The Siam Cement PCL : SCG reports lower operating results in 2011, to spend 2,000 MB on R&D to drive HVA products and move towards a sustainable ASEAN market leadership (News Release)

SCG announces the FY 2011 results with increased revenue, but with lower profits, as there was the non-recurring gain of 9,963 MB from the divestment in FY2010. Other factors attributing to the difficult Q4/11 earnings were the trough in chemicals margins and the flood disruptions. Sales of HVA product continued to grow, contributing 32% of FY2011 total sales, as SCG continues to place further efforts towards R&D with an allocated budget of 2,000 MB in FY2012.

Regionally, SCG continues to expand its presence, in pursue its vision to become an ASEAN sustainable business leader, as noted by its acquisition of additional shares in TPC which was approved by SCG's shareholders this morning at the extra shareholders meeting.

SCG also stresses its continued confidence in the future of Thailand, forecasting that the recent flood crisis would only have a short term effect on the kingdom. The combined efforts of the government's restoration plan and private sector's investments should contribute to the country's economic recovery and social growth.

Mr. Kan Trakulhoon, President and CEO of SCG, announced the unreviewed consolidated financial statements for SCG and its subsidiaries for fiscal year 2011, which showed Revenue from Sales of 368,579 MB, an increase of 22% y-o-y with primarily from higher product prices in all business units. Profit for the year decreased 27% y-o-y to 27,281MB as there was the non-recurring gain of 9,963 MB from the divestment of non-core assets in FY2010.

In Q4/2011, SCG recorded Revenue from Sales of 87,944 MB, an increase of 15% y-o-y, from continued high product prices in most business units, as a result of global cost push, but lower by 7% q-o-q. Profit for the Period decreased 81% y-o-y to 3,201 MB as there was the flood disruptions which resulted in lower demand in addition to higher logistics expenses, the large in equity income from chemicals associates as a result of the uncertain global economic situation, and the non-recurring gains of 9,963 MB from the divestment of non-core assets in Q4/10. Earnings decreased 57% q-o-q, due to trough chemicals margins at both the subsidiary and associated level, the flood disruptions, and the increase in energy prices.

As for SCG business in ASEAN market outside Thailand, the Revenue from Sales in 2011 amounted to 23,670 MB, which is 7 % of total Revenue from Sales of the Group, and recorded 17 % growth y-o-y.

Recently, SCG invested in a cement grinding plant in Southern Vietnam to support production capacity of grey cement and white cement and also set up two aggregated concrete plants in Ho Chi Minh City. Total assets of SCG business in ASEAN were 46,000 MB, which is 12.5% of total assets of SCG.

The total assets of SCG as of 31 December 2011 amounted to 374,738 MB.

The operating results of SCG's major businesses for FY2011 were as follows:

• SCG Chemicals: In FY2011, SCG Chemicals reported Revenue from Sales of 192,929 MB, a 34% increase y-o-y, from higher volume and selling price. Profit for the year amounted to 11,190 MB, a decrease of 51% y-o-y as there was the non-recurring gain of 9,963 MB from the divestment in FY2010.
  
• SCG Paper: In FY 2011, SCG Paper reported Revenue from Sales of 54,839 MB, a 6% increase y-o-y from higher average selling prices in packaging paper segment. Profit for the year registered 3,331 MB, ped 5% y-o-y.
  
• SCG Cement: in FY 2011, SCG Cement reported Revenue from sales of 54,249 MB, a 11% increase y-o-y from solid pricing in both domestic and export markets. Profit for the year increased 21% y-o-y to 7,288 MB, from cost reduction and HVA product development.

Mr. Kan said, "SCG believes the flood impacts on Thai economy are short term. Thailand still has vast business potential and continues to be a powerful destination for foreign investors, thanks to positive factors such as highly skilled and productive workforce, the business sectors' continuing investment in R&D, collaboration of core industries, the efficient and large-scale infrastructure, and the region's key transportation hub. It is believed that every sector will work together to develop the country, enabling Thailand to emerge stronger than ever. To demonstrate SCG's confidence in Thailand, SCG has launched an ASEAN wide campaign designed to strengthen confidence among foreign investors and businesses that Thailand has a bright future ahead. In addition, SCG has joined the BOI Fair 2011 to showcase the potential of the Thai industry. SCG Pavilion, which has won the Best Award of Pavilion at BOI Fair 2011, showcased a host of technologies and innovations that can compete internationally. The endeavors are believed to help boost foreign direct investment in Thailand."

"SCG's strategy to become an ASEAN sustainable business leader still focuses on the development of High Value-Added (HVA) products and services and brand maximizing. Last year, SCG invested 1,111 MB in R&D, resulting in sales of HVA accounting for 32% of total sales in FY 2011. This year, SCG continues to drive HVA to pursue the corporate policy of becoming an innovative organization. For this year, SCG will allocate budget for R&D investment approximately 2,000 MB." said Mr. Kan.

"Recently, the Extraordinary General Meeting of Shareholders has passed the resolution to approve SCG Chemicals to acquire additional shares of Thai Plastic and Chemicals Public Company Limited (TPC) from CPB Equity Company Limited (CPBE) and other shareholders, representing 30.47% of all issued and paid-up shares of TPC. The total transaction size will be 8,000 MB. This would increase SCG's stake in TPC to 76.11%, compared to 45.64% previously. SCG Chemicals will take further step to make a Mandatory Tender Offer for all securities of TPC. This latest move would enhance SCG's business potential and capability, reduce income volatility, and increase opportunities for the expansion of HVA. On top of this, the acquisition would increase synergies in business management in line with the Operation Excellence platform," added Mr. Kan.

The Board of Director of SCG approved to issue a new lot of debenture 1/2555 (SCC164A) in the amount not exceeding 25,000 MB with the four-year maturity at a market interest rate when issuance. The new issuance is to replace the existing debentures SCC124A in the amount of 20,000 MB to be retired for redemption on April 1, 2012, and issue a new tranche of debenture in the amount of 5,000 MB to support investments in the future. The new lot of debenture will be offered to (1) the holders of SCC124A which are Individual Investors, (2) the holders of other debentures of SCC which are Individual Investors, and (3) other individual investors, in compliance with the law. After issuing a new lot of Debenture, SCC will have the total amount of debentures not exceeding 115,000 MB.

As a result of the company's financial position and operating performance for the full year 2011, the Board of Directors of SCG has proposed for approval from the ordinary general meeting of shareholders on March 30, 2012 a full year dividend payment of 12.50 baht per share. Previously, the company paid an interim dividend payment of 5.50 baht per share in August, 2011 and will pay an additional year-end 2011 dividend payment of 7 baht on April 26, 2012 to the shareholders listed in the share register book closed for share transfer on April 11, 2012. The record date will be on April 10, 2012