Mr. Aidan John Lynam

Director and Group Chief Executive Officer

In another unprecedented and tumultuous year, the COVID-19 pandemic continued to heavily impact economic activity globally, and across Siam City Cement’s market footprints. As contagious variants spread in 2021, construction activities were interrupted, particularly in Thailand and Vietnam during the second and third quarters. Meanwhile, worldwide supply chain disruptions provoked significant increases in seaborne freight and thermal energy costs. Unit cost inflation has been ratcheting up on all raw materials and fuels across most of the cost-curve.

At a consolidated Group level, revenues saw a drop of just under 1 percent in 2021, with margins becoming pressurized by input inflation and challenges to pass these through onto market prices because of continuous competitive jostling.

Despite these headwinds. we have been assuring maximized protection of the health and safety of everyone at our facilities, whilst staying sternly focused all this year on driving costs efficiencies and assuring healthy cash flows as well as strong financial liquidity.

We have adapted well to various pandemic-related conditions known as the “new normal” with our sales teams accommodating to customers’ delivery needs. Overall, our entire staff has stayed strong, resilient, and positively engaged in the face of unexpected pressures and challenges rarely faced before.

While revenues and margins have indeed been pressed, successful mitigation measures have led to a net profit gain (including a one-off tax rebate in Sri Lanka) in 2021 of just over 15 percent compared with the previous year.

In Thailand, the long-awaited increase in infrastructure investment unfolded at a slower than expected pace amidst an ongoing downturn in residential building activity. The mid-year arrival of the Delta variant of the coronavirus led to construction worker camp shutdowns and severe curtailment of building activities that extended for weeks. Previously launched initiatives strongly boosted reliability in manufacturing facilities at our Saraburi plant and assured a healthy availability of products for sale, both domestically and for overseas exports.

Our cement, concrete, and aggregates businesses in Thailand saw operating margins become squeezed, due to strong thermal energy cost inflation and transport cost escalations. Transformational programs and cost efficiency improvement drives were activated to offset these external cost pressures, as far as possible.

Siam City Cement Trading Company Limited adapted its customer networks and trading activities in Vietnam, China, Japan, Taiwan, Bangladesh, Australia, and beyond, as well as to our own Group entities overseas amidst severely disrupted shipping supply chains.

Our Light Building Materials business in Thailand and Indonesia was impacted by the fall in residential construction, whilst our Ecocycle subsidiary saw ongoing reductions in industrial services projects across Thailand in the oil and gas and petrochemical spaces.

At the regional level, our international operations faced continued revenue pressures throughout 2021, particularly in Vietnam where COVID-19 related hard lockdowns brought a substantial reduction in sales during the third quarter. However, Siam City Cement (Lanka) Limited saw a strong rebound in market demand and was able to gain market share with prices strengthening considerably in the final quarter of the year.

Our joint venture business in Cambodia maintained strong performance due to strident cost efficiency initiatives and accelerated ramp-up of its waste management-oriented Ecocycle business. In Bangladesh, business was adversely affected in the face of continued high government tax on imported raw materials and general import costs inflation.

As we look forward to the coming year, the Group is confident about gaining from its in-built structural and cost-curve related strengths. Amidst poor visibility regarding the effects of new COVID-19 variants, we do sense a determination of governments and health authorities to “live with the virus”. Thus, we remain cautiously optimistic about some revenue improvements in 2022.

We remain committed to deliver on our Environmental, Social, and Governance (ESG) agenda, setting ambitious sustainability targets for the years ahead, whilst maintaining our determined focus on providing application-oriented solutions to customers. We approved two major capital investments in Thailand and Sri Lanka last year to accelerate a lowering of our Group’s CO2 footprint. We have also renewed a three-year MoU with the International Union for Conservation of Nature (IUCN) for continuation of biodiversity impact minimization in our quarrying activities and we carry on with efforts to lower ground water consumption at our facilities. Simultaneously, we continue to adhere to the highest international standards of corporate governance, industry occupational health, and safety practices. The Group also remains focused on our social responsibility towards both our employees and neighboring communities.

We deeply appreciate the constant trust and support from our shareholders, our Board of Directors, our customers, our communities, our employees, and our stakeholders.

We are dedicated to deliver on your expectations in the coming year and beyond.