Good afternoon, ladies and gentlemen. Welcome to SCG analyst conference for the first quarter 2025. I am Sukanath from the Investor Relations team, and I will be your moderator for today's session. We highly appreciate to welcome all the guests who join our session, both online and on-site. For those who join online session, please kindly change your online register name to your name_your company, so we are able to recognize. Our management are here to provide you the first quarter of 2025, as well as the important business update and outlook. After the presentation, we will open the floor for the questions. Today, presenter comprise of SCG Management, led by Khun Thammasak Sethaudom, the CEO of SCG, who will walk you through consolidated result and provide highlights of SCG Cleanergy. Second, SCGC Management, led by Khun Sakchai Patiparnpreechavud, the CEO of SCG Chemicals.
Next, our management from business related to cement and construction materials begin with Khun Surachai Nimlaor, President of SCG Cement and Green Solutions, and Khun Wiroat Rattanachaisit, President of SCG Smart Living and SCG Distribution and Retail, which will also represent the SCG Decor. Will follow by Khun Chantanida Sarigaphuti, CFO of SCG, who will present the financial parts and also SCGP. Lastly, sustainability part will be highlighted by Chana Poomee, Chief Sustainability Officer. Without further ado, now let's start for today's presentation, beginning with Khun Thammasak.
Good afternoon. We come back and discuss again on our first quarter result. I think it look like we can separate into two part. First part is we will submit the homework that we commit over the past few months on the restructuring plan and the result. Second part probably will be the most interested part is on the outlook on the tariff and discussion on the trade, for how it will impact SCG and also our strategies to cope with the issue. That is what I plan to discuss today. Start with submit the homework. So our strategy is to commit and to focus on the strong cash flow EBITDA. This is our theme from last years, and we continue to deliver better cash flow.
First quarter, our EBITDA register at almost THB 30 billion, and this is the before the dividend season in the second quarter. First quarter is normally is not a high dividend season. EBITDA from operation, which is reflect our operation performance, increased 22% Q on Q. So we register EBITDA from operation at THB 11.7 billion. Earning after tax register at almost THB 1.1 billion. Earning after tax has register. If we are excluding the LSP just for the sake of the comparison, the earning after tax exclude LSP will be almost THB 4 billion. The reason that we perform better in compared to the last quarter, actually from every business unit performance. So you could see in detail later on. Thanks to the restructuring that we have done over the past few months, cost saving and recombining the operation, competitiveness improvement. This result in a stronger margin.
If you look in detail business by business, Pi Surachai will explain to you that the cement and construction business in the first quarter seasonally getting better compared to the fourth quarter, which is the year-end quarter. Chemical operation, if you look at the naphtha and the gap in Q1, is more or less the same as Q4. But performance of the chemical better from the cost saving, restructurings, and also the portfolio management on the HVAs. Packaging business also very resilient, come back because of the consumer link. These are the detail that will be present later on. Net working cap has been reduced further. If you remember, from the mid of last year when we announced the plan to the end of the year, we can reduce working cap by THB 16 billion.
We continue to lean our working cap further for another THB 3.6 billion, almost THB 3.7 billion in first quarter. So our campaigns to create a lean supply chain and at the same time allow us to reduce the net debt further. Our net debt now stand at THB 290 billion. The interest expense dropped to THB 2.8 billion. In term of the consolidated result, you could see the sale revenues drop 5% quarter-on-quarter and flat year-on-year. Because last quarter we still have LSP operation during before we decide to temporarily shut down. So that why quarter-on-quarter drop about 5%. This is the revenue by key segment. Cement and Green Solutions revenue increase quarter-on-quarter and together as the Smart Living. SCG Decor is more or less flat and SCG Packaging also increased. That means the only sector that reduce in term of revenue is the Chemical.
