VN
Press Release
SCG Announces Q3 and 9M/2024 Results; Implements Short-Term Strategies by Reducing Organizational Costs, Shutting Down Unprofitable Businesses; While Pursuing Long-Term Strategies by Progressing Ethane Petrochemical Project in Vietnam, Promoting High-Value Low Carbon Cement and Green Polymer Growth Under Inclusive Green Growth Approach
Bangkok, November 1st, 2024 – SCG announced its Q3 and 9M/2024 results , addressing ongoing economic challenges. The company has set key targets, including 1) reducing overall organizational costs by 3.57 trillion VND (144 million USD) by 2025, 2) lowering working capital by 7.14 trillion VND (287 million USD) by Q1/2025, 3) discontinuing unprofitable businesses, and 4) executing asset divestments. SCG is also focused on reducing production costs and accelerating the use of alternative fuels, with a target of 50% usage in cement plants in Thailand. As part of its long-term strategy, SCG is increasing flexibility in its petrochemical operations in Vietnam by investing an additional 700 million USD to enable the use of ethane, thereby reducing raw material costs. This project is expected to be completed by 2027. SCG is also accelerating the development and export of Low Carbon Cement and high-demand green polymers. The ASEAN market continues to grow, strengthening in line with the Inclusive Green Growth approach. SCG is preparing to navigate escalating conflicts, heightened global economic volatility, a prolonged global petrochemical downturn that is lasting longer than expected, and fluctuations in the Thai baht .
Thammasak Sethaudom, President and CEO of SCG , said, “For the period of 9M/2024, SCG achieved revenue of 266.13 trillion VND (10.66 billion USD), close to the previous year, driven by sales volumes from SCG Chemicals and SCGP. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, including dividends received from associates) amounted to 27.1 trillion VND (1.09 billion USD), a decrease of 10% compared to the same period last year. Profit for the Period was 4.79 VND (192 million USD), down 75% from the same period last year due to operational expenses for the Long Son Petrochemicals (LSP) project, reduced chemical product price spreads, and a decrease in the share of profits from associates. Excluding extraordinary items, profit decreased by 46% compared to the same period last year. In Q3/2024, revenue was 91.57 trillion VND (3.68 billion USD), with EBITDA at 7.06 trillion VND (284 million USD). Profit stood at 515 billion VND (21 million USD), down 81% from the previous quarter, which was attributed to the foreign exchange effect from the Baht appreciation, the downwards chemicals inventory price adjustment, decreased equity income from associate companies, and seasonal dividend.
SCG expects its revenue f or 2024 to increase by 3% from the previous year, despite severe global economic volatility, a prolonged global petrochemical downturn, the Middle East conflict, increased competition from Chinese products in the domestic market, and fluctuations in the Thai baht. These challenges pose obstacles to business operations and are likely to persist for an extended period. As a result, SCG is focusing on conducting its business with increased caution and prudence. The company has set key targets, including: 1) reducing overall organizational costs by 3.57 trillion VND (144 million USD) by 2025, 2) lowering working capital by 7.14 trillion VND (287 million USD) by Q1/2025, 3) discontinuing unprofitable businesses, such as SCG Express and the digital technology business OITOLABS in India, with other operations also under review for potential discontinuation, and 4) executing asset divestments to enhance agility and focus on maintaining financial stability. Additionally, SCG is improving production efficiency to sustain a competitive EBITDA level, including initiatives to increase the proportion of alternative fuel usage in its Thai cement plants to 50% within this year and employing automation in tile production to achieve greater precision, speed, and reduced material waste. However, SCG continues to invest in ASEAN countries. Over the past nine months, sales have grown by 10% compared to the previous year, driven by contributions from Vietnam and Indonesia.
In the long term, green initiatives and Inclusive Green Growth approach present business opportunities and advantages. Therefore, the company is accelerating investment in the ethane project at Long Son Petrochemicals (LSP) to reduce raw material costs, with an investment budget of 700 million USD. This move enhances competitiveness within the global petrochemical industry and helps reduce carbon dioxide emissions in the production process. SCG is also promoting high-value green innovations such as Generation 2 Low Carbon Cement, which has been continuously well-received, achieving an 86% replacement rate of conventional cement with Low Carbon Cement. Additionally, the company is advancing green polymers under the SCGC GREEN POLYMER™ brand which shows consistent growth.
