Analyst Conference Q1/11

Wednesday, April 27, 2011

Ranked Gold Class: 2010, 2009, 2008 Member since: 2004

AGENDA
slide 2

I.

II. III. IV. V. VI.

Consolidated Results - Q1/11 Consolidated Results - Financial Updates Cement Chemicals Paper Medium Term Strategy Appendix

Revenue from Sales: Increased 35% y-o-y and 21%

q-o-q, with sales growth from all businesses.
slide 3

+ 35% y-o-y

MB

+21% q-o-q

EBITDA: Grew 23% y-o-y, boosted by volume from

the second chemicals complex, and 15% q-o-q, after completion of the first chemicals complex major turnaround.
MB 18,000 EBITDA
+23% y-o-y +15% q-o-q

slide 4

15,000 12,000 9,000

10,462

10,995 533

12,265 991

11,728 10,961 654

1,828

13,519 698

Dividend from Assc.

11,274 10,307 9,900

12,821

6,000 3,000 0 Q1/10

Note:

EBITDA from Operations

+23% y-o-y +30% q-o-q

Q2/10

Q3/10

Q4/10

Q1/11

EBITDA = EBITDA from Operations + Dividend from Associates

Equity Income: Increased 37% y-o-y and 62% q-o-q,

with increased contribution from chemicals associates.
slide 5

MB

+37% y-o-y +62% q-o-q 3,041 2,382 1,906

1,674 1,389 1,863 1,415

3,500 3,000 2,500 2,000 1,500 1,000 500

551 517 519 462 446

2,225

1,877
2,595

0 Q1/10 Q2/10 Q3/10 Chemicals Non-Chemicals Q4/10 Q1/11

Net Profit: Net Profit grew 34% y-o-y, driven primarily

by chemicals earnings.
slide 6

MB

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Q1/10 Q2/10 Q3/10
6,857 7,295 6,557

16,673

Net Profit
+34% y-o-y

Non-recurring Item

9,963

-45% q-o-q 9,207

6,710

Q4/10

Q1/11

Net Profit Segmentation:

Chemicals portion grew to 50% in Q1/11, following increased sale volume and equity income.
Q1/10 6,857 MB Q1/11 9,207 MB (+34% y-o-y)
Distribution 5% Building SCG Materials Investment 5% 6% Chemicals Subsidiaries 22% Cement 23%

slide 7

Paper 11%

Chemicals Equity Income 28%

SCG Investments net profit is from: 1) dividend income (stake of <20%) 2) equity income (stake of 20% to 50%)

Export Destinations in Q1/11: Domestic sales grew

to 66% with sales volume from the second cracker, while ASEAN accounted for 41% of exports.
Revenue from Sales
Export Destinations Export Destinations
Africa 5% M/E 4% E. Europe 4% EU 4% S. America 3% N. America 2% Oceania 4%

slide 8

ASEAN 41%

N. Asia 5% S. Asia 8% China 20%

ASEAN Operations

- consolidated subsidiaries in ASEAN.

Export Destinations - from Thailand.

EBITDA on Assets, and EBITDA Margin

slide 9

Percent (%)

35 30 25
21

EBITDA on Assets
29 27 26 20 14 15 14

20
16 16

17

18 13

15 10 5

14 11

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1/11

EBITDA Margin (%)

24 23 27 23 22 22 23 26 22 19 16 14 18 14 14

EBITDA on Assets = EBITDA / Consolidated Assets EBITDA margin = EBITDA from Operations / Consolidated Sales

AGENDA
slide 10

I. Consolidated Results - Q1/11 Consolidated Results - Financial Updates II. Cement III. Chemicals IV. Paper V. Medium Term Strategy VI. Appendix

Net Debt:
Dropped slightly from Q4/10.
slide 11

Billion Baht

CAPEX and Investments:

Amounted to 3,119 MB in Q1/11.
slide 12
Billion Baht
70

61.3
60

50

42.4
40

34.5 23.6 27.2 18.4

30

20

19.1 10.0 3.5 10.3 8.5 11.9 5.7

2002 2003 2004 2005

14.0 3.1
2006 2007 2008 2009 2010 Q1/11

10

1997

1998

1999

2000

2001

- CAPEX includes debottlenecking, expansion projects, and major turnaround. - Investments are acquisitions and purchase of shares.