If you look at the revenue by sale destination, our direct sale to U.S. is approximately 1%. So the direct impact from the tariff is really limited because 1% is not a big deal. We can divert the proportion very easily. However, the indirect impact is the key issue, which we would discuss later on. If you look at overall Thailand plus ASEAN business is almost 80%. So that is the main concern. If ASEAN has been affected by the tariff, that will create a slowdown in the region. This is something that we have to deal with. EBITDA, especially on the EBITDA from operation, improve 22% and overall EBITDA, including the dividend from associate company register almost THB 13 billion. So, typically the first quarter is not the dividend quarter. In the second quarter we will see the dividend season come.
Profit, we register for the first quarter at THB 1.1 billion, up quarter-on-quarter. If you look at excluding the LSP, you still see that the net profit also improve significantly. This is come from our business unit. As you can see, Cement and Green Solutions, Smart Living, SCG Decor and Packaging. So the net profit improve more than the sale increase, mainly because of the cost reduction and the reason that I already explained. So that is the quick submission of our homework, and probably we can move to the detail of business unit.
Good afternoon. I would like to start with the overall economies. As we know well, the first quarter's overall economic are slowdowns that also make the polymer demand quite weak. Look at the supply side on the first quarter. There are the new capacities addition in China. At the same time, also existing capacity and also some of the small capacity, they announced mothball or shutdowns or some of the capacity, they also prolong the shutdown. The supply side with the demand weak. Average is almost equal. That's why you look at the price quite stable. This is just want to show this average capacities in the industry. Overall, SCG Chemicals, we can utilize the capacity higher than the average of industry. Look at the olefin chains. As I mentioned, capacity addition and also some of the reduced existing capacity.
Look at the spread is also quite stable compared with the last quarter, I mean, the Q4 last year. Look at the margin, the spread, PE naphtha and PP naphtha is almost the same. This is what I used to share my idea from the last conference. It seemed that the overall market is bottom out. But such a low margins prolong, and if the new capacity come and make the price down, you will see the more number of the capacity will be reduced or even shut down. This is also proved, the industrial margin at this level will be sustained at the bottom of the cycle. In term of the volumes. The volumes Q1, PE and PP, much less than the last quarter because of we shut down LSPE. And vinyl chains, the situation is also the same. The gap is quite stable.
It's at about $300 . It's not good. It's not the healthiest gap, but it's also bottom of the cycle. And you look at the price is also quite stable. In term of the volume of PVC, we can produce and sell more because of VCM number one, the last quarters, we shut down. And the beginning of this year, we resume the production. That's why we can run almost full capacity. Financials SCG Chemicals, the revenues dropped from the last quarter. The revenues at THB 50 billion. That's because of the LSPE shut down. Look at the EBITDAs. EBITDA much improved than the last quarters. EBITDA from the operation is about THB 1.4 billion. And also this quarters, we also get dividends, THB 1.13 billion. For the profit, is more or less same.
We say that the operation in Thailand is dealing very tough situation, but we can break even. But if you compare last quarter and this quarters, last quarters inventory gain about THB 1 billion, but this quarter inventory turned to be loss, about THB 100 million. All in all, with our inventory gain or loss from the operation in Thailand, we can make the profit. And also, LSPE, we shut down, but we try to lower our cost, the base switch cost and also administrative cost. That's why the loss is less than our plan, and also compared with the last quarters. Outlook. The margins after April 2nd, after the U.S. government announce of the import tariff. So make the energy price down, that also make the naphtha prices down. In the short term, it seem that the industrial margin improve.
It's about the first week after announcement, the spread expanded about $100. It seems this is positive to the player, especially in Southeast Asia. What we plan and what we monitor the market closely is the retaliation of China to U.S. At this moment, it seems that China rely on import raw material from U.S. Basically, ethane 100%, China import from U.S. Also, about 60% of import propane also from U.S. Look at current situation, Chinese government still insist about the import tariff into China still 125%. That is impossible to run the business. These factors are very important because if they cannot buy the raw material, it's about 5 million tons a year of ethylene will disappear. Also propane, raw material for propane dehydrogenation is almost 20 million metric tons. Anyway, propane still have some flexible of Chinese producer.
