Thailand’s SCG Q1 net profit slumps 85%; eyes better H2 conditions

SINGAPORE (ICIS)–Siam Cement Group (SCG) posted an 85% year-on-year decline in Q1 net profit on losses from chemicals operations, but the Thai conglomerate expects the segment’s earnings to recover in H2 on improved olefins demand and expected restart of its Vietnam petrochemical complex.

• H2 conditions to improve on chemicals recovery
• Long Son Petrochemicals complex restart targeted in July
• Olefins prices to stabilize in Q2, recover later in 2024

In Thai baht (Bt) million	Q1 2024	Q1 2023	% Change
Revenue from sales	124,266	128,748	-3.5
EBITDA	12,623	12,170	3.7
Net profit	2,425	16,526	-85.3

*Earnings before interest, tax, depreciation and amortization

First-quarter EBITDA increased on higher contribution of businesses related to cement and construction.

The company’s listed SCG Packaging (SCGP) subsidiary, meanwhile, posted a 15% year-on-year increase in EBITDA to Bt5.2 billion as sales rose by 1% to Bt34.0 billion.

Chemicals results

in Bt million	Q1 2024	Q1 2023	% Change
Revenue from sales	45,376	46,805	-3.1
EBITDA	1,289	2,445	-47.3
Net profit	-1,866	1,356	–

Petrochemicals demand remained weak in the first quarter due to ongoing geopolitical tensions and weak global economic conditions, the company said in a filing to the Stock Exchange of Thailand on 24 April.

The first-quarter loss in the chemicals business, however, was mainly due to lower equity income from associates and start-up expenses of the company’s Long Son Petrochemicals Complex (LSP) in Vietnam.

Its 100%-owned integrated petrochemical complex completed initial test-runs early this year but was shut in March due to equipment issues and will remain down up to June.

SCG expects to restart the facility in July for the final test run, followed by commercial operations beginning August 2024.

In the first quarter, the company sold around 306,000 tonnes of both polyethylene (PE) and polypropylene (PP) products, down 22% year on year following the shutdown at Rayong Olefins’ (ROC) cracker.

SCG now expects olefins demand to improve gradually in the second half of 2024 as supply in the region is expected to be limited due to a series of planned maintenance, particularly in China and southeast Asia.

It expects stable olefins prices in the second quarter and a recovery in the latter half of 2024 as demand growth is expected to exceed capacity additions.

Polyvinyl chloride (PVC) demand in Asia continues to face challenges due to the persistent real estate crisis in China, while supply is impacted by high inventory in China resulting in more exports to Asia.

Focus article by Nurluqman Suratman

($1 = Bt37.05)