Net Debt on EBITDA Ratio

slide 13

Times (x)
10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1/11

9.2 7.7 6.4 5.8 5.1 4.1 3.1 1.8 1.9 1.8 2.0 3.1 2.6 1.8 1.6

Finance Costs:
Amounted to 1,558 MB with interest cost of 4.5% at the end of Q1/11.
MB 16,000 slide 14

15,006 14,030 12,995 11,487 10,038 9,216 8,101 5,876 6,089 5,649 4,670

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

5,273 4,762 5,169

1,558

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1/11

NOTE: Interest & financial charges includes FX gain/loss transactions

Interest Coverage Ratio

slide 15

Times (x) 16.0

14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0

11.2 9.3

11.1 9.5 8.3 9.8 8.7

4.6 2.8 1.7 2.3 2.2 2.5 3.0

6.3

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1/11

Note: Interest Coverage Ratio = EBITDA / Interest Expense

Financial Highlights
slide 16

H2/10 dividend of 9,600 MB or 8.0 Bt/share was paid on Apr 27/11. Net Working Capital increased 7,777 MB to 46,760 MB, as the first cracker complex completed its major turnaround in Q4/10. Cash & cash under management amounted to 73,280 MB at the end of Q1/11. High Value Added Products (HVA) accounted for 30% of net sales in Q1/11, compared to 29% for FY2010. Full subscription to the Apr 1/11 debenture issuance of 15 Billion Baht (4-year, 4.00%) which replaced the 15 Billion Baht matured debenture (4-year, 5.75%).

Financial Outlook
slide 17

Continued efforts on M&A activities, supported by solid financial position. Active management of cash-on-hand, with secured return guarantees. Continued FX hedging management which currently accounts for the majority of the net FX exposure.

AGENDA
slide 18

I. Consolidated Results - Q1/11 Consolidated Results - Financial Updates II. Cement III. Chemicals IV. Paper V. Summary Medium term & Strategy VI. Appendix

SCGs average domestic cement price increased to 1,850-1,900 Bt/ton due to cost push, while domestic demand increased 5% y-o-y and 14% q-o-q.

slide 19

Avg Price of Domestic Grey Cement (Net ex-factory)

Baht/Ton 2,500 2,000 1,500 1,000 Sales Mix in Q1/2011 500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Bagged Mixed Cement Bulk Portland Bagged Portland

34% 54% 12%

2007

2008

2009

2010

2011

Q1/11 export sales volume remained stable q-o-q while the average FOB price has been increased to $43.7/ton.
slide 20

MT

Export Volume and Avg FOB Prices

41.2 42.5 43.7

US$/Ton
50.0

4.0
40.3 40.6

3.0 2.0 1.0

1.3 1.1 1.0 1.0 1.1 2.0 1.7 0.5 0.5 1.8 0.6 1.8 0.7 1.8 0.6

40.0 30.0 20.0 10.0 0.0

0.0
Q1/10 Q2/10 Bagged Cement Q3/10 Q4/10 Bulk Cement Q1/11 Clinker

Revenue from Sales increased 11% y-o-y and 18% q-o-q, driven by the domestic market.
slide 21

Revenue from Sales

MB

+11% y-o-y +18% q-o-q

21%

19%

19%

19%

17%

Export Sales, as a % of Revenue from Sales

EBITDA increased 14% y-o-y, while Net Profit grew 16% y-o-y, primarily due to domestic market growths.
slide 22

MB

EBITDA & Net Profit

EBITDA +14% y-o-y +56% q-o-q

Net Profit +16% y-o-y +74% q-o-q

EBITDA Margin (%)

26

22 22

21

20

26

Outlook for Q2/11

slide 23

Domestic demand is expected to grow 5% y-o-y, while domestic cement price remains at the same level as that of last quarter. Contributing factor is strong domestic demand in commercial and industrial sectors, while marginal growth in residential and infrastructure sectors are also observed. Export volume is anticipated to remain at the same level as that of Q1/11.

