Good morning, ladies and gentlemen. Welcome to SCG Analyst Conference for the second quarter and first half of 2025. My name is Warren from IR team, and I will be your moderator for today. We highly appreciate all the guests who come on site today and those who are joining us online as well. For those who are joining us online, please kindly change your registered name to your company and underscore your name so we can recognize you. Our management today are here to provide you with the second quarter and first half of 2025 financial performance as well as business updates. After the presentation, we will open the floor for Q&A sessions. Today's presenter comprise of SCG management led by Khun Thammasak, the CEO of SCG, who will walk you through the consolidated results and highlights for SCG Cleanergy.
Next, SCG management led by Khun Sakchai, the CEO of SCG Chemicals. Then other management from cement and construction related business, beginning with Khun Surachai, the President of SCG Cement and Green Solutions Business. Khun Wiroat, President of SCG Smart Living and SCG Distribution and Retail Business, who will be also presenting for SCG DECOR. Followed by Khun Chantanida , the CFO of SCG, who will be presenting financial parts and SCG Packaging. Then for the sustainability part, it will be presented by Khun Chana, Chief Sustainability Officer. Thank you, and now let's start the presentation beginning with Khun Thammasak.
Good morning and welcome to SCG quarterly performance meeting. Thanks for coming by and attending today's discussion. Today, I would like to discuss about our ongoing restructuring plans and our effort to improve the competitiveness and deliver the performance. I just want to highlight the trend that the half years, especially on the first half, cash flow generation EBITDA is around THB 30.3 billion, which is well under plan for our deliver. This is the core cash flow that can generate in the first half. The EBITDA from operation also improved 20% compared to the second half of last year. Look at the big trend of the first half and the second half of last year. In second quarter, reported net profit registered at THB 17.3 billion. This includes the restructuring value release from Chandra Asri, THB 16.7 billion. This is not cash.
We will give more detail on how we can arrive at this. We took the effort to improve our operation, especially exiting from some of the non-strategic, non-performing business, and also closing down some of the non-performing operation. This time, we stop the operation for, this is in Europe, but actually it's outside E.U. This is in Kosovo. The chemical recycle operation in Europe still going well, but this is outside Europe, outside E.U. that we decide to exit. Some of the building material in Indonesia that we decide to step out. That will register another loss of, all of these are one time. THB 577 million for Smart Living Indonesia, and the other is around close to THB 400 million. Basically this is the cleanup to make us more competitive into the future. Net profit without restructuring, it's THB 2.16 billion.
But if you, some of analysts look at the excluding the inventory loss. If you exclude the inventory loss, the net profit without restructuring cost will be THB 3 billion. So thi is not for qualitues, b ecause the oil price is coming down, there will be some inventory loss. As part of our effort to strengthen our financial position, the net debt declined by almost THB 30 billion and registered at THB 282 billion. And THB 32 billion declines registered from the Q3 last year that we are embarked on the journey of deleverage. Deleveraging still continue, w e still want to create a very stronger balance sheet and net debt to EBITDA dropped to 5.1x. And of course, when we do the competitiveness improvement and stop non-performing business, we register the loss as I mentioned in the previous page. But there will be an ongoing gain.
Our Q2 effort will create additional annual saving around THB 1.2 billion, so around THB 300 million per quarter. If you remember last quarter when we discussed our performance, we do the restructuring in last year, and this create the THB 600 million saving ongoing per quarter. And if you add up our new effort, it is become THB 900 million per quarter that we will release to make us more competitive. This is the effort that we try to do. So you could see that our cash flow are pretty strong and stronger compared to the previous half. So that is why we are confident that we can deleverage and at the same time we can take care of the shareholder. So the interim dividend will be THB 2.5 per share. This is 92% of earning excluding the restructuring.
This is still the same story that we discussed from last year that we have to strengthen our cash flow. We will look at the deleveraging and at the same time we will take care of the shareholder. So this is still continuity of the same strategy. In a little bit more detail. This is the business restructuring. Of course, the Chandra Asri value release THB 16.7 billion. And we also intend to sell 10.57. This is moved to the asset held for sale. So that our intention, there will be more detail to explain on this. And also the SCGC restructuring in Europe. This is basically in Kosovo, as I mentioned. P. Sang will explain more why we exit from the Kosovo. But the overall recycle in Europe is still quite okay.
