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Business Overview

     
CEMENT AND BUILDING MATERIALS BUSINESS
 

Amid the challenges that affect the economy; Soaring energy costs, and lower consumer spending, the Cement-Building Materials business has quickly adapted in response to the changes by focusing on the High Value added products, service, and solutions development, using unique technology and innovations to cater to customer needs, as well as implemented cost reduction by using renewable and alternative energy to promote sustainable business operations.

OPERATING RESULTS

The Cement-Building Materials business generated Revenue from Sales of 204,594 Million Baht, an increase of 12% from the previous year, with EBITDA of 17,540 Million Baht, a decrease of 7% from the previous year, and Profit for the Year of 3,789 Million Baht, a decrease of 11% from the previous year. Normalized Profit for the Year was 4,670 Million Baht, a decrease of 41% compared to the previous year due to higher production costs. However, the business still maintains its leadership in the ASEAN market with new product development and the improvement of production process to reduce carbon dioxide emissions and achieve sustainable social development.

BUSINESS CHALLENGES

Even though the COVID-19 pandemic gradually subsided and the tourism sector began to see positive signs, the Russia-Ukraine conflicts exerted pressure on the production costs, especially energy prices resulting in a price increase in building material products while household demand and purchasing power had not rebounded. Moreover, as the global crises remained unpredictable, the cement-building materials business decided to adapts to changing global trends and customers needs.

BUSINESS ADAPTATION TO ADDRESS SITUATION IN 2022

Financial

  • Prudently reprioritized capital expenditure by focusing on projects relating to business strategies, such as cost saving or renewable energy projects, automation projects, and backbone investment to increase production efficiency as well as managed inventory and raw material at appropriate level for risk diversification and cash flow balance.

Business

  • Focused on developing and introducing solutions to meet customer needs, including Green Solution Business, which is a one-stop construction solutions via the CPAC Solution Center (CSC), and the expansion of the Green Circularity Business to maximize the value of resources used. In addition, the business has expanded into SCG Smart Building solution using intelligence technology to manage the building system, investing in enVerid, a leading American startup that provides indoor air quality solutions, to enhance the building efficiency by using cutting-edge technology.
  • Reducing greenhouse gas emissions in the cement and building materials industry, by replacing OPC cement with Hydraulic cement, developing new building materials products, e.g., Eco Terra tiles made from recyclable materials aligned with circular economy concept, Mosaic tiles certified by Thailand Greehouse Gas Management Organization for Carbon Footprint Product. Additionally, the business became first in Thailand to receive Circular Mark label certified for recycled products.
  • Developed and launched new environmentallyfriendly products in many applications e.g. SCG hybrid structural work mortar (green mortar), ready mix Tiger mortar (Expert formula), and CPAC low carbon concrete, etc.
  • Developed distribution channels and platforms for homeowners including SCGHOME website, SCGHOME smartphone application as well as launched Official stores in online marketplaces or in social commerce. Moreover, the Business continued to improve internal process, e.g., establishing distribution centers to enhance efficiency and shorten product delivery time, as well as managing the shipping costs for competitiveness.
  • Increased the proportion of renewable energy including solar and waste heat generator (WHG) that generates electricity from production heat. This is to mitigate the impact from rising electricity cost, to rely less on high cost electricity from the grild and to increase competitiveness in using biomass or refused derived fuel (RDF).
  • Merged SCG Logistics with JWD and renamed to SCGJWD to provide end-to-end logistics services to all industrial sectors across ASEAN and South China. This includes the development of railway transport for wider commerce, lower shipping cost in Door to Door service to China and one-stop service customs clearance.
  • Enhanced construction process with technology, in order to increase operational efficiency and reduce construction waste, solutions of which includes “CPAC BIM”, which provides digital technology to construction design and post-construction services resulting in waste reduction. CPAC 3D printing solution, the innovation that uses 3D printing to create free-form construction design. This help to shorten the construction time as well as to create labor efficiency and reduce construction waste. The business also developed the first thinnest concrete bridge in Thai and ASEAN called “Chalerm Prakiat Bridge” using UHPC technology (UItra High Performance Concrete).
  • Developed products and solutions that correspond to the well-being and quality of life trends for example, SCG Bi-ion, a well-being solution that purifies indoor air and eliminates up to 99% of airborne viruses and bacteria as well as limiting PM 2.5.
  • Developed a digital logistics system service to customers in order to enhance efficiency, and be able to manage transportation through the TRUCK GO platform, where the transport operators are able to save cost for over 50%.

