Siam City Cement Group (SCCC) reports strong Q3 2024 performance with 79% net profit growth

This growth is driven by lower input costs, successful cost-control measures, efficiency improvements under the Group’s "FIT+" initiative, and a strong recovery in key markets, including Vietnam and Sri Lanka.

Mr. Ranjan Sachdeva, the Group CEO of SCCC, emphasised the Group’s continued commitment to operational efficiency and sustainable growth. “Our strategic initiatives, especially the 'Fit+' programme, have delivered measurable gains in efficiency and cost reduction across our operations. This quarter's results reflect the resilience of our approach, despite ongoing challenges in each of our markets," he stated.

Key highlights from Q3 2024:

EBITDA growth: Strong EBITDA growth 28%, propelled by lower energy costs, enhanced operational efficiencies, continued restructuring efforts, contributions from overseas operations amid demand recovery, Vietnam’s YoY EBITDA surged by 234% and Sri Lanka’s YoY EBITDA rose by 270%.

"We have seen substantial gains in Vietnam and Sri Lanka, underscoring our adaptability in diverse economic conditions. These achievements highlight our team's dedication to operational excellence and our continued focus on top line growth via demand generation and Go To Market initiatives," Mr. Sachdeva remarked.

Commitment to sustainability and innovation:

A cornerstone of SCCC’s strategy is advancing its environmental, social, and governance (ESG) initiatives. As of the first nine months of 2024, 89% of the Group’s cement sales are from low-carbon products, aligning with SCCC’s goal of achieving 100% low-carbon cement sales. The Group’s Thermal Substitution Rate (TSR) improved 39% YoY, demonstrating progress in reducing fossil fuel reliance by utilising alternative fuels derived from waste.

“We are proud of our sustainability progress, especially our advancement toward 100% low-carbon cement sales. Our solar project in Thailand, under INSEE B.Grimm Solar, a collaboration between SCCC and B.Grimm Power, set to generate 83MW of electricity by September 2025, represents another significant commitment to sustainable growth,” Mr. Sachdeva remarked.

SCCC’s regional performance highlights:

Thailand

Government-funded infrastructure projects, particularly in road recycling and small-scale construction, have sustained demand in the bulk cement segment. However, adverse weather conditions and high household debt led to weakened demand in the bag segment, further impacted by flooding, which also reduced border volume with Myanmar and Laos. Despite reduced fuel costs and operational efficiencies, EBITDA in this segment declined by 7% YoY.

Vietnam

Strong growth in Southern Vietnam saw EBITDA surge by 234% YoY, driven by a rebound in market demand and successful sales transformation initiatives. Strategic price reductions helped capture market share amid competition, while cost-saving measures and an improved Thermal Substitution Rate (TSR) to 43.0% contributed to performance. SCCC’s commitment to sustainability is emphasised, with 100% low-carbon cement sales since 2020.

Sri Lanka

With economic recovery supporting increased demand in retail and B2B segments, Sri Lanka’s EBITDA rose by 270% YoY, marking a significant recovery from the previous year's losses. Cost savings in fuel and electricity expenses following tariff reductions bolstered net sales, with favourable foreign exchange rates also contributing to the positive outcome.

Bangladesh

Political instability and severe flooding led to lower sales volume and reduced selling prices, impacting net sales. While cost reductions helped mitigate some losses, EBITDA declined by 32% YoY. Exchange rate challenges further affected overall performance, despite Bangladesh achieving 100% low-carbon cement sales and improvements in the clinker factor to 62.0%.

Cambodia

EBITDA grew by 5% YoY, supported by favourable raw material prices and operational efficiencies, with TSR reaching 30.2% and a reduced clinker factor of 76.0%. The market faced challenges from oversupply and seasonal rain, but Cambodia's focus on ESG is reflected in 100% low-carbon cement sales, underscoring SCCC’s sustainability commitment.

In SCCC’s Concrete and Aggregates business, the construction and infrastructure sectors gained momentum from increased government spending, with contractors accelerating project completions before the fiscal year-end. Despite weather-related disruptions in the north, this segment delivered strong Q3/2024 results, with EBITDA rising 12% QoQ and 21% YoY. This growth was fueled by high-margin sales in ready-mixed concrete, increased crushed stone demand for road construction, and effective cost management that significantly reduced raw material expenses, offsetting weaker net sales, and underscoring operational efficiency.

In Waste Management and Industrial Services, EBITDA grew 6% YoY, driven by a 23% increase in net sales to new projects. However, on a quarterly basis, EBITDA declined by 17%, impacted by lower traditional fuel prices, rising production costs from higher raw material costs, and increased marketing costs.

In Light Building Materials, market conditions were affected by delays in new residential project launches due to oversupply and high inventory levels. Stricter loan approvals further pushed homeowners toward renovations over new purchases. Additionally, heavy rain and flooding disrupted deliveries, dampening sales in both low-rise and high-rise segments, leading to a 16% YoY drop in Q3/2024 net sales. However, stringent cost control measures and lower raw material costs, especially for limestone and additives, helped limit the decline in YoY EBITDA to 10%.

Outlook:

"Our outlook across our key markets remains cautiously optimistic as we continue to see promising growth opportunities," stated Mr. Sachdeva. "In Thailand, infrastructure development projects, particularly in transportation, are expected to drive demand in the bulk cement segment. Vietnam is poised for moderate market expansion amid heightened competitive activity, while Sri Lanka’s business environment shows steady improvement, supported by favourable economic policies and infrastructure growth. Although challenges persist in Bangladesh with political and weather-related uncertainties, Cambodia is positioned for steady progress, benefiting from favourable raw material costs and operational efficiencies.

Additionally, SCCC’s recent acquisition of 86,388,810 shares in Lanna Resources Public Company Limited (LANNA), following the Mandatory Tender Offer, Lanna is now a subsidiary of SCCC with 61.44% shareholding. “We are currently in the process of financial consolidation of LANNA with SCCC,” Mr. Sachdeva added. “A detailed update on the specific financial impact of this acquisition will be provided in the next quarter.”

“As we look forward, we are focused on capturing growth opportunities while maintaining resilience across our operations. Through disciplined growth, operational efficiency, and strategic investments, SCCC’s primary focus remains on creating sustainable, long-term value for our shareholders.”