And Smart Living in Indonesia, as I already mentioned, and we already did the exit on the 11th of July. So that is our highlight. A little bit in detail of the figure. Sales revenue register for second quarter is THB 124.6 billion. So slightly declined year-on-year but quite stable Q-on-Q. And for the first half, if you look at the first half compared to the second half of last year, sales revenue declined about 4%. That reflect overall economic condition. Again, so I think everyone are concerning and waiting for the result of the Thailand and U.S. tariff negotiation. I f you look at the direct sale of SCG to the U.S. is only 1%. That not a big amount. We can diversify to mitigate the direct impact. However, as the indirect impact that may impact the overall ASEAN economy, this is something the main concern for us.
But thanks to the successful negotiation between Vietnam, Indonesia, Philippines with the U.S., the economic condition for ASEAN will be not that bad. Now we have to wait for, let's say, probably tonight that we will know the result for Thailand. Before we start the conference, I just checked. The rumor said it's very close. Very, very close. So probably I think there might be some news tonight. EBITDA, you could see the EBITDA is pretty strong in the second quarter, THB 17.4 billion up QoQ and year on year. If you look at the first half, also the same trend. This is not only the EBITDA include dividend, but the EBITDA from operation also improve. So that reflect our restructuring and competitiveness improvement journey progress.
If you look at the EBITDA by segment, you could see that Chemicals, SCG Cement and Green Solutions, SCG Smart Living, Cement, Ceramic and Packaging all improve half on half. So the trend is pretty clear because we do the same to improve the competitiveness and do the optimization and close down on performing. In term of the profit, look at the net profit, THB 17.3 billion. But if you look at excluding the restructuring, so it will be THB 2.1 billion if you include the inventory loss. If you don't include the inventory loss, it becomes THB 3 billion. So that is the turnaround of the bottom-line corporation. We will give you more detail on how each segment can turnaround. So this is a little bit messy, but anyway, just want to highlight that typically SCG show the core profit. Without restructuring, we include the inventory loss.
To make it comparable, that's why we adjust number three to show clearly on excluding inventory loss. Again, hope that not confuse you. I hope that this help. So profit by segment also see the same trend as EBITDA. So every segment improve clearly, and this is including the restructuring cost. So that is the overall group performance. Then we will get into a sector discussion. Sakchai present.
[Non-English content] Good morning. Today, I just revise presentation slide a little bit to make it clearer. What happened is the last quarters actually the new capacity is still a lot that is coming on stream during the second quarters. Look at the new capacity in the second quarters from China's PE and PPs, is over 10 million tons comings during last quarters. But you look at the spread, the second quarter it seem improved from the last quarters. That caused by the energy price worldwide drop down after April 2nd. President Trump announced the tariff worldwide. That's made the energy price down. Actually, all of the polymer price is also down, but the cost, feedstock price is lower, more than the product price down. That's why make the gap is improving. Look at the gap, HDPE and Naphtha, the 363 and PP Naphtha 353 and also vinyl chain 332.
You look at the oil price down almost $8 per barrel. The demand actually is still soft. I will explain more why higher capacity demand soft, but the gap can be improved. Look at this capacity additions, as I mentioned, this is all the years. New capacity 12 million metric ton. On another side, last quarter I also explained the existing capacity and also the non-competitive cracker. There is shut down or even some of the complexes announced mothball, which mean if they have two, three, they may shut down permanently one or two. Combine the capacity of the announced mothball capacity about 4 million tons. The turnaround annually, this also can reduce the supply in this year. This year announced turnaround capacity about 5 million tons. On top of the capacity cut is from the commercials shutdowns.
The commercials shutdown mean maybe they have 100%, they probably run 80%, 85% or some of the crackers, they temporarily shut down. That overall is about 10 million tons. If you look at the new capacity and compare with the existing capacity, it seem that the net of the supply reducing. That also contribute to the spread of the PE and PP. This is just want to show our capacity utilization compared with the average in Asia. It seem we can utilize more. It mean we can run and sell more than the average of the player in Asia. This is the volumes the last quarters. You see as the gap is improved, that's why we can utilize more capacity. Overall, the second quarters, PE PP, we can sell higher than the first quarter about 30,000 tons.
