2010 - Dec - Tokyo - Nomura - vF .Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ... paper’s

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Text of 2010 - Dec - Tokyo - Nomura - vF .Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ... paper’s

  • Nomura Investment ForumNovember 30 - December 2, 2010

    Mandarin Oriental Tokyo

  • Slide 2

    AGENDA

    Financial Updates

    Medium-Term Outlook & Strategy

    Business Updates Business Updates

    Sustainability

    Appendix

  • Slide 3

    NET SALES & NET PROFIT (9M/10)

    Sales Segments225,071 MB (+27% y-o-y)

    Net Profit Segments20,709 MB (+9% y-o-y)

    SCG Investments net profit is primarily from 1) dividend income of other companies 2) equity income of associated companies.

  • Slide 4

    EXPORT DESTINATIONS (9M/10)Approximately 69% of SCGs exports are to Asia.

    Export DestinationsSales Destinations

    China/HK14%

    N. America2%

    EU2%

    N. Asia7%

    Oceania6%

    M/E6%

    Africa10%

    Others5%

    S. Asia10%

    ASEAN38%

    Regional Operations are subsidiaries in ASEANExport Destinations are from subsidiaries in Thailand

  • Slide 5

    EBITDADropped 8% y-o-y in light of the current chemicals trough.

    4,267 6,5717,771

    6,762

    4,577

    3,07040,000

    50,000

    60,000 MB

    37,188

    54,626 53,50757,151

    50,008

    38,783

    -8% y-o-y47,116

    34,221($1,140 Mill)

    28,58433,704

    50,359 46,936 49,380 43,24634,206

    44,04632,043

    1,8343,484 4,577 2,178

    0

    10,000

    20,000

    30,000

    40,000

    2002 2003 2004 2005 2006 2007 2008 2009 9M/10

    Note: EBITDA includes dividend received

    30,418

    - Dividend from associated companies- EBITDA from Operations

    34,221

  • Slide 6

    NET PROFITEarnings grew 9% y-o-y from improved performance in the paper and building materials.

    2,776

    1,5234,511

    25,000

    30,000

    35,000

    40,000MB

    19,954

    36,483

    32,23629,451 30,352

    +9% y-o-y

    20,709

    24,346 ($690 Mill)

    11,14217,806

    33,70730,713

    25,841

    16,479

    3,462

    2,148292

    0

    5,000

    10,000

    15,000

    20,000

    2002 2003 2004 2005 2006 2007 2008 2009 9M/10

    14,604

    19,954

    EPS 12.2 16.6 30.4 26.9 24.5 25.3 14.0 20.3 17.3(Bt/sh)

    16,77120,709

    - Divestment gains

  • Slide 7

    NET DEBT & CAPEX:With CAPEX of 141 Billion Baht ($4.7 Billion) during the past 5 years, net debt increased 23 Billion Baht ($800 Million).

    Billion Baht

  • Slide 8

    NET DEBT on EBITDA RatioLeverage is expected to drop, following the ramp-up of SCGs recently completed projects.

    Times (x)

  • Slide 9

    FINANCIAL HIGHLIGHTSStrong balance sheet.

    Highlights

    Cash on-hand of 25,540 MB ($0.85 billion) at the end of Q3/10.

    Full subscription of the 5,000 MB debenture (4 yr, 3.85%) issued on Oct 1/10 to refinance the 5,000 MB tranche (4 yr, 6.25%) due.on Oct 1/10 to refinance the 5,000 MB tranche (4 yr, 6.25%) due.

    Outlook

    Solid financial position, despite the chemicals trough in margins.

    Winding down the current CAPEX cycle, with total FY2010 expenditure of approximately 20,000 MB.

    Active FX hedging management, accounting for approximately half of the net FX exposure.

  • Slide 10

    AGENDA

    Financial Updates

    Medium-Term Outlook & Strategy

    Business Updates Business Updates

    Sustainability

    Appendix

  • Slide 11

    SINCE 2006...

    SCG has invested 141,000 MB ($4.7 Billion) during 2006 - 2010, and is completing the current CAPEX cycle.

    Accomplishments include:

    1) More than doubling of Chemicals capacity. 1) More than doubling of Chemicals capacity.

    2) Green field expansions in the Cement and Paper businesses.

    3) Acquisitions in the Paper, and Building Materials businesses.

    Financing was with cash flow, and project cost was competitive.

  • Slide 12

    SCGs INCREMENTAL CAPACITY

    HVA

    Note: HVA investment is present in all business units.

  • Slide 13

    MEDIUM-TERM OUTLOOK & STRATEGY Whats next for SCG?