AGENDA
slide 24

I. Consolidated Results - Q1/11 Consolidated Results - Financial Updates II. Cement III. Chemicals IV. Paper V. Medium Term Strategy VI. Appendix

Q1/11 Market Insight and SCGs Activities

polyolefins price increased from higher feedstock cost Market Insight Naphtha prices increased to $916/ton (up 14% q-o-q and 28% y-o-y) along with the rise of crude oil prices from growing concerns about unrest in M/E and North Africa regions In line with high feedstock cost, monomer and polymer prices rose on the back of turnaround of a major cracker Wider PTA PX gap from hiking of polyester price due to world cotton supply shortage Tsunami caused shutdown of several Japanese refineries and petrochemical plants and thus reduce supply of several petrochemical products i.e. Polyolefins, PVC, BD, and PX
slide 25

HDPE Naphtha Price Gap

decreased 2% q-o-q to $456/MT, and 24% y-o-y following an influx of new global supply in 2010
$/ton
1,750 1,500 1,250 1,000 750 500 250 0
Q1/10
HD-Naphtha Spread ($/T)

slide 26

Q-o-Q down $11/ton (-2%) Y-o-Y down $146/ton (-24%) HDPE Ethylene Naphtha

Q2/10 477 500

Q3/10 455

Q4/10 467

Q1/11 456

Q2/11 to date

602

Note: Prices refer to SEA regional prices

PP Naphtha Price Gap

up 16% q-o-q from strong non-Chinese demand within the region
$/ton
2,000 1,750 1,500 1,250
Naphtha Q-o-Q Y-o-Y

slide 27

up $98/ton (+16%) up $74/ton (+12%) PP Propylene

1,000 750 500 250 0

Q1/10
PP-Naphtha Spread ($/ton)

Q2/10 638 627

Q3/10 611

Q410 619

Q1/11 717

Q2/11 to date

643

Note: Prices refer to SEA regional prices

PVC
PVC margin remained flat q-o-q, supported by steady EDC feedstock price
$/ton
1,750 1,500
Ethylene Q-o-Q Y-o-Y

slide 28

Up $4/ton (+1%) Up $46/ton (+17%)

1,250 1,000 750 500 250 0

Q1/10
PVC-EDC/C2 Spread ($/ton)

PVC VCM

EDC

Q2/10 310 304

Q3/10 311

Q4/10 319

Q1/11 323

Q2/11 to date

277

Prices refer to FE regional prices

Benzene & Toluene

Benzene-Naphtha gap increased 58% q-o-q to $224/ton from strong derivative demand.
$/ton
1,600 1,400 1,200 1,000 800 600 400 200 0
Q1/10
BZ-Naphtha TL-Naphtha

slide 29

Benzene Gap
Q-o-Q up $83/ton (58%) Y-o-Y down $10/ton (-4%) Benzene Toluene Naphtha

Q2/10 171 123 176 133

Q3/10 156 110

Q4/10 142 114

Q1/11 224 111

Q2/11 to date

234 186

BZ Spread ($/ton) TL Spread ($/ton)

Note: Prices refer to SEA regional prices

Polyolefins Sales Volume

up 6% q-o-q after completion of the first complexs major turnaround, and grew 63% y-o-y with increased capacity from the second complex.
Ton slide 30

500,000
432,000
+6%

400,000 300,000
244,000

397,000 364,000 373,000

397,000

+63%

244,000

200,000 100,000 0 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11

Q1/10 Q1/11

PVC Sales Volume

down 2% q-o-q as regional sales dropped from tight VCM supply, but grew 19% y-o-y following the start-up of the new PVC plant in Vietnam
Ton

slide 31

250,000

Regional Production Thailand Production

199,000 170,000 155,000
28% 33%

- 2%
188,000 185,000
27%

200,000

+19%

185,000
27%

150,000
29%

26%

155,000
29%

100,000
71% 74% 72% 67% 73% 71% 73%

50,000

0
Q1/10 Note: *Regional Sales = Sales volume from PVC operations in Vietnam and Indonesia

Q1/10

Q2/10

Q3/10

Q4/10

Q1/11

Q1/11

Revenue from Sales

improved 28% q-o-q driven by higher sales volume after the major turnaround in Q4/10
MB 60,000