Look at the half years compare with the half years, I mean the last year. It's also selling volume is also higher than the last year. If you remember last year first quarter, our Rayong Complex turnaround, and we also that time we extend the turnaround because of the gap is too narrow. Why do you change the volume is also in the same trend? Because the gap is improved. We can run more. Last quarter, we sell almost 190,000 and compare first half year-on-year is also improved. It's about 40,000 sale volume higher than last year. EBITDAs, if you look at reported EBITDA, it seem the second quarter is lower than the first quarter. We announced THB 1,790. Look at the operating EBITDAs, the second quarter is improved because of the gap, as I mentioned.
If we exclude the one times European restructuring excluding LSPE Project and also inventory loss, you will see from the operation is improved from the last quarter. We could achieve THB 4.2 billion. That's about 8% EBITDA margin. That's also including the dividend paid in the second quarter. Normally, the second quarter, the dividend paid is higher than the last quarter. Look at the net profit, the same. Reported profit, it seem a lot. It's THB 2.9 billion because of one time as Khun Thammasak just explained. If you just look at the operations, it's also improved because of the improved margins. Thailand asset, as always says, even though it is a tough situation, but Thailand asset we can survive and also can make a little bit profit. The net profit reported huge improvement because of the one time that consists of CAP. That non-recurring.
We combine two, three activities that we reported THB 16.712 billion. Restructurings Europe, as people mentioned, I just explain a little bit. Recycle business in Europe still promising because of the regulation in Europe are going to be imposed very soon to increase the recycle ratio in the finished products. But these assets located in Kosovo, and Kosovo outside OECD and also outside European country that recently they just announced the energy price is almost triple price. Looking at the potential in this country, we decided to close down this asset. Anyway, our plan for clean polymer on recycles are still ongoing and also we explore the opportunity to expand the business that both in ASEAN and also in Europe. This is the outlook in the third quarters.
Olefin chain is a seasonal high demand, but the potential to be affected by tariff issues look at probably within this one or two days. If Thailand announce rate is higher than our neighbors, it also will be more challenging. Also, ongoing new supply addition from China is about 2 million tons will be started in the third quarters. Also every year, summer season, LPG propane price is soft. This year is also relatively softer than the rest of the years. That is why that make PDH capacity in China can be ramped up. So we expect new, maybe the additional supply of PP from China in the third quarter. Also the tariff for propane import to China the last quarter after they retaliated the tariff, they announced import tariff to 125%. But now they compromise, they drop to 11%.
This is also have a good chance for PP producer in China can import with the competitive price. So it mean we expect the PP capacity in China will be higher supply. Oil price still stay soft if you compare with the first quarter of this year. But have to keep a close eye because now many issues are also the uncertainty in term of the tariff retaliation and also the geopolitics and also policy U.S. last years on this situation. Last two days after U.S. announced the sanctions, forced [Luxembourg] to pause the war. Let us make the energy prices firmer. You look at the crude oil price the past one, two day, the price is up now to over $70 per barrel. Vinyl chain, even though gap is improved, but the demand quite soft during the monsoon season and also the real estate in China still soft.
Vinyl chains, we expect the supply from U.S., the last quarter they export to Asia a lot. We every year, the third quarter is a hurricane and some of is the weather difficulty that make them export to Asia less than the other quarters. So all in all, the business will be the sideway. I can't say is up or down. Anyway, in term of this abundant supply and also the existing capacity reduction. At the same time, the energy price, we expect remain this low level. So that will be the next quarter situation. What we plan or what we do right now, of course, the optimization to keep close to the market movement. That will be our focus to run more or to run less or to take the advantage of the situation time to time that we have to do.
Also our HVA and polymer, this is proven can contribute to the bottom line. The margin is much higher than the commodity. Our HVA and our downstream product about 60% that will continue or even if we can sell higher, we will do. To focus on the product development is still our priorities. This year we achieved 20 grades that is coming out. Also the policy to lean and also try to reduce the working capitals that we will do more. Also LSPE restart, that we try to maximize our asset. Just 2 weeks ago, Vietnamese government announced increased the import tax 2%. That is a little bit help to the business. Look at right now gap is not much, but if you compare with the first quarter, it seem improved. We hope this situation we could make LSPE running again.
Non-cash or non-financial benefit is we can test our machine. We also can train our operators. We hope after our LSPE complete the liftoff, we could run smoothly. Also the progress of the LSPE is what we used to announce all the activities we will do to improve the competitiveness of LSPE. Now everything is on plan, including the budget. That is I already explained our LSPE. Just have to new business highlight. I would say this is two potential business that just like investment. We try to utilize our knowledge and experience to support business partner and also can grow the business. First one is Digital Reliability Solutions. This is more and more customer appreciated. We help our partner and customer to optimize the asset, and also to do the plant reliability, and also improve productivities.
