Good afternoon, ladies and gentlemen. We are delighted to welcome you again to the analyst conference of the first quarter of this year. Today, we will cover the performance of the first quarter. My name is Sornnarin Bangkedphol from the IR team, and I will be your host on this afternoon's session. As usual, we will start with the presentation by management, and we will have the Q&A session right after. Please allow me to introduce and hand over the floor to SCGP CEO, Khun Wichan Jitpukdee, and SCGP CFO, Khun Danaidej Ketsuwan. Thank you, khrap.
Good afternoon and sawasdee khrap. Once again, time flies so fast. We meet again on the first quarter performance result of year 2025. At the end of first quarter and the very beginning of the second quarter, there is U.S. tariff issues beginning at the second quarter of this year.
Before discussion on that, may I report on the first quarter performance before we go to the U.S. tariff issues. In the overall, in the first quarter, the packaging demand has been growing. Thanks for the government stimulus package that build the demand from the bottom of the people. Also with the strategy of SCGP, we focus on the flexibilities of speed. Of course, we do focus on the cash management and cash generation management. That help and still really strong. That lead to the consolidated key financial performance first quarter. Revenue from sales are THB 32 billion , which reduce 5% year-on-year and improve 3% Q-on-Q. The revenue decline due to the selling price, both in term of the Integrated Packaging Business and Fibrous Business. Also the volume of export of the packaging paper also reduced compared to last year.
For EBITDA are THB 4.2 billion, which is down 18% year-on-year and improve 49% Q-on-Q with the EBITDA margin at 13%. Net profits are THB 900 million, which is down 48% year-on-year, and also profit margin up to 3%. This is mainly due to the margin improve, thanks to those production utilization and the effective cost management, especially RCP and also the energy cost saving. We are using the machine learning and the AI. From this information, we are really confident that we can reach the bottom, and now we are out of the bottom, as we commit at the end of last year.
As we prioritize the expanding consumer packaging business and strengthen the top line growth to the consumer focused strategy, which lead to we have the consumer packaging business increase to 44% of the total revenue, up 1% compared to first quarter last year. This we put a lot of effort to improve the volume of the consumer packaging business, and this is the result help us to very proud of the team to improve this one. In fact, the consumer packaging business comprise of copy paper, A3, A4, A5 like that, which we also export some portion to U.S. Food service packaging, of course, and then healthcare supply, polymer packaging and fiber packaging. So in this category, we consider to be a consumer packaging business.
In term of the revenue from sale by destination, Thailand improved for 43% to 45% because mainly Thailand focus on the domestic and little export and expand and capturing the market in Asia also. In Indonesia and Vietnam, the revenue reduced 1% each because of reduced number of export. We would say that in the past year that we see the trend of export to China has been reduced until today. We decided to loose coupling from China for export. In the past, we are very tight coupling to China. Now we can say that we are loose coupling from China with the new market and also with the domestic market. We still have the link to China, but we still don't say that we are decoupling from China. We just say that we are loose coupling from China at this stage.
In term of the other country ASEAN, Philippine, Malaysia, and in Europe, U.K. and Netherlands, things like that, still maintain as usual as last year. For export, 17% year, 6% to China and U.S. 4%. Last year, the total whole year last year, we did export to U.S. at 3%. But this first quarter, we did export to U.S. at 4%, which demand that jump up in March, especially in Thailand. This help a lot that the export to U.S. improve. That will be the revenue from sale by end destination. For the economic and market movement, we see that the global economy face the significant volatility. We can see these three figures. First, in term of the PMI, purchasing manager index here. We see that the ASEAN, which in the gray color, also improved compared to last year.
China seems to be stable, but if you look in the detail, January, February, and March, the red color from China improved a lot. However, in the U.S., this PMI seem to be abnormal, quite high. As you know that it might be impact from before the tariff issues. In term of the export value from the major economy in Southeast Asia, Thai, Vietnam, Indonesia, 15%, 11%, and 7% growth year on year. Especially Thai in March has jumped a lot compared to the past few years. In addition to that, China also export value increased at 6%. We can see that all the major country, the export improved. That seem to be, and understand that meaning the market is still growing. For the consumer pricing index, we see that Thailand, Vietnam, Indonesia also increased year on year.
However, the orange color, Vietnam on the top, it tend to be reduced from 4.5% to lastly about 3% from CPI. Indonesia is another graph that in gray color. Indonesia, the CPI start to decline, but still not negative. For Thailand, I would say Thailand stable at lastly 1%, so this is quite a good number to maintain those inflation. This is the three main area that I want to report. Next for the detail business for each business unit. May I pass on to Khun Danaidej, please.