Chinese can import from Middle East to replace raw material from U.S. Anyway, that cost increase drastically. Even though at this moment, Chinese, the short term, they have to stop import, make the Middle East propane price increase. Now the price from the Middle East higher than the price compared with the Far East Asia, like that cost is about over $50 per ton. At this moment, the Chinese producer, they try to get approval. They would like Chinese government to exempt the import duty. We hope the government will support. If the government relax and announce exemption on the tariff for the feedstock, it means Chinese producer can resume the production. That resume the production is not only the existing capacity, several new capacity that also right now still struggle and wait for the raw material from U.S..
As you may know, this year, the new capacity in China's PE and PP, including the crackers, is almost 20 million tons. Those capacity will be idle or reduce late if the Chinese government still insist the tax. Insist the high tariff. That's why the situation still sensitive and fragile, and it will impact to the business in what way is hard to predict. But for sure, the demand of the industry will be weak. You look at the global GDP and also the regional GDPs is also weak. Thus, is the commodity, including plastic or the polymer demand is also weak. The vinyl chain is also same. The vinyl chain is also actually a PVC, the main demand from the construction, and that's very much linked to the property and real estate in China. That could be prolonged in term of the weak demand in China.
At the same time, right now, EDC price is also dropped down sharply. Ethylene down, EDC down, that improve the gap of the PVC, even though the PVC price right now is lower. What SCG Chemicals doing and plan to do? Of course, firstly, we have to maintain the cost reduction. How to do the cost reductions? Mainly, we look at our administrative cost and also the feedstock cost. The feedstock cost actually is more impact than the other cost. To monitor the market closely and also try to find the opportunity to bring in the cheap feedstock into Thailand. Also try to optimize the production plan, the product mix, and adjust our sale and the customer to match with the situation. All in all, the supply chain must be flexible enough to adjust our sale in line with the market trend.
Also, of course, at this moment, you look at the gap, it's not healthy, but it's affordable, even LSP. We also try to prepare our sale, including our LSP. If the situation's prolonged, it mean this gap can be like this or even higher, it mean LSP can run the plan. Now we prepare everything. If situation is favor to LSP, we probably will bring LSP on stream. Okay. Also to keep closely to customer and also flexible in supply chain and also try to look at the market, so-called HVAs, that customers still need the products. Of course, the clean polymer, the recycle, we still pursue, and that is not impact much. Next is just want to update LSP. LSPE, that is ongoing. Everything's on track. Last quarter, we already signed five ships. That is our plan.
We also signed an EPC contract to build the ethane tank. Also we also work with the licensor for the plant modification design. Everything's on track. Also the construction of ethane tank is already started. Look at the pictures. The piling already started and will be finished within a month. That is what I update. Everything's on plan. This is also just a small highlight. Last quarter, our technology business and also our service business are still doing well. DRS, our digital reliability service, we continue this service and also renew the contract with B.Grimm. Also, the new business is fetching materials that can restore the energies. This is the new products, very good with the cold chain. That is, we already launched the products together with our sister company, SCGJWD . That's all my part. Thank you.
For Cement and Green Solutions business, I would like to start from the financial part. Look into this presentation. In the first quarter, EBITDA increased by 3% year-on-year. Profit, you can see from the figure, improved significantly, 20% year-on-year. We performed quite well in the quarter one, mainly from cost reduction and streamline our business that we have put a lot of our effort since last year. In Thailand, overall cement demand in the first quarter increased 7% year-on-year, significantly improved compared to the previous quarter. Infrastructure is the main driver for the growth of 15%, followed by commercial segment of 5%, while residential are flat. Our ready-mix concrete demand increased 4%, aligned with cement demand growth. In ASEAN, market in ASEAN also improved compared to the same period last year, particularly in Vietnam and Cambodia.
In Vietnam, come from government budget injection into the infrastructure segment, and in Cambodia, come from industrial project in border area and special economic zone. Let's move to the highlight. In the first quarter, our alternative fuel usage can maintain at a level at the 44%. In this 44%, we can shift the proportion of usage that we can use more ADF, which is a cheaper price than biomass, resulting in we can get lower fuel price. The replacement of Portland cement, OPC, with low- carbon cement has increased from 87% to 88% in quarter one. We are successfully launching Low- Carbon Cement Gen 1 and Gen 2. We have been working with architect to create our use case for the building that made from Low- Carbon Cement Gen 3, which can reduce our carbon by approximately 40% more than Gen 2.