This business we already announced. We will update time to time how successful of this new business. Another one so-called GLUX, is we upgrade our byproducts to generate the incomes. This is very promising and also very go with the trend, because it is a kind of energy-saving business. So we already successful to pilot with the cold chain industry. One of the big name cold chain industry in Thailand already buy the service. This is also not only the cold chain, also all of the office building is also would be our potential customer. More and more about the energy saving, we will try to develop to serve with those application and the market. That conclude all my presentation. Next is Khun Surachai, please.
[Non-English content] Good morning [Non-English content]. May I start from the financial result. In the second quarter, SCG delivered very strong financial performance. As you can see from the slide, our revenue from sale and EBITDA increased by 7% and 25%. Profit also increased double if compared to the same period last year. Mainly come from our cost reduction, efficiency improvement and pricing strategy. The second performance remain positive if compared to the first quarter. In term of the first half, our revenue from sale and EBITDA also increased by 2% and 13%. Profit increased 55% year-on-year, mainly from our cost reduction and pricing strategy as I have mentioned earlier. In term of market, for the Thai market, overall cement demand in the second quarter increased by 3% year-on-year. Infrastructure and commercial segment are the main growth driver in the second quarter.
Market in ASEAN also significantly improved compared to the same period last year, particularly in Vietnam and Cambodia, mainly from infrastructure segment also. For our low-carbon cement, in this quarter, I want to update all of you. We are proud to announce that our low-carbon cement is the first brand in Thailand to receive a certification under the new hydraulic cement standard. Importantly, the product is designed to lower greenhouse gas emission by reducing clinker usage, while we can maintain our quality at the same level of a Portland cement. We are not only reinforce our commitment to achieve net zero, but also set a new benchmark for sustainable construction material in Thailand. For our major development in the second quarter, our big developers, they are interested in using our low-carbon concrete in their project. This can reduce carbon emission by 10%.
Moreover, our third generation low-carbon cement, which could reduce carbon reduction by 40%, was award by ASA platform selected material in this year. For the outlook, we foresee continued growth in Thailand in the second half, mostly driven by government projects. While we are seeing continued growth in the ASEAN market. For the future effort, we continue to working on cost reduction by using alternative fuel and expanding our green product into high growth market. For example, in U.S., Canada, Australia and Oceania. These are initiatives and all our efforts that I have mentioned. I believe that it will help SCG be competitive among the uncertainty situation in the second half of this year. So that is all for my part. May I pass to Khun Wiroat?
Good morning. Thank you for joining this session. Let me start with the Thailand building materials situation in the second quarter. The second quarter saw a drop, 9% decline, mainly due to the slow demands in the residential segment, caused by the weak purchasing power from higher household debt and rising construction material prices. However, there are positive signs in the non-residential and the government segment. For the regional market, we saw the potential market in Vietnam and Cambodia is potential because in Vietnam it is driven by a tariff benefit. We need to closely monitor the competition, transport costs, and demand and uncertainty issue. For the operational, financial, Smart Living and Distribution & Retail is this quarter, both EBITDA and net profit experienced decline was primarily due to the soft market demand and business restructuring effort.
For the first half of this year, our performance in the first half dropped due to the soft market sentiment across ASEAN. For the highlight of the Smart Living business, we continue to innovate to expand our product offering across diverse market segments and drive cost efficiency as following: we have created wider range of color and design for the concrete roof. For Smart Value products, enhance SCG Smartboard Super, which has a strong more strength and flexibilities, leading to a superior performance. Furthermore, our commitment to operational efficiency has resulted in significant cost saving, THB 105 million. For the SCG Distribution & Retail, we have expanded into the SME market, capturing high growth opportunities and serving more diversified customer base. In addition, to make the customer experience even better, we have built our AI, Beyond Homii, on the SCG HOME line officials.
Our smart and friendly AI assistant, which was previously launched and well-received by users. We have now to connect it with our contact centers and preparing to launch a new service solution. For the outlook in the second half, despite uncertainties, we expect recovery from the government and commercial projects in Thailand, along with the promising potential in Vietnam and Indonesia, driven by the favorable tariff condition. However, we continue to closely monitor the situation along the border with Cambodia, given the ongoing risks and potential impact on regional logistics and demands. To capture new opportunity and overcome challenges, we plan to expand the Smart Value product at affordable price, accelerate how we reduce cost to ensure we are even more competitive in market, expand our business in ASEAN and SME, and build sourcing agility to better manage tariff challenges and ensure more flexible recent supply chains.