Human Resource

  • Raise competitiveness to all levels of SCG employee in 2 aspects, Leadership skill and Business Competitiveness Skill, to ensure that that are ready to adapt the rapidly changing business. The topics focus on creating competency through Speed, Execution, Adaptability and Tell the Truth.
  • Generated momentum in business operations and aligned work of all functions with ESG guidelines by deploying SCG Code of Conduct into business to shape fairness and social responsibility.

CONDUCT BUSINESS FOLLOWING ESG FRAMEWORK FOR SUSTAINABILITY

  • Set Net Zero: With SCG’s Net Zero goal to be achieved by 2050, SCG has adopted and implemented several Global Cement and Concrete Association (GCCA) guidelines such as carbon dioxide reduction from clinker production by increasing the proportion of alternative fuel use and using electricity from renewable energy in the cement and concrete production. In addition, as a member of the Thai Cement Manufacturers Association (TCMA), SCG took part in declaring the “MISSION 2023” to elevate its carbon neutrality practices in the Industrial Processes and Product Use, Replacing clinker production with hydraulic cement production to minimize greenhouse gas emissions by 1,000,000 tons of CO2 by 2023.
  • Go Green: Developed SCG Green Choice labeled products as an eco alternative for consumers; for instance, Tiger Cement of special plastering formula, CPAC Swab Cabinet, CPAC Precast Concrete System Solution, etc. In addition, it also cooperated with various sectors to promote environmentally-friendly practices. For example:
    • SCG has joined forces with Quality Construction Products PCL, or Q-CON, for the recycling of Autoclaved Lightweight Concrete (ALC) waste from the construction site of One Bangkok, the largest holistically integrated district in the heart of Bangkok, into Q-CON Sound Barriers for an underpass entrance to the premises. This initiative reiterates their ambition to achieve zero waste by optimizing all resources, mitigating environmental impacts as well as elevating the Thai construction industry to a sustainable future.
    • SCG has partnered with Supalai and SC Asset to integrate SCG Green Choice products in more than 100 housing and condominium projects to ensure a sustainable low carbon society through products such as CPAC low-carbon concrete of green formula, Q-CON lightweight bricks, SCG eave liners, and water-saving COTTO faucets
  • Lean Inequality: Established the 2022 Water Conservation Project to support communities with water management, and a sustainably strong community process to ensure the locals have access to water supply throughout the year. The goal is to build 5,000 check dams in Lampang Province by 2022 and join hands with educational institutions across the country to implement digital construction know-how to their courses so that they can be equipped with new skills and knowledge to meet the labor market demand of the future construction industry. It also helps elevate Thailand’s construction SCG Active Air Quality, an indoor air quality management system to respond for the global trends industry to be compatible with the international standards.
  • Enhance Collaboration: Implement the Sea Conservation Project, rehabilitated natural marine resources by placing artificial coral reefs made from the CPAC 3D printing solution in Samae San area, engaged in the Plant Genetic Conservation project under the Royal Initiative HRH Princess Maha Chakri Sirindhorn, as well as cooperated with the Department of National Parks, Wildlife and Plant Conservation, Lamphun Province, government bodies and communities in the area to conduct participatory reforestation at Mae Ping National Park, Lamphun Province, covering an area of 400 rai to restore the forest and absorb carbon dioxide as guided by the Natural Climate Solution (NCS) project.

Cement and Building Materials Business Consolidated Financial Information

  2022 2021 2020 2019 2018
Information from Statements of Financial Position
Current assets 76,048 71,128 58,655 59,539 64,031
Assets 228,277 224,226 212,615 211,573 218,316
Liabilities 113,278 94,139 91,448 98,484 105,775
Shareholders' equity 114,999 130,087 121,167 113,089 112,541
Information from Income Statements
Revenue from sales 204,594 182,529 171,720 184,690 182,952
Cost and expenses * 203,576 179,461 167,483 180,886 178,012
Profit for the year ** 3,789 4,262 6,422 5,455 5,984
Normalized profit *** 4,670 7,939 8,771 7,449 6,593
EBITDA **** 17,540 18,877 21,591 20,991 21,244

* The figures for year 2019 are reclassified and the business segment information for year 2018 are restated.
** Profit for the year attributable to owners of the parent
*** Profit before assets impairment, investments sold and others
**** Profit before finance costs, income tax expense, depreciation and amortization and includes dividends from associates