper 11% Chemicals Equity Income 19% SCG Investment 1) dividend income (stake of <20%) 2) equity income (stake of 20% - 50%)

8 Japanese joint venture partners in Thailand Slide 8 SCG Chemicals Mitsubishi Rayon (47% stake) Mitsui Chemicals (20% - 50%) SCG Paper Rengo SCG Building Materials - MMA, MMA cast sheets - PTA, PET, LLDPE cast film - 30% JV partner in ASEAN box plants TOTO Manufacturing (36% - 40%) - sanitary ware, and fixtures Sekisui Heim (49% - 51%) - modular home, and sales SCG Investment Aisin Takaoka Group (30%) Siam Kubota Corp (40%) Musashi Auto Parts (21%) Siam Toyota Manufacturing (4%) Toyota Motor Thailand (10%) Siam Yamato Steel (10%) - automotive related - farming machinery - automotive related - diesel engines - automotive related - structural steel

9 Agenda Slide 9 History Strategy Sustainability Business Updates Financials Appendix

10 Strategy Slide 10 GROWTH 1) ASEAN expansion 2) High Value Added products & services (HVA) DISCIPLINE Cash return on investment hurdle of 15% Dividend payout policy of 40-50%

11 ASEAN expansion Slide 11 ASEAN Myanmar Laos Thailand Vietnam Cambodia Philippines Malaysia Indonesia Singapore

12 SCG s capacity ranking Slide 12 ASEAN Thailand ASEAN Downstream Chemicals million tons Packaging Paper million tons Cement million tons Building Products million sqm of ceramics Note: as of Apr/12

13 ASEAN assets Slide 13 ASEAN ASEAN assets = 52,300 MB ($1.7 Billion or 14% of total assets ) Note: as of Apr/12

14 ASEAN segments ASEAN is an increasing part of SCG. Slide 14 ASEAN ASEAN as a % of SCG consolidated Sales from ASEAN Operations Mar/12 % 3% 5% 5% 7% 7% 7% 7% MB 7,700 13,400 14,600 16,700 20,200 23,700 - Assets % 3% 5% 5% 7% 7% 13% 14% MB 6,800 13,000 14,500 22,500 26,700 47,000 52,300 HR* % 5% 10% 11% 11% 12% 19% 26% Staffs 1,180 2,628 2,974 3,225 3,777 6,519 9,878 * Including SCG's international staff (Thai) Note: as of Apr/12

15 Export destinations FY2011 ASEAN was 39% of exports, or 18% of sales. Slide 15 ASEAN 4% ASEAN 39%

16 Regional growth opportunities Slide 16 ASEAN NOTE: figures for 2011

17 ASEAN investments since Jan/11 Indonesia Slide 17 ASEAN Boral Indonesia (valued 4,300 MB) Leading ready-mixed concrete (RMC) with 2.2 mill cubic metre. Businesses includes concrete pipes, precast concrete, quarries, and limestone reserves for expansion. February/12 Chandra Asri Petrochemicals (valued 13,500 MB) September/11 30% stake in an integrated chemicals complex. Conclusion of project upgrades: Cracker debottleneck, and downstream expansion. Operational excellence for process control, and cost saving initiatives. Accelerate development of HVA. KOKOH: distribution & KIA: ceramic tiles (valued 3,080 MB) Kokoh has 22 distribution centre and +10,000 wholesalers / retailers. KIA has a domestic market share of 10%, with capacity of 27 mill sqm. June/11

18 ASEAN investments since Jan/11 Philippines & Vietnam Slide 18 ASEAN Philippines: Ceramics (valued 150 MB) Mariwasa is a leading ceramics player in the Philippines, with 12 mill sqm. Increased stake to 83% (from 46%). March/12 Vietnam: PVC pipe producers (valued 1,200 MB) 17% stake in Binh Minh Plastics (plant in southern Vietnam) 23% stake in Tien Phong Plastics (plant in northern Vietnam) Combined PVC pipe capacity of 150,000 tons. March/12 Vietnam: White cement grinding plant (200 MB) January/12 Buu Long (0.2 MT) is a dominant producer of white cement in Vietnam. Vietnam: Box plant (valued 750 MB) January/11 Alcamax (53,000 tons) has a leading domestic market share with large multinational clients.