Last but not least, adopt the technology and AI to elevate the customer experience, make every transaction faster, easier, and more personalized. For the SCG DECOR, EBITDA increased 5% Q-on-Q, and the net profit increased 19% QoQ, if we exclude the non-recurring expense. This improvement came from the regional market recovery, especially in Vietnam, where the SCG's world-class facilities are located, and from the continued cost-saving and efficiency project. Also, the EBITDA and sale improved 15.2% and the net profit margin rose to 4.8%. Both are higher than the last quarter and the last year's. In the first half of this year, the company maintained a solid profitability in challenging market, support by the cost saving, better efficiencies. If we exclude non-recurring restructuring, EBITDA on sale improved 14.6%, and the net profit also reached to 4.4%.
Both are higher than last year's. Thank you. That's all for my part. Thank you, everyone.
Thank you. Good morning, everyone. I'll start with a very quick recap on the SCG Packaging performance. For the revenues on the first half of this year, it was about THB 64 billion, down both from year-on-year and half-on-half. Pretty much because of the lower selling prices in both the integrated packaging business and the fibers business. But if you look at EBITDA and net profit, although they dropped year-on-year following the drop in revenue, but improved half-on-half. EBITDA in the first six months was THB 8.5 billion, and the net profit was THB 1.9 billion. Improvement was because of that continued effort in terms of the energy cost savings and also the effort on the raw material sourcing. Looking at the second quarter number, pretty much in line with the first half.
Revenue dropped both year-on-year and Q-on-Q, but EBITDA and net profit improved Q-on-Q. Move on to the financials. This is the page that we are very happy to show because this is our homework and our promise that we promise to reduce the working capital. You can see from the top left box that working capital has continued to decline. From the end of last year, we would be able to reduce working capital by THB 11 billion. From the end of first quarter, we can reduce it further, another roughly about THB 7 billion. On the net debt as well, that another promise that we will not increase our net debt and we will continue to lower it to deleverage SCG. Net debt also reduced same as working capital.
At the end of Q2, net debt dropped by almost THB 8 billion from the previous quarter and THB 13 billion from the end of last year. Cash remained at healthy level, about THB 45 billion at the end of June. In terms of the spending, this is another homework that we mentioned that we will control our spending both in terms of the capital expenditure and investment. For the first 6 months, we spent about THB 15.4 billion. If you recall the first quarter, we spent about THB 6 odd billion. The second quarter is about THB 9 billion. THB 9 billion, the major portion of that THB 9 billion was the acquisition of the shares in Duy Tan Plastics in Vietnam. That's about THB 3.5 billion. If you subtract that, it's about the same level of the Q1, THB 6 billion.
At this point in time, we're still confident that we would be able to achieve roughly about THB 30 billion or THB 30 billion plus, slightly plus for the full year of 2025. Let me spend a little bit of time on this slide. I think since we announced the performance yesterday, there's a number of questions about the January 3 number. What I would request is, please be patient because CAP is a listed company in Indonesia, and they will announce the second quarter performance, I believe, on the August 5th. By that time, I think all the number will be fully released and you would be able to calculate on whatever the questions that you may have in mind. We are very ready to explain by that time.
With this THB 16.7 billion, these extra items that occur in the second quarter, there's three elements within that. One is a negative goodwill, which as I mentioned, they will announce on the August 5th. So we take that 30.57% on that negative goodwill into our financial statement. The second element is the performance of the Aster.
Aster is the, if you recall, the refinery that CAP bought from. They closed the transaction on April 1st, that refinery in Singapore that they bought together with the Glencore. Since the close of this transaction, we have to take the performance of the asset through the CAP on financial statement. This is the second element in the THB 16.7 billion. Last is the fair value adjustment. Once we change the status of CAP from the associated company to other investment, as per the accounting standard, we have to do the fair value adjustment.
That has been done by the certified third party. But you may ask, what is the fair value that we have put in? As I mentioned, please be patient, and all the numbers will be disclosed in the notes to the financial statement once we release the review financial statement of the second quarter. Anyway, all the transactions are the non-cash items. So within the financial statement, you will see the two different accountings. One is the 20% stake we will put as the other investment. Second is the 10.57% that we put as the asset held for sale, that reiterate our intention to sell this 10.57% portion. With this, from now on, actually starting from June 1st, we no longer take equity gain or equity loss that incur from CAP.