In Vietnam, we aim to become a low- carbon cement leader by being the first to get the EPD certification. We also plan to use Vietnam operation for exporting to global market. This could improve our supply flexibility. For the outlook, we foresee continued growth in Thailand at growth rate around 2%-3%, mainly from government project, and followed by a commercial segment, while we are still seeing continued growth in ASEAN. For the future effort, we continue working on sale expansion of our low- carbon cement, both in Thailand and in global market. We continue to implement cost reduction by increasing our alternative fuel and renewable energy usage. Let me introduce you a little bit for our service, CPAC Lifetime Solution. CPAC Lifetime Solution is a joint venture between CPAC and Japanese infrastructure repair company.
This partnership bring together local market insight and Japanese cutting-edge technology in term of repair and maintenance. We have supported seven clients, both in public and private sector after earthquake in Bangkok last month. We can provide end-to-end Our service from structural assessment, repair and maintenance, corrosion protection, and material supply. So this is our opportunity to capture value from repair and maintenance work. So that is all highlight from Cement and Green Solutions. May I pass to Wiroat , kap.
Good afternoon, kap. For the SCG Smart Living and SCG Distribution and Retail. Today, we start with the market situation. For Thailand building material market situation in the first quarter dropped 6%, mainly due to the slow demand in the residential segment, caused by a weak purchasing power from the high household debt and the rising construction material price. However, there are positive sign in the non-residential and government segment. For the regional, Indonesia is seeing weaker demand due to the uncertainty in the government investment. Vietnam continued to grow, and Cambodia remained steady. In term of the financials, we increased the EBITDA and net profit by 12% and 29%, respectively, driven by the cost efficiency for the operational enhancement. For the SCG Smart Living business effort, we continue to deliver innovate and sustainable product for the net zero society while enhancing cost competitiveness.
Example, Elitar is affordable ceramic roof tiles with the installation package. SCG Smartboard ULTRA and Eco- Friendly Board with the 20% increased durability. Expand roof truss business, improving cost competitiveness and service level. Additionally, ongoing efficiency improvement, they yield an cost saving around THB 53 million . The highlight of the distribution and retail. The first quarter, Mitra10 in Indonesia is expand one new branch in Bandung. Is a mixed-use format. Is total number of the store in Indonesia now is 57 branches. In additional, we utilize digital and AI technology to enhance customer experience by launching smart and friendly generative AI assistant named Homie Gen AI on the SCG Home online officials to effectively handle customer inquiry and offer the fast and convenient shopping experience via the chat to shop features.
For the outlook, despite ongoing uncertainties, we expect the market improvement from the government spending in both Thailand and regional market. We also see the new renovation opportunity following the earthquake. To capture the new opportunities, overcome challenge, we plan to capture the renovate opportunity from the earthquake with the wall system, penetrate affordable product segment, export to the new market, and leverage global sourcing to reduce U.S. tariff impact, and continuing developing the utilizing AI to create better and more convenient customer experience. Following the recently earthquake, our business respond quickly to our Q-Chang service, which provide 24-hour support from the professional technician to assist affected homeowners. We also built a system we call the Quake Checks to help people after the earthquake by providing repair cost estimate for the house and condominiums.
Beyond our service offering, our smart system and solution, including the SCG Wall Lining system and SCG Smart Wall - PRIVAZY system, can provide efficient and high performance alternative for wall repair. Moreover, residential of the SCG Home can be assured earthquake protection up to 1,200 kg. Next to the SCG Decor. Overall, the company has consistently improved its profitability and competitiveness during the market slowdown. Compared with the previous quarter, the EBITDA increased by 34% and 171%, respectively, thank to improve the operational excellence and cost saving and business restructuring. However, the EBITDA dropped by 5%, profits was down 16% year-on-year from effect of baht appreciation against the local currency. Lastly, the EBITDA margin and net profit margin improved to 13.7% and 3.9% respectively. That's all my part, kap.