SCG Chemicals (SCGC) continues to face challenges from the petrochemical trough, product oversupply, and a global slowdown in demand for chemicals. To address this, SCGC is working to strengthen its long-term competitive edge by investing in upgrades to its LSP plant to enable the use of U.S.-sourced ethane. This move will help lower production costs, as ethane is a competitively priced raw material in the global petrochemical industry, and it will also increase raw material flexibility in production. The project involves an investment of approximately 700 million USD, primarily allocated for constructing ethane storage tanks and supporting facilities for raw material reception. The project is expected to be completed by the end of 2027.
The LSP project began commercial operations on September 30, with an initial production output of 74,000 tons during the trial phase. SCGC is focused on managing the production of all three plants—Rayong Olefins (ROC), Map Ta Phut Olefins (MOC), and LSP—to align with raw material prices, product demand, and the global economic situation, maximizing competitiveness. The LSP plant has temporarily halted operations to manage overall business costs, with plans to reassess operations when conditions are more favorable.
In terms of green innovation, SCGC GREEN POLYMER™ is progressing well. Recent milestones include partnerships with industry leaders such as Bangchak and Panjawattana Plastic to produce the eco-friendly “FURiO Ultra HD diesel additive packaging” made from post-consumer materials. This packaging has been specially formulated for strength, durability, and safety, with certification from the Global Recycled Standard (GRS). Additionally, SCGC has collaborated with Kao Industrial, a leading Japanese company, to develop sustainable shampoo bottles made from high-quality recycled plastic, which are 100% recyclable.
Cement and construction related businesses shows continued growth driven by the government’s acceleration in budget disbursement for infrastructure projects. Meanwhile, Thailand’s building materials market remains sluggish due to a slowdown in project activity and high household debt.
SCG Cement and Green Solutions is advancing its construction technology, particularly in 3D printing, by developing special cementitious materials that harden and provide compressive strength to meet global market demand. Recently, it signed an agreement with Samsung E&A from South Korea to integrate innovative technologies that enhance efficiency, speed, accuracy, reduce costs and construction waste, and address the skilled labor shortage in the construction industry. This collaboration emphasizes the use of high-quality, patented 3D Printing Mortar, which has been developed over the past decade. The technology consultation provided supports the construction of highly complex structures, including multi-storey buildings, especially in Saudi Arabia. SCG International has already delivered its first batch of 3D Printing Mortar to Saudi Arabia, with plans to expand into South Asia, the Middle East, and Africa (SAMEA) to support business and construction growth in these regions. Additionally, SCG promotes eco-friendly housing solutions, such as the “CPAC Small Concrete Mixer Trucks” for small areas, which reduce noise pollution, and the “CPAC Low Carbon Concrete,” which helps reduce PM 2.5 issues. In collaboration with AP Thailand, this Low Carbon Concrete will be used in over 56 housing projects by 2024, reducing carbon dioxide emissions by 1,112,600 kg CO 2 , equivalent to planting 117,116 trees.
For cement products, SCG has received the international Environmental Product Declaration (EPD) across all product groups. Notably, the Tiger Mortar ready-mixed cement products are the first to receive this recognition, covering 10 mortar products, 8 SCG and Tiger cement products, and 27CPAC Ready-Mixed concrete products. (The Ready-Mixed concrete certification is expected to be granted in November 2024.)
SCG Distribution and Retail is actively expanding into the high-potential retail market for home products and services, which continues to experience growth. The company has recently accelerated the expansion of Mitra10, a modern trade store in Indonesia, by opening two additional branches in Jababeka and Samarinda, with plans to open four more branches by 2024. The expansion will also include a wide range of affordable house brand products through domestic distribution channels. These include the UNIX brand for decorative products, TOPSTEEL for steel products, and TOPPRO for tools and equipment. Additionally, Q-Chang, the platform that connects customers with skilled handymen and offers comprehensive home care services, continues to grow steadily. Currently, the platform has a network of over 10,000 expert handymen, serving more than 300,000 customers nationwide. The company is strengthening its service capabilities with cutting-edge technology to meet all customer needs, while also welcoming strategic partnerships to enhance business expansion and drive efficient growth in the future.