Going forward, if any dividend payment paid from CAP, that will go straight to our P&L. I think that is a lot of information. As I mentioned, please be patient. After CAP announce their performance, I think we will be able to explain more in details in terms of the number. That concludes my part. Let us move on to Chana.
Good morning. Just want to update that the first half of this year, SCG made a strong progress on the greenhouse gas, reducing to 13.81 million tons. A key part of this success came from using the alternative fuel, both the biomass and also RDF across the SCG is about 27%, and cement business done quite well at 40%. This progress strengthen SCG business by reducing our energy costs and also improve resource efficiency, and scale up low-carbon solution across the SCG. Second, with Sandbox, that we still continue work with the government side using five level, as you can see on the slide.
The progress is we still continue develop the energy sector using the green pilot project towards electricity sale through the third-party assessment to prove that if having the very good policy support from government side, we can also lower down the energy cost across the industry and also can have more competitiveness in the industry. Second, we get the support from the Canadian government passed through the UNIDO by giving us the money to have the mobile carbon capture unit. Right now, it is made there in the Canadian area. It will move to test in some of the cement company in Saraburi. Third, eco-friendly rice wet and dry simulation and test in the area of Saraburi province. We also expand the area connecting to the OTOP and tourism network to support clean agriculture. This direct spending in the area of the Saraburi province.
The fourth, we also increase the green space, and also gaining momentum with the support from the environmental fund. It is about THB 4 million and community-led forest bathing or apa activity that promote forest conservation and local income. This is the very highlight on our activity. Tomorrow we will have the ESG symposium that you can see that a lot of very interesting speakers will also join this event tomorrow. ESG symposium will take place here in our head office in Bang Sue. The event brings together global leaders and strategic partners from the government side, business, and academia to drive collective action toward a cleaner, more resilient future. If you remember last year or so, we submitted the white paper to the government.
We still continue working on that one, and this year we quite focus on the net zero group in Thailand to discuss how we can further drive and work to get good support and move forward for our country. Especially, we split into breakout rooms. One is the SME, to see how we can have the initiative or the idea that can propose to the government to support our SME transformation. Second, it is also always very important is energy transition, how we can transform our energy in our Thailand and also bring up our competitiveness among the ASEAN. May pass to Khun Thammasak.
Just a little bit on the ESG symposium. Actually, ESG is quite a big issue at the moment because of the economic condition, the global economic condition. Tomorrow will be a working session for the leader to get together, figure it out how to move forward in the current environment. This is a very challenging question that we pose to all of the leaders who will join. That is quite interesting. We bring in very senior people to come in a close group to debate and to share their input. Then after that, we will announce the thinking and thought later on. For clean energy, clean energy is still a very steady growth. Demand for renewable energy is plenty in my opinion, and very important for competitiveness of the country.
That is why we are participating in this renewable energy, and you could see a steady growth. In the second quarter, all the registered megawatts improved 8% to 870, and energized or operational megawatts registered at 388 MW. Still steady. On one hand, we control the net debt as a group, but on the other hand, we are still progressing on this clean energy development. That is why we trade off and choose only for the high-quality project that is important for the long-term scalability. When we are investing in clean energy amid this current situation, we are participating in the smart grid, which is a very important piece of technology.
The smart grid allows the industry that within this grid can optimize, can buy, and can sell the required renewable energy or the surplus renewable energies to reduce the loss and to improve the return on investment. That is the power of the smart grid, and we are already installed the system in Chachoengsao with a group of customers. We are working with the EGAT as a Sandbox, and the PEA as a Sandbox, successfully complete data exchange and system integration to test this model. You know, I believe that this is a smaller scale of the third-party access that we can demonstrate, and hopefully third-party access will be adopted and implemented soon. Another piece of technology that we are pushing forward is energy storage, highly efficient energy storage. We are choosing the Rondo Heat Battery, the Rondo Heat Battery, as you know.
We already installed the first one in Thailand in Saraburi, and now under commissioning. The initial result is very impressive. Very impressive in terms of the energy efficiency. It is up to 93%. This is not bad if you compare to lithium-ion and the other type of energy storage. This far exceeds the conventional energy storage.