Thank you. Good afternoon. I will start with the recap of the SCG Packaging financials. Revenues for Q1 was THB 32.2 billion, down 5% year-on-year. That's pretty much because of the lower average selling price and also the lower export volume. Although the volume with domestic market increased, but that's not enough to compensate the drop in the export volume. EBITDA was THB 4.2 billion, and net profit was THB 900 million. Both are down from year-on-year. That's pretty much in line with the lower revenue and also because of the higher raw material costs. But improved on Q1 Q pretty much. EBITDA improved 49% and net profit improved from the loss in Q4. That's because of the increased volume and also because of the continued effort of SCGP in terms of the cost saving, improve the production utilization. Next is on the financials.
The format changed a little bit on this page, but I think the key message here is that we deliver our commitment that we have given out since the middle of last year. We reiterate many times that the key priority is to have the financial stabilities, and the first commitment is on the working capital that reduced. As people mentioned from the end of last year, THB 91.3 billion, we were able to decrease by THB 3.7 billion. But looking back from Q3, that is a big drop to Q4, and all the business unit continue their effort to manage the working capital. On the net debt, this is the second commitment that we said we won't increase our net debt, and we continue to decrease from the Q3 of THB 311 billion down to THB 295 billion and down to THB 290 billion at the end of Q1.
Our net debt to EBITDA is now at 4.3x. We realize that is still on the high side because of the low EBITDA cycle, particularly from the chemical business, but we will continue to deleverage the net debt to EBITDA. Cash dropped from THB 53 billion down to THB 43 billion at the end of Q1. That is pretty much we used the cash to repay debt. That helped reduce the finance cost down to THB 2.8 billion in Q1 from THB 3.1 billion in Q4. As I mentioned, we reduced debt and also we adjust our borrowing portfolio to have more short-term borrowings. At the beginning of this month, we successfully closed the rollover of our debenture of THB 15 billion at the 3.2% coupon. Another commitment that we promised that we will control our spending on capital expenditure and investment.
In Q1, we spent THB 6.1 billion, and if you look at the circle next to it, you will see that probably close to half of it is for the maintenance CapEx. We still confirm that our capital expenditure and investment this year would be in the range of about THB 30 billion. Thank you very much.
With the strong execution in the first quarter of this year, SCG successfully reduced its greenhouse gas emission scope one and scope two at 6.36 million tons. This is still on track of the 25% on SBTi target that we set. Also mainly from the increasing of the renewable energy and additive fuel utilization as Khun Surachai said that the cement reached to 44%. For the whole group is reaching to 29%. Thanks for our team that can get the resulting in both carbon reduction and also operational cost saving. Second, I would like to update the Saraburi Sandbox has continued to demonstrate tangible progress in the first quarter of this year as the successful area-based model for advancing low-carbon city demonstration. We have key highlights in five areas in the first quarter.
Energy transition progress on solar floating, that project on the concrete through multi-agency collaboration with the government agency and especially EGAT to design and moving forward to achieve on this testing model. Second, industrial decarbonization, IPPU, hydraulic cement standard upgraded to mandatory standard of TIS 2594 and 2567. Third, low- carbon agriculture. AWD rice farming expand from the 500 line to about 1,200 line delivery sale via the eco-friendly rice project. For the waste management, we also implement the project through the 54 school implementing the zero waste school project in Saraburi area. Five, the forestry and land use. We also strengthen 45 community forest networks and launch youth forest conservation initiative. These are all five initiative lever collectively demonstrate for the sandbox capability to deliver climate action at the local level, while enhancing community engagement, resource circularity, and low- carbon economic growth.
