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Business Overview

     
SCG Cement-Building Materials
 

 

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

  • In 2016, domestic demand for cement declined slightly compared to the previous year. The domestic demand came from the government infrastructure projects while the demand from the household and private sectors witnessed some growth slowdown. The cement exports has decreased slightly compared to the year before.
  • Revenue from sales of SCG Cement-Building Materials totaled 170,944 Million Baht, falling by 4% from the previous year. EBITDA was 23,186 Million Baht, a drop of 5% year-on-year, and profit for the year was 8,492 Million Baht, down 17% from the year before.

Market and Competition

  • Domestic demand for cement and building materials slackened due to the lack of consumer confidence and declining purchasing power. However, SCG Cement-Building Materials managed to maintain its leadership status in the building materials market through the continued development of high value-added products and services that address customers' needs and requirements.
  • Overall, the reboot growth in the demand for building materials in ASEAN was fueled by the cement and building materials market expansion. Cambodia, in particular, witnessed a steady growth driven by the housing and commercial building projects and the government's large-scale infrastructure projects such as road network. In Myanmar, the growth was propelled mainly by the government's infrastructure projects and private investment projects, especially factories in various special economic zones. However, high-rise building projects slight regression development in the third quarter as the government was reviewing the high-rise building permits. The growth in Vietnam and the Philippines was spurred by government infrastructure projects such as the subway train initiative in Vietnam and the government's policy to promote housing in the Philippines. Likewise, construction projects in Indonesia saw an uptick in growth from the previous year in light of the government's infrastructure projects such as the expressway, airport, dam, and high-speed train.

Organizational Development

Business Development

  • Acquired and restructured a stone building material business appraised at 1,161 Million Baht and a production capacity of 4 million tons per year at Amphoe Chalermprakiet, Saraburi province. Commencing operations in the third quarter of 2016, the new stone mill was upgraded and developed to become an operating model for stone mill business in Thailand, using the technology from the cement plant to reduce production costs and minimize impacts on the surrounding environment and community. The manufacturing process was also streamlined to maximize resources.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to prudence and virtues]

Human Resources Development

  • Studied and gained insights into the needs of the employee development to design and develop appropriate training courses that integrate work process and learning to align with the role-based competency. The objectives were to support the business direction in tune with the corporate strategic plan and sustainably promote the career advancement of employees both at locally and aboard.
  • Promoted diversity in the workplace both locally and abroad. The focus was to properly ensure the happiness, the safety, and the quality of work life for employees in a fair manner.
  • Provided opportunities for employees to demonstrate their potential by adopting the concept of Open and Challenge, empowering them to develop innovations and technology as well as high value-added products and services to benefit customers, society, and all stakeholders.
  • Promoted and supported "SCG Marketing Way: Building Trusted Innovation" by building trust in creating innovations that help uplift the quality of life of customers and other people with collaboration of SCG People, business partners, distributors and related parties
    [Operating business in accordance with the principles of Sufficiency Economy with regard to virtues and reasonableness]

Innovation Development

  • Passive Stack Ventilation System : the combination of natural ventilation strategy, which depends on the amount of the movement of external air, and the external air temperature and a ventilation system using a solar powered fan with a smart control to provide optimum cooling comfort and reduce the build-up of heat during the day.
  • SCG Eldercare Solution, a housing innovation for the elderly. A wide range of innovations dedicated to offering maximum safety throughout the house have been added with the focus on solutions to the problems associated with joints and muscles in the lower body
  • Tiger Décor White Plastering Cement for Ancient Heritage. Manufactured using molecular structure technology, the cement allows for good dissipation of stored moisture within the building. Friendly to existing buildings, Tiger décor white plastering cement offers excellent convenience, ease of use, and is safe for users.
  • Concrete Fabric, an innovation that combines cement and canvas technologies. Lightweight, fast, and easy to install, the concrete fabric is used in a variety of applications.
  • A wood substitute product for door and window frames and floors that resemble natural wood texture, using extrusion technology and fiber-reinforced composites to provide greater strength, durability, and longer use. With digital printing technology, the product provides a finish similar to natural wood. Ideal for both interior and exterior applications.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to knowledge and reasonableness]

Sustainable Development in Business Operations

  • Conducted business with the concern of achieving a balance in economic, social, and environmental dimensions. Examples included enhancing energy efficiency in the manufacturing processes and using waste from the community as a fuel substitute to help tackle the waste problem and minimize environmental impacts.
  • Devised a plan and prepared the workforce as well as implemented risk management encompassing the areas of safety, health, the environment, laws and regulations, and natural disaster management to ensure smooth business operations with no disruption to the overall economy.
  • Studied, researched, and developed new products. The company is committed to researching and developing to substitute natural raw materials from waste materials to achieve sustainable business operations.
  • Supported and strengthened the civil society through various activities which include check dam construction, SCG Education Clinic, Community Career Promotion project, and Waste Bank initiative, in order to contribute to a better quality of life and sustainable happiness in the community.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to moderation, prudence, knowledge and virtues]

SCG Cement-Building Materials Consolidated Financial Information

  2016 2015 2014 2013 2012
Information from Statements of Financial Position
Current assets 58,279 56,384 53,566 51,935 38,736
Assets 203,068 187,976 168,662 155,711 129,818
Liabilities 103,198 105,242 85,937 72,186 63,544
Shareholders' equity 99,870 82,734 82,725 83,012 66,274
Information from Income Statements
Revenue from sales 170,944 178,988 185,423 174,642 154,537
Cost and expenses 163,503 168,306 170,565 158,350 140,050
Profit for the year * 8,492 10,250 13,180 16,092 13,129
EBITDA ** 23,186 24,395 26,683 26,274 23,009

* 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.