SCG Smart Living advances landscape decoration innovations by contributing to a new landmark in Roi Et province, establishing a distinctive identity in the northeastern region of Thailand. The design incorporates cultural elements and emphasizes eco-friendly materials, with paving blocks and concrete tiles made from 40% recycled materials. These products are certified by SCG Green Choice and have a Carbon Footprint certification from the Thailand Greenhouse Gas Management Organization (Public Organization). Examples include Pavement series, Serena series, as well as the latest concrete floor tiles: UVT series. SCG also promotes prefabricated products and quick installation systems to meet the needs of customers repairing flood-damaged homes, offering items like fascia boards, pre-colored siding and decorative panels, and durable, moisture-resistant materials like SCG Smartboard panels.
SCG Decor (SCGD) focuses on reducing costs and increasing the use of clean energy. The installation of a hot air generator at the Nong Khae Industrial Estate has resulted in annual cost savings of 12 billion VND (482,668 USD). SCGD is also aggressively expanding into the Vietnamese market, driving continuous growth. Recently, it has upgraded its ceramic tile production line to manufacture large-sized glazed porcelain tiles, with a production capacity of 2.5 million square meters. In addition, SCGD has expanded distribution channels and offered a variety of products. Notably, SCGD has launched the first V-Ceramic store in Southern Vietnam to cater ceramic tiles and sanitary ware.
Công ty năng lượng sạch – SCG Cleanergy has seen steady growth due to increasing demand and the promotion of clean energy in the country. The company now boasts a total production capacity of 526 megawatts from both public and private sector projects. Recently, SCG Cleanergy, in collaboration with Kasikornbank, signed an agreement for a 1.07 trillion VND (43 million USD) for green loan to invest in various Solar Private Power Purchase Agreement (PPA) projects. These projects will involve the installation of solar systems for organizations and companies, with a combined production capacity of 88.5 megawatts. Additionally, the implementation of Smart Microgrid technology is underway, with plans to expand this solution to Toyota plants in the Amata City Industrial Estate in Chonburi Province. Progress on the installation of the Rondo Heat Battery, which stores heat from clean energy, at the SCG Cement Plant in Saraburi Province has reached over 45%. The project’s design has been completed, and production of the thermal media for heat storage has begun, with machinery expected to start operating around the second quarter of 2025.
SCGP continues to actively expand consumer packaging and solutions business, such as foodservice packaging and medical supplies and labware. SCGP has recently partnered with Once Medical Company Limited to develop syringes and other high-quality medical supplies. This collaboration aims to enhance the production capabilities of VEM Thailand while strengthening and expanding its customer network. Additionally, SCGP is focused on cost management and increasing profitability by adjusting portfolio to boost sales of high-value products. This includes increasing exports of packaging paper to high-demand markets, optimizing transportation costs, increasing of domestically recovered paper usage, and growing its recovered paper sourcing network. SCGP is also improving production efficiency by utilizing advanced technology and artificial intelligence to maximize resource use and continuously reduce energy costs.
For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in 9M/2024 recorded a 13% y-o-y increase, amounting to 50.71 trillion VND (2.03 billion USD). This growth was primarily driven by improved market conditions in regional operations, particularly in Vietnam and Indonesia. This contributed to 19% of SCG’s total Revenue from Sales. This figure includes sales from both local operations in each ASEAN market and imports from Thai operations.
As of 30 September 2024, SCG’s total assets amounted to 660.86 trillion VND (26.88 billion USD). Of these, the total assets of SCG in ASEAN (ex-Thailand) were 294.71 trillion VND (11.99 billion USD), or 45% of SCG’s total consolidated assets.
For SCG in Vietnam, the company reported Revenue from Sales of 25.67 trillion VND (1.03 billion USD) for 9M/2024, representing a 17% y-o-y increase. This growth was primarily driven by the increased sales from SCG Chemicals (SCGC).
