Analyst Conference Q1/13 Wednesday, April 24, 2013
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
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
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 120,000 100,000 102,884 100,541 104,286 99,890 109,439 80,000 60,000 40,000 20,000 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13
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 10,301 466 12,178 2,686 11,520 11,717 138 255 12,858 431 +10% 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
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 1,500 959 576 1,000 500 0 344 475-131 611 567 144 423 1,264-305 1,223-500 -920-1,000-309 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13
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 10,000 +27% 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
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)
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
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
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 5,000 0 7,700 19,000 13,400 14,600 16,700 22,500 31,200 2006 2007 2008 2009 2010 2011 2012 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%
EBITDA on Assets, and EBITDA Margin slide 12 Percent (%) 35 EBITDA on Assets 30 25 20 15 10 11 14 16 16 17 18 21 29 27 26 20 14 15 13 12 12 13 5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1/13 EBITDA Margin (%): 24 23 27 23 22 22 23 26 22 19 16 14 18 14 11 10 11 EBITDA on Assets = EBITDA / Consolidated Assets EBITDA margin = EBITDA from Operations / Consolidated Sales
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
Net Debt Increased by 4.0 Billion Baht from Q4/12. slide 14 Billion Baht 300 250 246.7 200 189.5 179.9 175.8 150 100 50 148.4 126.3 114.9100.6 100.5 103.1 99.9120.5 122.0 83.6 112.1 137.0 141.0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1/13
CAPEX and Investments Amounted to 5,566 MB, of which approximately half was for capacity expansion projects. slide 15 Billion Baht 70 60 61.3 50 40 30 20 10 0 47.0 42.4 34.5 32.0 27.2 23.6 19.1 18.4 10.0 10.3 11.9 14.0 8.5 3.5 5.7 5.6 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 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.
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 2,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1/13 685 NOTE: Interest & financial charges include FX gain/loss transactions.
Net Debt on EBITDA slide 17 Times (x) Net Debt to Equity = 0.9X
Interest Coverage Ratio slide 18 Times (x) Note: -Interest Coverage Ratio = EBITDA / Interest Expense -Interest Coverage Ratio excludes the effect of FX gain/loss.
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.
HVA Progress slide 20
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
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
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.
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% 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
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
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
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
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
Updates and Outlook slide 29 Updates: Final contractor selection for the Indonesian cement plant, which are expected to start up in mid-2015. Consolidated of Prime Group (Vietnamese ceramics) in Q2/13. JV with Nichirei Logistics (Japan) in temperature sensitive logistics, with services beginning mid-2014. 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.
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
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.
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. $/ton 1,200 1,000 HDPE-N Gap +39% y-o-y +16% q-o-q PP-N Gap +42% y-o-y +12% q-o-q slide 32 800 600 Naphtha PP-N HDPE-N 400 200 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date HDPE-Naphtha 375 494 428 449 521 577 Spread ($/ton) 437 PP-Naphtha 408 551 529 519 581 620 Spread ($/ton) 502 Note: Prices refer to SEA regional prices
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. $/ton 1,750 1,500 PVC Gap - 4% y-o-y - 10% q-o-q slide 33 1,250 1,000 750 500 250 Ethylene PVC VCM EDC 0 PVC-EDC/C2 424 518 463 452 405 395 Spread ($/ton) 464 Prices refer to FE regional prices Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date
Benzene & Toluene BZ-N margins were stable q-o-q, but BZ prices are on the downward trend from weaker SM demand. slide 34 $/ton 1,800 1,600 1,400 1,200 1,000 800 Benzene Gap + 171% y-o-y + 1% q-o-q Benzene Toluene Naphtha 600 400 200 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 to date BZ-Naphtha 155 223 268 415 420 430 TL-Naphtha 214 262 251 372 334 301 BZ-Spread ($/ton) 265 TL Spread ($/ton) 275 Note: Prices refer to SEA regional prices
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 1,000 500 0 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 140 120 100 80 60 40 20 0
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 36 + 3% y-o-y Ton 600,000 + 7% q-o-q 500,000 400,000 433,000 385,000 464,000 416,000 446,000 433,000 446,000 300,000 200,000 100,000 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13
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 172,000 175,000 178,000 170,000 178,000 172,000 178,000 150,000 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
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
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 39 + 262% y-o-y MB 4,000 3,000 EBITDA Dividend 2,868 3,036 111 + 77% q-o-q 3,235 312 3,235 312 2,000 1,000 0 1,830 2,538 36 2,925 2,923 894 466 1,794 428 330 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 2,923 894 466 428 Q1/12 Q1/13 EBITDA 1% 1% 6% 4% 5% 1% 5% Margin Note: EBITDA = EBITDA from Operations + Dividend from Associated Companies
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 0-1,000 Equity Income 2,629 2,270 144 576 1,240 476 2,126 185 2,053 764 490-84 -305-921 Q1/12 Q2/12-1,005 Q3/12 Q4/12 Q1/13 2,629 576 1,240 476 2,053 764 Q1/12 Q1/13-2,000 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q1/12 Q1/13
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.
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
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 505 510 505 505 515 505-525 450 300 Wastepaper (AOCC) 235 230 190 220 215 215-235 150 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr 2010 2011 2012 2013 Note: regional prices
Packaging Paper: Domestic sales volume increased 9% q-o-q from improved seasonal demand in all segments. slide 44 000 tons 000 tons 500 450 400 350 300 442 460 460 450 458 102 111 109 102 99 52 53 62 66 53 250 200 150 288 296 289 282 306 100 50 +4% y-o-y 500 +2% q-o-q 450 400 350 300 250 200 +6% y-o-y +9% q-o-q 150 100 50 442 102 (23%) 52 (12%) 458 99 (21%) 53 (12%) (65%) 288 306 (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
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 855 885 830 820 830 830-850 600 Short Fiber 690 690 630 650 650 630 620 605 670 655 670-690 655-675 300 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr 2010 2011 2012 2013 Note: regional prices
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 46 000 tons 140 126 120 30 100 119 27 122 24 115 26 124 28-2% y-o-y +8% q-o-q 000 tons 140 120 100 126 124 30 28 (24%) (23%) 80 80 60 40 96 92 98 89 96 stable y-o-y +8% q-o-q 60 40 96 Stable 96 (76%) (77%) 20 20 0 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 0 Q1/12 Q1/13 Domestic Export
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 2,273 851 Profit for the period (Right) 1,986 598 +26% y-o-y +40% q-o-q 1,342 +33% 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
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 2,000 0 1,490 1,706 2,146 Q1/12 Q4/12 Q1/13 +44% y-o-y +26% q-o-q 6,000 4,000 2,000 0 4,314 4,709 4,224 725 280 643 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
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.
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
Summary slide 51 Thank You For further details, please contact invest@scg.co.th