slide 32

Oversea opeartion Domestic operation

39,636 5%

50,000 40,000 30,000 20,000

+28% 48,404
4%

+67% 48,404
4%

38,057 5% 28,955 6%

37,669 5% 28,955 6% 96% 96% 94%

95% 94%

95%

95%

10,000 0 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11

Q1/10 Q1/11

Note: * Regional = Sales revenue from PVC operations in Vietnam and Indonesia

EBITDA
grew 15% q-o-q from increased sales volume
slide 33

MB

8,000

Dividend
6,000

EBITDA from Op
15% 4,926 4,289 4,267 49% 4,926 698 698

4,168

698
3,300 527 527

4,000

3,300

727

566 1,636 3,723 2,631 4,228

527 2,000 2,773 0 Q1/10

EBITDA Margin 10%

4,228 4,207 2,773 2,773

3,441

Q2/10
9%

Q3/10
9%

Q4/10
7%

Q1/11
9%

Q1/10

Q1/11

10%

9%

Note: EBITDA = EBITDA from Operations + Dividend from Associated Companies

Net Profit
dropped q-o-q from the absence of PTTCH divestment, but rose y-o-y on strong performance of associated companies and increased sales volume
MB

slide 34

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

3,845 3,045 3,078

Divestment of PTTCH Equity Income from Associates Subsidiaries Profit

12,641 - 62%

9,963
4,788

+57% 4,788 3,045 1,674 2,595

1,674 1,371

1,389 1,689

1,863 1,415 1,982 1,263

2,595 2,193

1,371
Q1/10

2,193

Q1/10

Q2/10

Q3/10

Q4/10

Q1/11

Q1/11

Outlook for Q2/11

slide 35

Weak demand for PE/PP in China, following monetary tightening, and exacerbated by the labor holiday in early May. Higher cost from increasing naphtha prices, coupled with lower seasonal demand, and resulting in the drop in margins, particularly in the PE chain. Gradual start-up of some of the Japanese chemical plants which were affected by the earthquake. Lower PTA prices due to the slowdown in Chinese demand. Auto industry production slowdown due to Tsunami effect. Start up of SCGs elastomer JV business in Q2/11.

AGENDA
slide 36

I.

II. III. IV. V. VI.

Consolidated Results - Q1/11 Consolidated Results - Financial Updates Cement Chemicals Paper Summary Appendix

Packaging Paper:
Wastepaper prices remained flat q-o-q as Chinese inventory was well stocked, while packaging paper prices rose slightly.
$/Ton

slide 37

600

Q1 Packaging Paper
505 470 405 465 515

Apr/11
520 - 530

450

300

Wastepaper (AOCC)

270 245 230 245

270

270-280

150

0
Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Apr'11

2008

2009

2010

2011

Note: regional prices

Packaging Paper:
Total sales volume increased 7% q-o-q on higher seasonal demand in all key industries.
000 tons
450 400 350 300 250 200 150

slide 38

- 1% y-o-y 000 tons 434 399 400

94 88 84 61 52 55 49 93

430
85 66

427

+ 7% q-o-q 450
400 350 300 250

430
85 (20%) 66 (15%)

427
93 (22%) 49 (11%)

279

259

279

261

285

+ 2% y-o-y + 9% q-o-q

200 150 100 50 0 279

(65%)

285
(67%)

100 50 0 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11

Q1/10

Q1/11

Regional Sales * Thailand Export Thailand Domestic

Note: * Sales Volume from Philippines and Vietnam

Printing & Writing Paper:

Short Fiber pulp prices dropped q-o-q from increased supply in China and Indonesia, while Long Fiber pulp prices continued to climb due to shortages.
$/Ton 1,200

slide 39

Q1 P&W Paper
900
850 990 870 980 900 870 840 870 810 810 760 740 915

Apr/11
920-960 910- 930

Long Fiber

755

730-760

600

Short Fiber

705

300
Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Apr'11

2008

2009

2010

2011

Note: regional prices

Printing & Writing Paper:

Domestic sales volume increased 15% q-o-q as a result of the seasonal National Book Fair and school materials.
000 tons
140

slide 40

+ 5% y-o-y

125
120

130 119 118

131

000 tons
140

29
100 80

25

36

44

32

125
120 100 80

131
32
(24%)

