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Business Overview

     
Cement-Building Materials Business
 

 

SCG's ASEAN expansion strategy has resulted in business operations in multi-location approach. The utilization rate maximization of the new green field cement plants in Cambodia and Indonesia is further assisted by the integration to the downstream subsidiaries. At the same time, the Thai operations continue to operate for both domestic demand and the pre-market efforts for the regional countries while placing an increased emphasis towards the development of new products and services to serve customer needs.

Operating Results

  • Domestic demand for cement declined compared with 2016. Domestic demand came from government infrastructure projects, while demand from the household and private sectors witnessed some growth slowdown. Cement exports increased compared with the previous year.
  • Total revenue for SCG Cement-Building Materials was 175,255 Million Baht, a 3% increase from the previous year. EBITDA was 22,319 Million Baht, a drop of 6% from 2016, while profit was down 15% to 7,230 Million Baht.

Business Challenges

  • Domestic demand for cement and building materials fell due to lower consumer confidence and declining purchasing power. However, SCG Cement-Building Materials managed to maintain its leadership status in the building materials market through the continue development of high value-added products and services.
  • Overall, business operations in ASEAN grew at a satisfactory rate, thanks to the expansion of the cement and building materials markets in several countries. Cambodia, in particular, witnessed a steady growth driven by housing and commercial building projects and the government’s large-scale infrastructure projects, such as the road network. Meanwhile, the construction market in Indonesia picked up from last year as a result of the government’s continuous investment in infrastructure, including toll roads, airports, dams and high-speed trains. In Myanmar, the growing construction market was led by private direct investment, especially in special economic zones. The Vietnam construction market grew slightly due to government investment in large projects such as bridges and sea ports. Similarly, the Philippines government increased infrastructure spending to spur growth in its local construction industry and domestic economy.

Organizational Efforts to Embrace Change

Human Resources

  • Enhancing employees’ capabilities in order to support business operations amidst a changing working environment. Also, strengthening the company’s working culture to support and align with the business direction, such as using customer-centric approaches, and working in a more “hands-on” manner.
  • Adopting the concept of “Open and Challenge” to provide opportunities for employees to demonstrate their potential, thereby empowering them to develop technology and innovations that lead to high value-added products and services for the benefit of customers, society, and stakeholders.

Products and Innovation

  • Concrete Fabric: Building on the success of the development of concrete fabric, the innovation was applied in projects including the Baan Sa Phae reservoir in Lampang province, and the Tamot check dam in Phatthalung province. The objective of the application of the two dams was to build a market and provide knowledge for users in preparation for a commercial launch.
  • 3D Printing Mortar: Extrusion 3D Printing is a new construction fabrication technology. In the future, it is anticipated that this technology will be able to build entire houses using automation, thereby requiring less labor than traditional construction methods. As a result, SCG has invented its own 3D printing technology compatible with SCG’s cement products. This will not only help solve labor shortage problems, but also increase efficiency by making installation faster and more convenient, enabling design flexibility, and handling more complicated projects.
  • Research and development in innovation for the Smart Ventilation and Air Quality control systems for homes to increase the quality of living: The combination of the Passive Stack Ventilation innovation and solar-powered ventilation fans controlled by a smart system can help create a more comfortable living environment and reduce built-up heat. Furthermore, new products were developed to improve indoor air quality by aiding homeowners in monitoring and controlling humidity levels, temperature, CO2 and volatile organic compounds (VOCs).
  • SCG Eldercare Solution: A series of housing innovations for the elderly dedicated to offering maximum safety throughout the house, as well as bedding solutions that ease joint and muscle pain in the lower body. For example, beds and chairs designed to make it easier to arise, special mattress to ease bedsores, bedside toilets, and an intelligent lighting system that automatically illuminates when getting up from bed at night.
  • Research and Development in wood substitute materials to cover more outdoor usage, such as wall paneling and one-piece skirts, made from the extrusion technology and the existing fiber-composite technology.

Sustainable Development in Business Operations

  • SCG Cement-Building Materials Co., Ltd. Invested in the installation of 500kW solar cell systems capable of generating power from the sunlight about 660 kWh per year, thereby reducing greenhouse gas emissions by 384 kg carbon dioxide per year. The investment totaled 15 Million Baht and will result in energy savings of 2 Million Baht per year.
  • Siam Sanitary Ware Industry Co., Ltd. took part in soil improvement projects in Sara Buri Province, providing clay scrap, which are byproducts from the sanitary ware production process, as fertilized soil for local communities including Village No. 15 and Kaeng Khoi. The soil was also provided to the Royal Thai Army Cavalry Center for its campaign to plant vetiver ground covers for soil and water conservation. The campaign, which was coordinated with the Land Development Station in Sara Buri province, was held in honor of the 65th birthday celebration of Thailand’s King Maha Vajiralongkorn. It is planned to expand the project further in Sara Buri province by collaborating with other government agencies.
  • SCG Cement-Building Materials and its subsidiaries engaged in activities and received accreditations relating to sustainable development:
    • SCG Cement-Building Materials Co., Ltd., a manufacturer of SCG Portland Cement and Tiger Brand Cement, received carbon footprint labels on 17 products and carbon footprint reduction labels on 17 products from the Thailand Greenhouse Gas Management Organization. In addition, SCG Portland Cement became the first and only cement product to be certified with the “Green Label” from the Thailand Environment Institute.
    • The Siam White Cement Co., Ltd., a manufacturer of white cement, received carbon footprint labels on 10 products and carbon footprint reduction labels on 3 products from the Thailand Greenhouse Gas Management Organization.
    • Concrete Product and Aggregate Co., Ltd., a manufacturer of ready-mix and instant concrete products, received carbon footprint labels on 10 products and carbon footprint reduction labels on 3 products from the Thailand Greenhouse Gas Management Organization.
    • The Siam Ceramic Group Industries Co., Ltd. received carbon footprint reduction label for SCG Tiles for floors and walls from the Thailand Greenhouse Gas Management Organization, as well as received a carbon reduction label from Thailand Environment Institute.
    • Siam Sanitary Ware Fittings Co., Ltd. saw its COTTO line become certified with the carbon reduction label from the Thailand Environment Institute. This marks 9th consecutive year that the range of faucet products has received the designation.

SCG Cement-Building Materials Consolidated Financial Information

  2017 2016 2015 2014 2013
Information from Statements of Financial Position
Current assets 56,466 58,702 56,384 53,566 51,935
Assets 213,134 203,068 187,976 168,662 155,711
Liabilities 106,913 103,198 105,242 85,937 72,186
Shareholders' equity 106,221 99,870 82,734 82,725 83,012
Information from Income Statements
Revenue from sales 175,255 170,944 178,988 185,423 174,642
Cost and expenses 169,431 163,956 168,306 170,565 158,350
Profit for the year * 7,230 8,492 10,250 13,180 16,092
EBITDA ** 22,319 23,639 24,395 26,683 26,274

* Profit for the year attributable to owners of the parent.
** Profit before finance costs, income tax expense, depreciation and amortization and includes dividends from associates.