    1. Regional investments.

    2. Increased sales of HVA (High Value Added Products and Services). Services).

  • Slide 14

    GROWTH OF HVA

  • Slide 15

    AGENDA

    Financial Updates

    Medium-Term Outlook & Strategy

    Business Updates Business Updates

    Sustainability

    Appendix

  • Slide 16

    DIVERSIFIED CHEMICALS EARNINGSSCG Chemicals s net profit contribution in 9M/10.

    25%

    HVA (Subsidiary)PEPPPVC

    Equity Income (Associates)LLDPEPSMMACast Sheet 25%

    25%

    50%

    Commodity (Subsidiary)PEPPPVC

    Cast SheetPP CompoundPTA/PET Others

    HVA = High-Value Added ProductsHVA are also produced at the associates level.

  • Slide 17

    1,200

    1,600

    2,000

    HDPE

    HDPE NAPHTHA MARGINSmargins have already troughed at $378/ton in July/10.

    $/tonHDPE - Naphtha

    0

    400

    800

    1,200

    Note: Regional Prices

    Ethylene

    Naphtha

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 to date

    562 583 731 724 681 611 692 644 732 636 694 537 523 630 640 529 602 477 455

    650 659 650 581 511

    HDPE Naphtha $/ton2006 2007 2008 2009 2010

  • Slide 18

    1,400

    1,750

    2,100

    PP

    PP NAPHTHA MARGINSPP is outperforming HDPE, with firm margins at the $600/ton level.

    $/tonPP - Naphtha

    0

    350

    700

    1,050Propylene

    Naphtha

    568 575 748 728 673 617 688 587 643 697 792 465 488 604 576 483 643 638 611655 644 649 574 630

    Note: Regional Prices

    PP Naphtha $/ton2006 2007 2008 2009 2010

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4to date

  • Slide 19

    6,000

    8,000

    10,000

    12,000

    CHEMICALS EBITDA grew 3% q-o-q on higher sales volume, but down 28% y-o-y following the trough in HDPE margins.

    MMBB

    -28% y-o-y+3% q-o-q

    EBITDA

    5,951

    4,429 3,8535,357

    2,773 3,441 3,722

    751 1,210594

    3278

    527727 567

    0

    2,000

    4,000

    6,000

    Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10

    EBITDA Margin 21% 16% 18% 12% 10% 9% 9%

    Note: EBITDA = EBITDA from operations + dividend from associated companies

    4,429

    5,180 +3% q-o-q

    - Dividend fromassociates

    - EBITDA fromsubsidiaries

    5,0635,951

    3,288- EBITDA

    3,3004,168 4,289

  • Slide 20

    5,000

    6,000

    7,000

    CHEMICALS NET PROFIT25% q-o-q growth, with gains from subsidiaries and associates, despite the current trough in HDPE margins.

    MB

    - 8% y-o-y+25% q-o-q

    Net Profit

    4,170

    1,722 1,7202,535

    1,345 1,371 1,6891,982

    7561,546

    1,635

    1,297 1,6741,389

    1,863

    0

    1,000

    2,000

    3,000

    4,000

    Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10

    2,478 - Equity Income from associates

    - Subsidiaries Net Profit

    2,642

    4,170

    3,266 3,045

    - Net Profit

    3,078

    3,845

  • Slide 21

    CHEMICALS OUTLOOK

    New global ethylene capacity of approx 6 MT in FY2011, compared to 12 MT in FY2010.

    Continued trough in HDPE margins, while PP should continue to outperform. to outperform.

    Healthy PVC margins, driven by Chinas power rationing which has decreased the competitiveness of non-ethylene based PVC producers.

    Improved PTA and MMA margins.

    Maintenance shutdown (40 days) of ROC (1st cracker), while MOC (2nd cracker) will continue to ramp-up its utilization.

  • Slide 22Million Ton

    Industry Production

    Industry Capacity

    39 MT

    56 MT

    70-75% utilization

    DOMESTIC CEMENT INDUSTRYDomestic demand growth in 9M/10 registered 12% y-o-y.

    Total Thai Demand

    Total Thai Export15 MT

    24 MT

    Total Domestic Growth Rate (% y-o-y)- 10% -45% 15% -8% -1% 23% 6% 11% 9% -2% -6% -6% 1%

    9M/10+12%

  • Slide 23

    DOMESTIC CEMENT PRICESPrices are expected to firm up, due to cost push factors.

  • Slide 24

    CEMENT EXPORTSExport prices have increased to $42/ton in Q3/10.

    Million Ton $/ton1998 to 2009 Q1/09 Q3/10

  • Slide 25

    3,381

    2,880 2,785 2,570

    3,301

    2,6162,486

    3,000

    4,000

    CEMENT FINANCIALSEBITDA and Net profit have dropped y-o-y, primarily due to lower domestic prices.

    EBITDA-11% y-o-y-5% q-o-q

    EBITDA & Net ProfitMB

    1,963

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