The Long Son Petrochemicals (LSP) project, Vietnam’s first fully integrated petrochemical complex, officially commenced its commercial operations on September 30 and produced 74,000 tons of plastic resins, with sales volume during the trial period. However, in Q3/2024, if excluding a non-recurring financial gain from unwinding the interest rate swap (IRS) at LSP of 1.56 trillion VND (61.5 million USD), SCGC’s Loss for the Period was approximately -2.63 trillion VND (-105 million USD), resulting from the foreign exchange effect from the Baht appreciation, and decreased equity income from associate companies. For LSP, Loss for the Period in Q3/2024 without IRS was approximately -1.56 trillion VND -1.56 trillion VND (-62.9 million USD). During 9M/2024, LSP realized fixed costs of downstream operations, mainly depreciation and interest. In the fourth quarter of this year, additional fixed costs from upstream productions will be realized after commercial operations. Due to the current situation with the continued global petrochemical industry downturn, global oversupply, and low demand for petrochemical products, LSP has made the decision to temporarily shut down its operations. The project will resume its activities once the petrochemical market shows signs of recovery. This strategic decision reflects the project’s ability to adapt to market dynamics and navigate challenging conditions. By temporarily suspending operations, LSP aims to position itself for future success when the petrochemical market rebounds.
In the meantime, SCGC is actively progressing an investment project to improve the production process of LSP. This project aims to enhance the long-term competitiveness of the business by increasing LSP’s operational flexibility. It involves importing ethane gas from the United States as a raw material, alongside the current use of naphtha and propane. Ethane has an average price approximately 40% lower than naphtha and propane over the past three years, enabling better cost management and mitigating raw material price fluctuations. Additionally, the increased use of ethane will reduce carbon dioxide emissions and minimize by-products. LSP’s core strengths lie in its ability to accommodate gas-based raw materials, with a central utility system ready for ethane gas storage tanks and pipelines. The investment budget of 700 million USD will mainly be used for constructing ethane gas tanks and supporting facilities. The project is expected to be completed by the end of 2027, and once operational, LSP will produce olefins and polyolefins to meet the high demand for consumer goods in Vietnam. The project will be managed to align with raw material prices, product demand, and the global economic situation, ensuring maximum competitiveness and production efficiency across all SCGC’s factories in Thailand and Vietnam.
For SCG Decor (SCGD), the company is advancing its market expansion in Vietnam to achieve continuous growth. Recently, the company has accelerated the conversion of its ceramic tile production line to large-sized porcelain tiles with a production capacity of 2.5 million square meters. Additionally, SCGD is expanding its distribution channels to offer a diverse range of products that meet customer needs. In a recent development, SCGD has partnered with VAN PHUC TRADING to open the first V-Ceramic store in southern Vietnam, specializing in the sale of ceramic tiles and sanitary ware.
In addition to promoting sustainable economic growth for Vietnam, SCG is dedicated to environmental, social, and governance (ESG) initiatives, in line with its business purpose of “Inclusive Green Growth”. SCG Color Roof has become Vietnam’s first concrete roof company to achieve the Singapore Green Label. To be certified as a green product, SCG Color Roof underwent a rigorous testing and assessment process to meet stringent criteria related to product quality, health, environmental impact, and product life cycle. This recognition highlights SCG’s commitment to ensuring the highest standards of quality while fulfilling its environmental responsibilities for customers’ benefits. SCG also empowers youth through the Packaging Speak Out 2024 competition by SCGP which has officially launched in Vietnam for the third year. In collaboration with the Ho Chi Minh City Student Assistant Center (SAC), this year’s innovative competition encourages young Vietnamese designers to create cutting-edge and sustainable packaging solutions under the theme “Packaging for a Brighter Tomorrow”.
In terms of reducing social inequality, SCG’s efforts included the 17 th SCG Sharing the Dream project, which awarded 100 scholarships in Vietnam worth 1.5 billion VND (approximately 59,000 USD), and the Learn to Earn project, which provided opportunities for young people to secure better jobs. The company also supplied clean water to the community in Quang Nam through the Loving Water for the Future project and donated 2.1 billion VND (approximately 82,700 USD) to the communities affected by Typhoon Yagi. Through these initiatives, SCG underscores its commitment to sustainable development and community upliftment in Vietnam.
SCG Management Team
Mr.Thammasak Sethaudom, President and CEO of SCG
SCG’s short-term & long-term strategies
SCGC Green Polymer
SCGC GREEN POLYMER – Collaborate with partners to produce eco-friendly plastic packaging