19 ASEAN investments since Jan/11 Thailand Slide 19 ASEAN Box plant (valued 410 MB) Acquisition of Tawana Container (61,000 tons) Resulting in SCG s capacity of 855,000 tons (46% internal integration). March/12 LLDPE cast film (valued 1,400 MB) 45% JV with Mitsui Chemicals Tohcello 15,000 tons of T.U.X. LLDPE cast film, a HVA product. PVC producer (valued 11,500 MB) Increased stake to 89% (from 46%) in Thai Plastic and Chemicals, a regional integrated PVC producer. March/12 March/12 Modular home producer (valued 2,900 MB) SCG Heim is a JV with Sekisui Heim of Japan, producing modular homes. Capacity increased to 1,000 homes, from 200. May/11

20 Cement expansion Slide 20 Under Study Capacity Asset Indonesia MT integrated cement Myanmar MT integrated cement ASEAN Existing Capacity Year Asset Vietnam 0.2 MT 2012 M&A for white cement grinder Cambodia 1 MT 2008 Green field integrated cement Thailand 23 MT 1913 Green field integrated cement

21 Chemicals expansion Slide 21 ASEAN Vietnam Complex: JV Agreement signed on Feb 9/12: QPI Vietnam (subsidiary of Qatar Petroleum Int l) PetroVietnam, and Vinachem Thai Plastic and Chemicals (SCG stake of 89%) Future Location Start-up Stake Olefins Capacity Vietnam Complex Vietnam SCG 28% (TPC 18%) 1,400 (Flex-feed cracker) Existing Location Start-up Stake Olefins Capacity (ton) Ethylene Propylene Total 1) ROC Complex Thailand 1999 SCG 64% ,200 2) MOC Complex Thailand 2010 SCG 67% ,700 3) Chandra Asri Indonesia 1995 SCG 30% Existing Total 3,820

22 HVA = High Value Added Products & Services HVA on Sales target of 50% by 2015, from subsidiaries. Slide 22 HVA

23 Systematic training roadmap Competent staffs are key to fulfilling strategic objectives. Slide 23.

24 SCG s external training program Slide 24 Programs Current Since Years Staffs AMP - Advanced Management Program Harvard Wharton EDP - Executive Development Program Columbia MDP - Management Development Program Wharton ,307 Duke Marketing Excellence Program Kellogg (as of Feb/12)

25 Corporate scholarship program Began in 1973, with +400 scholarships granted. Slide 25 Current 53 students (45 overseas). MBA 15, Technical, 38

26 Agenda Slide 26 History Strategy Sustainability Business Updates Financials Appendix

27 Slide 27 Ranked Global Sector Leader (Building Materials & Fixtures) in 2011 by SAM. From , SCG also was ranked Gold Class and has been a member of the DJSI since Represents the top 10% of the largest 2,500 stocks in the Dow Jones Global Total Stock Market Index, based on long-term Economic, Environmental and Social criteria. Established in 1999, and is the first truly global index to monitor the sustainability initiatives of listed companies. +60 global funds in 16 countries follow the DJSI. For further details:

28 DJSI sector overview Building Materials & Fixtures Slide 28

29 SCG eco value Thailand s first eco label, accounting for 13% of SCG s 2011 sales, or approx 47,000 MB. Slide 29 Cool Roofing System 40% Energy Reduction Cerafino Solar Roof Tiles Solar Power Heat Insulation STAYCOOL Recycled Contents > 80% COTTO Sanitary Ware and Fittings Reduces Water Usage by 25%

30 Agenda Slide 30 History Strategy Sustainability Business Updates Financials Appendix

31 SCG Chemicals Integrated and competitive operations. Thailand - Fully Integrated Cracker #1 (1999) Crackers Cracker #2 (2010) Regional Player Slide 31 Chemicals Downstream Subsidiaries PE PP PVC Others Associates Dow Mitsui Mitsubishi Rayon Others +50% of PE/PP are exported to +110 countries