Next program, what we call NZAP, is our SCG initiative, according to Inclusive Green Growth that we trying to support the SME in Thailand. This initiative trying to equip the SME entrepreneur with the knowledge, perspective, and practical skill to address the global warming and transition to what a low- carbon economy. The first quarter we have quite successfully encased 106 participants from SME and government executive covering key topics such as the national climate policy direction, carbon market strategy, decarbonization promotion, regulatory compliance, and practical climate action. Is what conduct this course between January to March this year. Through NZAP, SME strengthen their capability to transition to what a low- carbon economy by building skill to manage climate risk. Capture emerging green business opportunity and integrate net zero strategy into their operation. This is what I would like to share to you. May I pass to Khun Thammasak.
Come back to the clean energy. In the first quarter, we can achieve 363 MW in operation and another 484 MW in the pipeline. This is a steady growth. We are adding the new partnership with the Wellgrow Industrial Estate to a number of customer in this Wellgrow are working with us on the transition into the solar. We also work with the Centara Grand and Toyota. Toyota is more under not only the solar, but also the BESS, the battery energy storage system. This is another work that we are prepared for the smart grid that will be more and more important in the near future. For the Rondo. Construction of Rondo in Ta Luang, Saraburi is on plan, and the recent earthquake has no impact to our construction.
We will finish the construction around mid of this year, and we will demonstrate the heat battery performance in the second half of this year. We received a number of requests to study how to use Rondo as a way to decarbonize and improve the cost efficiency. Surprisingly, from Vietnam, there are a number of customer that very interest, probably because they are planning to supply to European market. That is the clean energy. In summary, may I take a little bit more time discuss on the trade war. What we can say is we are selling only 1% of our sale revenue to U.S. So the direct impact from this trade war very minimal. We can easily manage this 1% sale revenues. However, the indirect impact is very big because as you know, tariff will impact the global demand and translate into the change in the global production.
So basically, slow in the trade will reduce the production of the global plant. Now, very difficult to predict what will happen after this 90 days period. We do know that if you really want to make into the boundary condition or boundary scenario, we can make it two. One is the current situation we could prolong. Let's say after 90 day, the Trump administration can extend another 120 days, on and on. That could happen. This is the scenario one. Scenario one is the U.S. and China totally disconnect, and the rest of the world pay 10% of the tariff. The 10% is the original plan of the economic team of Trump's that they need the 10% to shore up the revenue for the central government. That is the best case.
The worst case is a situation where U.S., China are totally disconnected and after 90 day, everything go back to the second half April. This is disaster scenario where the total global trade will be in paralyzed. The degree of the production reduction will be significantly huge. Now, if you look at in mainland China, the plant running rate may be around 80% or 70%. Later on will be come down to 60% to 50%. These are the degree of impact that we start to see. But the other part of the world, we still can get going. But second scenario is no. Let's say if Vietnam will be imposed by 46%, 47%, that's totally very difficult for Vietnam to maintain the trade flow. Thailand, 36% will also big issue. Okay, right? That why we put the second scenario as the downward boundary condition.
In realities, we think we'll be somewhere between these two. Unlikely that we'll hit the second lower boundary, the second scenario. That what we think. In term of the planning, we have to prepare for the second scenario and what we should do. Okay. How about the effects of this trade war? Let's look at one by one. The chemical business benefit from the lower naphtha price. That we already see. Chinese capacity will constrain by the less competitive feedstock from U.S. So that another positive point. But as Pisang explained, the key issue is the demand. Demand will be shrinking. In the first scenario, we see already demand shrink, but in the second scenario will be a very deep reduction in the global demand. This is something that worrisome. Cement and construction business. Cement volume mostly from the infrastructure. Let focus on Thailand first.
We are experiencing a slow demand for commercial and residential for quite some time already. We heavily rely on the government spending and infrastructure. So that one likely to continue because the government will continue to invest in the infrastructure. So that should be okay. We will benefit from the price increase. The first quarter, the benefit from price increase is very limit. The performance of the cement and green construction in the first quarter come from the cost reduction, not the price increase. But in the second quarter, we will couple with the price increase benefit and also the cost reduction. Lower energy cost, this is follow our strategies to improve our competitiveness through the decarbonization process. So that another thing that will benefit. However, the cheap products from abroad, mainly China, will come in, especially on the building material. This is something that we have to prepare.
