Siam Cement PCL : SCG announces Operating Results of Q3 and the first 9 months of 2016. The main profit driver is the chemicals business, while demand for cement in ASEAN is on the rise. (News Release)

SCG reports Q3/2016 and the first 9 months of 2016 Operating Results show increased profit from the chemicals business, thanks to the cyclical upturn of the petrochemical industry. Demand for building materials in the ASEAN region also continues to rise steadily.

Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed the company's unreviewed Operating Results for Q3/2016, with registered Revenue from Sales decrease 5% y-o-y to 104,957 MB, on lower chemicals prices and softer cement volume and prices, and a decreased 4% q-o-q on seasonal effects. In consequence, Profit for the Period reached 14,091 MB, an increase of 57% y-o-y, attributed mainly from the continues performance of the chemicals business, which also includes the approximate 1,800 MB deferred tax assets and a decreased of 12% q-o-q, due to the seasonal effect in the cement business with lowered its performance.

SCG's Profit for the first 9 months of 2016 registered 43,606 MB, an increase of 28% y-o-y, driven primarily by the chemicals business, while Revenue from Sales dropped 3% y-o-y to 323,829 MB, on domestic cement demand softness and lower chemicals prices. Export revenue accounted for 27% of SCG's consolidated Revenue from Sales, representing a decrease of 11% y-o-y to 86,821 MB.

The performances of SCG's businesses in ASEAN outside of Thailand in Q3/2016

The consolidated Q3/2016 Revenue from Sales of SCG's ASEAN production facilities and Thai exports to ASEAN countries amounted to 24,490 MB, representing 23% of SCG's consolidated Revenue from Sales, 2% decrease y-o-y. Sales Revenue from SCG's production bases in ASEAN is at 13,129 MB, which accounted for 12% of the consolidated Revenue from Sales, and an increase of 5% y-o-y. Meanwhile, Revenue from Sales of exports to ASEAN countries is at 11,362 MB, accounting to 11% of the consolidated Revenue from Sales, a decrease of 9% y-o-y. For the first 9 months of revenue from Sale from ASEAN operations and export equal to 74,072 MB, accounting to 23% of total revenue from sale, a slightly decreased y-o-y. As of 30 September 2016, SCG's total assets in ASEAN excluding Thailand stands at 121,499 MB or 23% of the company's total assets.

The total assets of SCG as of September 30, 2016 amounted to 528,395 MB.

The Q3 and The first 9 months of 2016 operating results by business units are as follows:

• SCG Cement - Building Materials recorded a Q3/2016 Revenue from Sales of 40,970 MB, a decrease of 6% y-o-y and 5% q-o-q due to lower volume and pricing in the domestic Thai market. The business unit registered Profit for the period of 1,680 MB, a dropped 19% y-o-y and 32% q-o-q, due to lower EBITDA and increased depreciation expenses from the new plants outside Thailand. Revenue from Sales for the first 9 months of 2016 is at 129,834 MB, a decrease of 5% y-o-y, due to soft domestic market continue which affected pricing and volume growth. Profit for the period dropped 13% y-o-y to 7,446 MB due to lower EBITDA and increased depreciation expense.

• SCG Chemicals recorded Q3/2016 Revenue from Sales of 48,138 MB, a decreased 7% y-o-y, and 3% q-o-q, owing to reduced prices and lower sales volume. The business unit registered Profit for the period stood at 11,910 MB, earnings grew 74% y-o-y and 6% q-o-q, as there was an approx. 1,800 MB deferred tax assets. Revenue from Sales for the first 9 months of 2016 is at 145,477 MB, a decrease of 5% y-o-y, primarily reflecting the lower chemicals prices. and Profit for the Period grew 53% y-o-y to 32,122 MB from better performance from associated companies and lower feedstock costs.

• SCG Packaging recorded Q3/2016 Revenue from Sales of 18,449 MB, grow 1% y-o-y but dropped 2% q-o-q. The business unit registered Profit for the period of 670 MB, gain 4% y-o-y while a decrease 34% q-o-q. Revenue from Sales for the first 9 months of 2016 is 56,137 MB, increase of 7% y-o-y, owing to higher sales volume in Packaging chain and Profit for the period increased 29% y-o-y to 2,940 MB.

Mr. Roongrote said: 'The chemicals business continues to improve as a result of the cyclical upturn of the petrochemical industry. However, the domestic cement market has not shown significant signs of recovery due to more rain fall compared to the previous year. This is also coupled with the fact that government infrastructure projects are in the process of being carried out, while investment by the private sector has slowed down. However, demand for cement in the ASEAN region continues to rise, due to the expansion of the construction industry. The Company's investment plans abroad are on course. The cement plant in Myanmar has begun a trial run and is expected to begin production in the fourth quarter of 2016. The cement plant in Laos is expected to begin commercial operation in the first quarter of 2017.

For the first nine months of 2016, SCG's Revenue from Sales of High Value Added (HVA) products and services is at 122,219 MB, close to the same period of the previous year, and accounting for 38% of the total Revenue from Sales. The Company invested more than 3,208 MB, or 1% of the Revenue from Sales, towards research and development (R&D) during the period. SCG will continue to invest in R&D to innovate products and services that cater to the lifestyles of consumers across ASEAN'

The Board of Directors of SCC approved to issue a new lot of debenture no. 2/2016 (SCC20NA) in the amount not exceeding 25,000 MB with the four-year maturity at a fixed interest rate of 3.00% per annum. This new issuance is to replace the existing debentures SCC16NA in the amount of 25,000 MB to be retired for redemption on November 1, 2016. The new lot of debenture will be offered to individual investors as stated condition in the Debenture Prospectus. After issuing new lot of debenture, SCC will have the total amount of debentures not exceeding 166,500 MB.