32 SCG Chemicals The 2 nd naphtha cracker is propylene-rich. Slide 32 Chemicals Typical crackers Gas-based Naphtha-based Propylene-rich cracker Naphtha-based 000 tons 000 tons ethylene ethylene propylene versus 000 tons ethylene propylene '000 tons propylene 0 '000 tons 0 '000 tons SCG s 1 st cracker (1999) SCG s 2nd cracker (2010)

33 Historical margin: HDPE Naphtha Trough is supported by global conversion cash cost. Slide 33 Chemicals $/ton 1,000 Price Gap Avg global conversion cash cost of $300/ton, ex-feedstock Avg global conversion cash cost of $400/ton ex-feedstock

34 Global ethylene supply growth Slide 34 Chemicals MT Ramp-up Capacity Effective Nameplate Capacity Estimated by ground break to 4 3 to 4 3 to Global Capacity Capacity Growth 3% 8% 5% 3% 3% 3% 2%

35 HDPE Naphtha Trough margins till the end of Slide 35 Chemicals 370

36 PP Naphtha PP margins are expected to outperformed HDPE. Slide 36 Chemicals 410

37 PVC Benefiting from Asia s building-related activities. Slide 37 Chemicals 430

38 Price gaps of associates MMA-Naphtha: Weak electronics demand. BD-Naphtha: Better margins, due to tight supply. PTA-PX: Affected by excess Chinese supply. Slide 38 Chemicals

39 SCG Cement SCG is the only producer with nationwide production facilities, and the leading domestic market share of 40%. Slide 39 Cement North Lampang Central Kaeng Khoi Ta Luang 2.1 MT 7.3 MT 6.9 MT Lampang Saraburi Bangkok ASEAN capacity 23 MT Thailand 1.0 MT Cambodia 0.2 MT Vietnam South Thung Song 6.9 MT Nakhon Srithammarat

40 Domestic cement industry Forecasted domestic demand growth of 5% for Slide 40 Cement Million Ton Industry Capacity 56 MT 70-75% Op Rate 39.5 MT Industry Production Total Domestic Demand Total Thai Export Total Domestic Growth Rate (% y-o-y) - 10% -45% 15% -8% -1% 23% 6% 11% 9% -2% -6% -6% 1% 10% 3% 28 MT 11.5 MT

41 Domestic cement prices Ex-factory price was $60/ton in Q4/11. Slide 41 Cement

42 Cement exports Export prices are at FOB basis. Slide 42 Cement Q1/11 Q4/11 Million Ton Export Prices (FOB) $/ton Export Volume (MT) Q1/11 Q2/11 Q3/11 Q4/11

43 SCG Cement Waste-heat power generators Slide 43 Cement Utilize heat from the production process to generate electricity. Phase 1 2,000 MB Thailand -started in Q1/08 Phase MB Cambodia -started in Q2/09 Phase 3 3,400 MB Thailand -started in Q4/09 total 5,750 MB

44 SCG Paper Operations within ASEAN P&W Short-fibre pulp: 425,000 tons P&W paper: 565,000 tons Packaging Paper Slide 44 Packaging paper: 1,880,000 tons Box plants: 855,000 tons Rengo is an ASEAN JV partner Pulp mill P&W plant Packaging plant Box plant

45 SCG Paper Integrated paper operations Paper Slide 45 Printing & Writing Paper Internal Eucalyptus Pulp Printing & Writing Paper 100% integration Packaging Paper 46% integration Internal Sales -Corrugated Box 58% External Sales -Containerboard -Paperboard

46 Packaging paper Slide 46 Paper

47 P&W paper Slide 47 Paper

48 Business outlook Slide 48 Chemicals 100% utilization, but with trough margins in PE and PP. Continued challenges in PTA Recovery of MMA and Butadiene to be driven by Asian demand. Cement 5% domestic demand growth in Demand from flood infra, and growth of commercials / industrials. Moderate expansion from residential sector. Paper Flood recovery of box plants is not expected until early Q2/12. Low growth volume.