We know that just a few weeks ago, the high authority from China come and try to sell the material to us. That is why we see they are in a deep situation that they have to find a way to maintain their employment. Later on, slow infrastructure spending, probably toward the end of next year. This game of the trade war, what we are seeing is we have to survive until the end of next year, because that is the midterm election. The key is this tsunami, we have to pass this year and next year. That is the key. If we pass this wave, probably we make sure that we emerge stronger. That what we intend to do. Packaging related to essential product and packaging will benefit from multi-location.
You could see that on 2nd of April tariff scenario, Philippines will be the less impact by the tariff. The most competitive place to produce and send to the U.S. might be in the Philippines. Since SCG, and not only SCG Packaging but also other SCG asset, we have the multi-production center. We can utilize this to optimize our trade competitiveness. Again, the indirect impact from the slow trade volume and from the import substitute is the main concern. This is the quick analysis of what we see the impact to our main business. What should we do in this situation? Fortunately, last year we have gone through a restructuring program where we improve our balance sheet, we improve our cash flow, we improve our competitiveness. Those transformation restructuring process are still underway. I think we should speeding up to make ourself more competitive.
If we stay competitive, we are in a better shape for this economic tsunami. However, this probably will not enough. Last year when we look at the economic tsunami, we might look at the two or 3 m of the tsunami. This year we likely to see at least 10, 20 m wave. That is why we have to add the others countermeasure. Number one is the benchmarking with the world-class player, especially in the mainland China. We need to be as competitive as the mainland China. Which seem to be really daunting task. We already test some of our production plant that we upgrade using the robot, almost 90% robot. We can maintain cost competitiveness even benchmarking with the mainland China. That is the model that we will use to improve our company-wide competitiveness, especially on the building materials.
Because that is the one who easily been impact by the import products. Using the AI and the robotics in the step-change way will be required. We have to go after the new segment. HVA product is still get going because the unique of the product sell itself. The green product which can benefit from the green priority can sell itself. However, the mass market segment is the main concern because the cheap import product can come and penetrate in this mass market. We are launching a new campaigns on something called quality affordable products. Quality affordable product mean the product that very good qualities for that particular use. The other thing, the other quality dimension that don't need for that segment, we will strip down to make the cost competitive and make the price affordable to the shrinking of the consumer power.
That is something we have to adjust. I can give you example on the, let's say, PVC pipe, for example. PVC pipe that used for the building have to be very high qualities, last for 10, 20 years. That's the Elephant PVC pipe, very suitable for that one. But if you use those, the Elephant PVC pipe for the agricultural purpose, with this only one years and will be removed after the harvesting season. You don't need 10 years durabilities. Actually, you need only one or one and a half or maximum two years. And we can redesign our agricultural PVC pipe to fit to those purpose and reduce the cost, of course, and also the price. These are the final segmentation.
Design the quality that be excellent for that purpose and strip down the unnecessary qualities to reduce the cost and make it affordable will be another strategy to move forward. This is the quality affordable product segment will be another campaign we will push into the future. And another thing is when we look at the trade war, we would see the shrinking in the global trade. However, there are some place that will benefit from U.S.-China trade dispute. You can look at the rare mineral that China or the country associated with China sell to the U.S. and Europe will disconnect this trade. And alternative country who also own the mineral, rare mineral, will benefit from this latest dispute. This is, I give you just example. All the agricultural product that China used to import from the U.S., now they disconnect the trade.
But China still have to import, and now they may import from Brazil or Argentina, so Brazil and Argentina will benefit from this trade dispute. These are the thing that we are carefully investigate and testing the demand in those new segment and utilize our international trade network to move our products to the place that still have the demand. So that we call it's a very pool and responsive supply chain. It has to be demand pool because, at the moment, no one know what will happen after 90 days. What would be the new tariff, right? If we build to inventory, this is very risky. You may get stuck, and you may have the product in the wrong location. No one want that. So the supply chain have to make it responsive to the new realities.
That is the four additional strategy we put on top to cope with the situation. And that's what our current thinking is on, k ap.
Thank you, kap .