That is why we see it very promising, and we are working on the new generation, basically to create a green steam generation. So that is the quick update on the clean energy. Okay, now it is the very difficult prediction for the second half of this year, I have to say. Since we do not know the result of the tariff yet, and likely that maybe tonight we will know it. I hope that we are very close or similar to Vietnam. That is important. Okay. Anyway, in business, we have to prepare everything in advance.
We cannot just wait, and then we make a decision and take an action because there will always be the delay. So that is why we take the action in the second quarter already. Our key idea is that we should leverage SCG's strength as the ASEAN multi-location supply chain. Basically, if— I do not know, just worst case scenario, if Thailand has been imposed by 36%, then we have to push Vietnam, Philippines, Indonesia as the export to U.S. And Thailand, Cambodia will have to push to serve the region instead. So that is a strength of the regional supply chain.
So that's why we quickly transfer the technology and innovation from Thailand to regional operation to make sure that we have more flexibility to serve the global market. Low-carbon cement already introduced in Vietnam and later on will be in Indonesia. So that is why we create our flexibilities.
LSPE restart, this is as [P. Sang] mentioned. Restart because we want to test and we want to maintain the skill and make sure that our people are skillful. For the machine, if you stop for long, it is not good. So you want to start up from time to time at least. The margin is not as low as in the fourth quarter last year. Of course, we are watching, we are optimizing. So that is something we are doing now. SCG Packaging now optimized the ASEAN and production to serve the growing local market. If ASEAN, in general, do not impact much on the tariff, and if China still get going in term of the exporting to the U.S., if the flow of the economic activity is still moving like this is not bad at all. Not bad.
Of course, tariff is bad, I have to say. Tariff 10% and tariff 20%, 20% will pull the global regional GDP down. That for sure. That is the fact of it. But it is much better than 36%, much better than 40%. That is what I mean. We are operating in this situation. Of course, a lot of uncertainty is looming over the next six months. A lot of uncertainty and volatilities. That's why we have to be careful and deleveraging journey is still go on. We not have confident that everything will be bright. That is why we take a very cautious step on this part. Working capital efficiency, linear supply chain, we still continue to do. But if we start up Long Son, we may need to put more inventory. That is the way it works, right? You need an inventory in order to run the asset.
Long Son is the large asset. That is something we are mindfully implement. Operation efficiency and cost reduction. This is another thing that we are pushing very hard on the competitiveness improvement. Automation, robotics, energy saving, consolidation of the production facility, regional optimization. This will be the thing that we will continue to push forward. It will make us more competitive into the future. Another thing is the, okay, sorry for the name of the Smart Value product. Last time I call it the quality affordable products. But my marketing team say, "No, no. People is not good. You should not say affordable. You should say smart things." A lot of debate. I did not win the negotiation with my marketing team. I could not win Khun Chantanida comment also because she is the one who proposed the smart.
Anyway, we come up with the one who really make a choice, Khun Wiroat, for the Smart Value product. Anyway, we will call Smart Value product for the affordable segment. Why this is important? Because we feel a pressure from deflation come from mainland China. For example, the cheap product from mainland China. We need to do something if we want to stay relevant. That's why we are campaigning on this good quality, very good qualities engineers in a way that our cost is very competitive. Okay? Customer will enjoy the quality that we design. This is very good quality, but we will strip unnecessary quality for that particular segment. That is what I mean. To make sure that we are competitive with the import products. You could see that we are not only competing on the high value added.
High value added still relevant, but if you look at the overall slow down the economy, you need the Smart Values to fill in. Again, our strain, our SCG strain is on the ASEAN operation multi-location. I just want to highlight the facts that at the moment we have 24,000 staff in ASEAN outside Thailand. Okay? This is 45% of our people is outside Thailand. ASEAN outside Thailand is very high GDP growth. That is why we should take advantage of this local operation in ASEAN. The demographic is still pretty attractive and still consuming, and we could design the region to specialize and to synergize each other. You could see that [Non-English content] Kulachet now is in Vietnam. We send a very senior people to operate in Vietnam. That is why we send and respond very quickly.
He successfully convinced the Vietnam government to impose the 2% tariff for the chemical. That is a good new. [Non-English content] Wiroat also take care of the Indonesia. That is our strategy. Second half is still a lot of uncertainty, something that we have to be very cautious, that for sure, but we are really prepared for it. Let us see the good new or the bad new by tonight or tomorrow. Then we will adjust on. Yep.