49 Agenda Slide 49 History Strategy Sustainability Business Updates Financials Appendix

50 EBITDA Slide 50 MB 60,000 50,000 40,000 30,000 20,000 10,000 30,418 1,834 28,584 37,188 3,484 33,704 54,626 53,507 4,267 50,359 6,571 46,936 57,151 7,771 49,380 50,008 6,762 43,246 38,783 4,577 34,206 47,116 45,949 3,070 4,006 5,415 +1% y-o-y ($1.5 Billion) 46,253 44,046 41,943 40, Dividend from associated companies - EBITDA from Operations Note: EBITDA includes dividend received

51 Net profit Slide 51 MB 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 14,604 3,462 11,142 19,954 2,148 17,806 36,483 2,776 33,707 32,236 1,523 30,713 29,451 30,352 4,511 25,841 16, ,479 Divestment of PTTCH 24,346 37,382 9,963 27,419-27% y-o-y ($880 Million) 27,281 27, EPS (Bt/sh) - Divestment gain

52 Net debt Includes cash of 50,288 MB ($1.6 Billion) Slide 52 Billion Baht Debt Profile Net Debt / EBITDA = 2.4x Net Debt / Equity = 0.7x 92% are Thai Baht 76% are fixed Interest cost of 4.4% CAPEX = 178 Billion Baht CAPEX = 146 Billion Baht Net Debt x on EBITDA

53 CAPEX & investments Slide = 178 Billion Baht = 146 Billion Baht

54 Incremental capacity: Previous investment phase ( ) Slide 54

55 CAPEX cycles Slide 55 Current Phase Past Phase CAPEX of 146,026 MB ($4.7Bill) Cash-flow financed Mostly green field CAPEX of +150,000 MB Cash-flow financed Cash on hand of 50,288 MB Mostly M&A...ASEAN expansion of core businesses

56 Primary use of cash Slide 56 Past Phase Current Phase (MB) EBITDA 57,151 50,008 38,783 47,116 45, ,007 46,253 Profit for the Period 29,451 30,352 16,771 24,346 37, ,302 27,281 CAPEX & Investment 23,574 27,160 42,379 34,535 18, ,026 32,053 Dividend 18,000 18,000 9,000 10,200 15,000 70,200 15,000 Tax 4,036 5,898 4,562 5,168 13,959 33,623 7,504 Finance Costs 5,169 5,273 6,089 5,649 4,670 26,850 6,048

57 Agenda Slide 57 History Strategy Sustainability Business Updates Financials Appendix

58 Capacity at the end of 2012 Slide 58

59 SCG Cement RMC expansion into ASEAN. Slide 59 Cement Myanmar Laos Cambodia Vietnam Indonesia

60 SCG Building Materials World s top 2 largest ceramics producer, with diversified offerings of products and services. Slide 60 Broad range of product offering Roofing products Ceramic tiles Fiber cement products Sanitary ware / fittings Autoclaved lightweight concrete blocks HVA accounts for >40% of existing sales. Integrated solutions provider Home Solution Center Roofing Center Cotto tile studio Cotto speed bathroom Modular house (Sekisui Heim jv)

61 SCG Distribution Primarily logistics, global trading, and domestic distribution. Slide 61 Leading supply chain solution provider, whereby non-scg clients accounts for approx 40% of total sales. Global international trading coverage is provided by the 35 global offices in 24 countries. Domestic logistics service provider to +200 clients, with +30 MT hauled in FY2011. Network of more than 450 exclusive domestic distributors nationwide.

62 SCG Distribution Kokoh s 22 distribution centre in Indonesia Slide 62

63 SCG Investment Contribution in FY2011 was approx 1,009 MB in equity income, and another 2,346 MB from dividend income. Slide 63 SCG Investment Agricultural business Automotive business Others Siam Kubota Corp (40%) Siam Kubota Leasing Siam Kubota Metal Tech (40%) Aisin Takaoka Group (30%) Michelin Siam Group (10%) Musashi Auto Parts (21%) Siam Lemmerz (30%) SiamYamato Steel (10%) Siam Toyota Manufacturing (4%) Toyota Motor Thailand (10%)