So may I start with the picture of the market and the demand for the first quarter for all the countries that we operate. As you can see on the left side that the arrows are pointing up and it is green for most of the markets. That is a good thing. That is good news. Q1, QY, it is up in every market except in Vietnam, where there is a Tết holiday, Lunar New Year. That is why the demand was dropping Q-on- Q due to seasonality. But if you look at the year-on-year, it has been a big improvement in all the markets, even in Europe, which has been also the demand in Europe is picking up year-over-year.
For the segments, the Fibrous Business, pulp, and polymer packaging we see on the consumer staples, that there is also the rise in consumer product as well as certain segment of the export, such as frozen and canned food. So that contribute to the increase in the demand. There is also a stock preparation before the holidays in Thailand and Indonesia, which partially offset this low demand in Vietnam due to the Tết holidays. But on the consumer discretionary, we have some segments which are growing due to seasonality, such as air conditioner or cooling appliances. Also, some of the footwear markets are gradually increasing. So that is the part that is growing. But overall, in this consumer discretionary, we see that there is still the restraining spending on the household or consumer due to the high debt level.
For this, it leads to the packaging paper also have experienced an increase in demand on the domestic markets. For import into China or the export from our part to China, it also shows that increasing number in the first quarter compared to fourth quarter of last year, despite having the Lunar New Year in the first quarter here. So that is indicating that in the China and the Chinese market also requiring more paper into their production process. For food packaging, the QSR segment is favorable, and that partially contributed by the increasing in the tourist number and also the activities in the ASEAN market. Short-fiber pulp demand increased, but the dissolving pulp demand somewhat weakened towards the end of the quarter due to the slower garment and textile market. So that is the picture of the demand for the first quarter.
Now we move into the performance in each business chain, starting from Integrated Packaging Business. In the first quarter, we locked in the revenue of THB 24 billion . That is a decline of 5% year-on-year. That is due to mainly on the price factor of the segments plus the declining volume in the packaging paper, mainly in the export part. If you look at Q-on- Q, these numbers are flat. If you look at indeed segment in the polymer packaging revenue decline because our portfolio for the polymer is mainly in Vietnam, so there is a Tết holiday. But in Thailand, we see the consumer part quite stable. Medical and labware sales volume also improved in this polymer packaging. For fiber packaging revenue slightly decreased.
Price was stable and not adjusting higher, but there is also some slight decline in the durable goods segment, which is offset by the stable demand in the essential goods part. Packaging paper revenue was up. The sales volume increased by 4% Q-on-Q, and that is mainly from the export market that is down. But if you take about the domestic market for the packaging paper, it actually increased by about 7%. So that reflects the healthy demand in the first quarter in the various domestic markets. Selling price relatively flat for packaging paper. With this, the overall EBITDA for IPB was THB 3.5 billion. That is down 4% year-on-year, mainly on the price of packaging paper as well as the rising raw material cost, which is RCP, which has risen year-on-year.
In term of margin, the margin grew to 15% compared to 4% in the last quarter, mainly from the volume increase in packaging paper and in all the other segments. But the overall cost was reduced. So overall RCP cost is favorable, the energy cost is favorable, and freight cost is favorable. This is the main reason that the margin has expanded to the level of 15% compared to last quarter. Let me discuss a little bit on the Indonesia operation. The overall Indonesia market, we see the broad domestic consumption remain quite resilient, and that is seen from the demand pre and post-holiday there. You can see from the chart that the domestic volume grew internally about 3% on the quarter. Overall, the volume dropped, but that is mainly because of the export to China, which was reduced.
If you look at the price, it also increased by about 3% Q-on-Q. With this, we can see that EBITDA has improved, become less negative in the first quarter. This is the unit. It is in billion rupiah, so it is improved from IDR -100 billion to about IDR -55 billion. So it is in the right direction that we aim to break even in the second quarter of this year. In term of the progress, how we do this, how we improve the volume.
We strengthen our chain integration between packaging paper and the box business. The box, we are able to acquire some new segments for the customers, and that means utilizing more of the paper from PT Fajar Surya Wisesa Tbk. So the integration and the consumption of paper has been increased because of the new segment that we are able to get. So that is increasing in term of the collaboration between the chain.
The second part is on cost. We were able to achieve, prioritize the use of the domestic RCP supply at 55% and also increase delivering on our quality rationalization by reducing our product SKU. That helps improve the production run in the plant and improving the plant efficiency as well. In term of capital increase, it is on track.
We are now in the midst of the right issue, and it should be completed by June or July of this year, which is about one quarter ahead of our plan. This would help reduce the interest cost of PT Fajar Surya Wisesa Tbk by about THB 500 million per year at PT Fajar Surya Wisesa Tbk level. So that is improvement and development on PT Fajar Surya Wisesa Tbk. Next will be on the Fibrous Business. Revenue is THB 6.4 billion. That is a reduction of 2% year-on-year and mainly from the price of all the paper and pulp.