29
(23%)

60

96
40 20 0 Q1/10

94

82

86

99

+3% y-o-y +15% q-o-q

60 40 20 0

96
(77%)

99
(76%)

Q2/10

Q3/10

Q4/10

Q1/11

Q1/10

Q1/11

Domestic

Export

EBITDA increased 52% q-o-q, mainly from the normalization of maintenance costs, higher sales volume, and improved selling prices.
MB
Revenue from Sales (Left)

slide 41
Q1/10 Q1/11

MB

Revenue from Sales (MB)

12,551
+9% y-o-y +6% q-o-q

13,700

EBITDA (Right)
+5% y-o-y +52% q-o-q

EBITDA (MB)

2,547 2,424

Net Profit (Right)

+8% y-o-y +154% q-o-q

Net Profit (MB)

974

1,054

19%

19%

EBITDA Margin

Business Segments
slide 42

Packaging Paper & Corrugated Containers MB

12,000

Pulp and P&W Paper MB

6,000

Revenue from Sales

10,000

9,334 8,302 8,599

4,000

Revenue from Sales

4,249 4,332 4,366

8,000 6,000 4,000 2,000 0

2,000

1,354

985

EBITDA 1,604
0

1,070 687

EBITDA

943

Q1/10
EBITDA Margin 16%

Q4/10
11%

Q1/11
17% EBITDA Margin

Q1/10

Q4/10

Q1/11

25%

16%

22%

Outlook for Q2/11

Pressure on margin from rising raw material and energy cost.
slide 43

Packaging Paper & Corrugated Containers Upward trend for wastepaper prices, due to strong regional demand and rising freight cost. Pulp and Printing & Writing Paper Short Fiber prices are expected to increase, following the start-up of regional paper machines and rising freight costs. Higher Long Fiber prices as a result of continued shortage in dissolving pulp which is used in the textile industry. Decreased margin as competition from imports are expected to curb any increase in domestic paper prices.

AGENDA
slide 44

I. Consolidated Results - Q1/11 Consolidated Results - Financial Updates II. Cement III. Chemicals IV. Paper V. Medium Term Strategy VI. Appendix

Medium Term Strategy

slide 45

Regional / domestic business expansion in core businesses. Raise HVAs portion of Revenue from Sales to 50% by 2015. Heightened efforts towards R&D.

HVA Progress
slide 46

Summary
slide 47

Thank You

For further details, please contact invest@scg.co.th

SCGs Incremental Capacity

slide 48

Note: HVA investment is present in all SBU

SEGMENTED FINANCIALS
slide 49

CAPACITY AT THE END OF 2011

slide 50

Chemicals - Naphtha Cracker (consolidated) Ethylene 1,700,000 tons Propylene 1,200,000 tons

Chemicals - Associates (equity accounting) Mitsui Chemicals JV - PTA (1.44 million tons) - PET (100,000 tons) - PP Compound 86,000 tons Chemicals - Downstream (consolidated) HDPE 1,180,000 tons Dow Chemicals JV LDPE + LLDPE 200,000 tons - LLDPE (650,000 tons) PP 720,000 tons - SM (300,000 tons) PVC (Thailand, Indo, Vietnam) 940,000 tons - PS (100,000 tons) - Specialty Elastomer (220,000 tons) - Propylene Oxide (390,000 tons) Paper (consolidated) Packaging Paper (Thai, Phil, Viet) 1.88 million tons Mitsubishi Rayon JV Box (Thai, Malay, Sing, Viet) 795,000 tons - MMA (175,000 tons) Printing & Writing Paper 565,000 tons - Cast Sheets (20,000 tons) Short Fibre Pulp 425,000 tons Cement (consolidated) Grey Cement (Thai + Cambodia) Ready-Mixed Concrete 24 million tons 19 million metre3 Building Products (consolidated) Ceramic Tiles (Thai, Indo, Phil) Roofing Products (Thai, Cambodia, Phil, Viet) Ceiling & Wall Products Autoclaved Lightweight Concrete

50% 20% 46% 50% 50% 50% 50% 50% 47% 47%

122 M sqm 87 M sqm 65 M sqm 15 M sqm