64 Examples of eco process Slide 64 Reduced water usage Reduced CO 2

65 Q4/11 was a challenge Slide 65

66 Chemicals EBITDA Slide 66 MB 8,000 6,000 4,000 2, , ,429 5,063 1,210 3,853 5, ,357 3,288 3,278 3, ,773 4,926 4,789 4,168 4,289 4, ,636 2,752 3,441 3,722 2,631 4,228 2,038 2, ,703 1,560 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11-32% y-o-y - 25% q-o-q 4,429 - EBITDA 2, Dividend from associates - EBITDA from subsidiaries EBITDA Margin 21% 16% 18% 12% 10% 9% 9% 7% 9% 4% 3% 3% Note: EBITDA = EBITDA from operations + dividend from associated companies

67 Chemicals profitability Slide 67 MB 14,000 12,000 10,000 Divestment of PTTCH Equity Income from Assc. Subsidiaries Profit 12,640 8,000 9,963 6,000 4,000 2, ,788 4,170 3,845 3,266 1,635 3,045 3,078 1, ,297 1,674 1,389 1,863 2,595 2,478 2,642 1,415 1,722 1,720 2,535 1,345 1,371 1,689 1,982 3,329 2,499 1,465 1,435 1,263 2,193 1,765 1,064 +7% y-o-y +3% q-o-q Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11

68 Cement financials Slide 68 MB 4,000 3,000 2,000 1,000 3,381 3,301 2,880 2,785 2,570 1,924 1,9631,553 1,525 1,173 2,616 2,486 2,407 1,481 1,323 1,285 3,755 2,241 3,386 1,990 3,193 1,848 2,447 EBITDA +2% y-o-y -23% q-o-q Net Profit -6% y-o-y 1,209-35% q-o-q 0 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 EBITDA 27% 26% 24% 22% 26% 22% 21% 20% 26% 25% 23% 19% margin 25% 22% 24%

69 Paper financials Slide 69 MB 2,800 2,400 2,000 2,146 2,298 1,948 2,424 2,630 2,403 1,672 2,547 2,350 2,348 EBITDA -6% y-o-y -33% q-o-q 1,600 1, , , ,054 1, ,566 Net Profit -15% y-o-y - 62% q-o-q Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 EBITDA Margin All 16% 20% 20% 17% 19% 21% 18% 13% 19% 18% 16% 12% Packaging 18% 18% 17% 14% 16% 17% 14% 11% 17% 15% 14% 11% P&W 12% 25% 27% 23% 25% 28% 26% 16% 22% 22% 21% 14%

70 Debenture profile Slide 70 MB 50,000 Debenture Maturity Table 40,000 30,000 25,000 25,000 25,000 40,000 30,000 Retail investors only. Unsecured, unsubordinated. No debt covenant. Thai Baht, fixed rate, and mostly 4-yr maturity tenure. Current A rating by Fitch (local). 20,000 16,000 15,000 15,000 10, NOTE: Debentures amount to 110,000 MB, as of Q4/11.

71 Segmented financials Slide 71 Sales (MB) Assets (MB) Consolidated 293, , , ,579 Consolidated 285, , , ,653 Chemicals 136, , , ,929 Chemicals 138, , , ,614 Paper 47,110 42,729 51,714 54,839 Paper 51,089 48,271 50,127 52,542 Cement 49,999 46,661 48,954 54,249 Cement 60,770 60,680 61,018 60,180 Building Materials 23,351 26,873 30,719 34,171 Building Materials 22,654 22,992 24,796 35,804 EBITDA (MB) Profit for the Period (MB) Consolidated 38,783 47,116 45,949 46,253 Consolidated 16,771 24,346 37,382 27,281 Chemicals 12,598 19,482 16,024 14,394 Chemicals 6,136 12,556 22,609 11,190 Paper 6,660 7,901 9,129 8,811 Paper 1,658 2,286 3,490 3,331 Cement 11,272 11,616 10,810 12,781 Cement 6,006 6,214 6,014 7,288 Building Materials 4,085 4,907 5,489 5,060 Building Materials 778 1,617 1,872 1,476 EBITDA Margin (%) EBITDA / Assets (%) Consolidated 12% 18% 14% 11% Consolidated 14% 15% 13% 12% Chemicals 7% 17% 9% 5% Chemicals 9% 12% 12% 8% Paper 14% 18% 18% 16% Paper 13% 16% 16% 17% Cement 23% 25% 22% 24% Cement 19% 19% 19% 21% Building Materials 16% 18% 17% 14% Building Materials 18% 21% 20% 14%