Volume actually increased except for paper in terms of the year basis. In terms of Q-on-Q, revenue increased by 18%, and this is the increase in all of the segments here, food service, paper, and pulp. For food service, the revenue rise mainly from volume factor driven by tourism and promotional materials, as well as the demand which started to pick up in Europe and U.K. in preparation for the higher usage season in the spring and summer. In terms of the fine paper, revenue also grow and that is mainly on the volume. Price dropped somewhat. For pulp, both volume and price are better in the first quarter. Volume, of course, we have the shutdown of the dissolving pulp operation in the fourth quarter. We resume that. We are running full capacity in the first quarter and having then the output increase.
The price of pulp also increased, whereas toward the end of the quarter, the dissolving pulp price started to weaken. With this, we achieve EBITDA in the Fibrous Business of THB 727 million. That dropped year-on-year due to price factor but improved Q-on-Q mainly from the volume as I mentioned. Next will be on the financial part. In terms of core profit and net profit, our core profit for the first quarter was THB 916 million. There was some adjustment, mostly on the FX and some impairment of the obsolete spare parts that we booked in Q1. The total net profit is THB 900 million. In terms of our balance sheet, the net debt level is now stable at about THB 52 billion. Our net debt to EBITDA stay about 3.4x , DE about one time. Cost of debt over the first quarter was 4%.
This 4% is actually a blended cost of debt in Thailand and in overseas market. In Thailand, our cost of debt is below 3%, but in certain overseas markets, the cost of debt is higher, so the average is 4%. In terms of CapEx, the first quarter number is THB 1.1 billion. That is still not much because mostly of the maintenance, efficiency, innovation type of CapEx. The growth of CapEx we plan at THB 8 billion-THB 10 billion this year is more for the expansion and M&A, which would be coming in the second to the fourth quarter rather than in the first quarter. The budget is still maintained at THB 13 billion for this year. Now I want to move into some progress in terms of the business that we have.
The first one will be on the investment to put up a line to produce syringe and needles in Thailand. We enter into healthcare market because of the high growth, and the healthcare supply market are still growing everywhere in the world. Globally, it is about 4%, but in Asia Pacific region, the growth is higher. Syringe and needles are the essential part of this that we are looking into enter, because it bring us closer to the real users. They have a growing market in Thailand and elsewhere. Thailand now still rely mostly on imported syringe and needles from outside of the country. It will be a good chance to actually produce this product in the country. This is a more sophisticated and higher value than the portfolio we have. The way we do it is we use our VEM.
If you remember, we acquired this company at a 90% share last year. VEM also have already the portfolio in the healthcare. They also have a knowhow in terms of production and also the facilities with clean room. We just want to add this production line to produce. First of all, if you look at it's a syringe. The syringe, the one that we have seen and use here. This in Thailand, I had mentioned, are mostly imported, so we will be able to substitute import with our local productions. In term of the needles, we will source and then assemble the needles at the VEM facilities. Because we can combine and sell it as a package of the needle for use here.
One of the key features is the new work which is gaining momentum in term of the safety needles, where after use in the healthcare professional, there's some time to time there's accident where the nurses or doctors get pinched by the used needles, and that's very dangerous. Once Medical, who is our partner in doing this brand Once Medical for the needles and syringe, they have also the patent design on this safety which can cap all the needles, and the professional are safe from being pinched by the needle. That's the kind of product that we are looking to move into. Initially, the investment will be THB 142 million for this line, producing 180 million pieces of syringe a year and 100 million pieces of needles, and should start commercialization in 2026.
The next product will be on the flexible packaging, which is our current portfolio, but we want to expand into new and higher value, which is a growing pet food segment. For this particular investment, Howa Packaging (Thailand), which is our current partner in our flexible packaging, will set up a company to produce this flexible packaging to serve their customer from Japan. But facility is here in Thailand, meaning their customer in Japan set up the pet food manufacturing facility in Thailand, and Howa Packaging (Thailand) will be serving this customer. We join with them at a 25% share to be able to catch on this fast-growing pet food market, as well as to gain some higher technology, higher production knowhow in this particular product, which is the retort pouch with four-layer dry lamination.
This is just to strengthen our relationship with our current partner, Howa Packaging (Thailand), and also to tap into the new and value-added market. The plan will start running starting from June this year. Next will be on our ESG and recognition in other parts. First of all, we install or we establish two new biomass boilers for our box plant fiber packaging operations in Thailand. These two boilers will replace the old ones with used fossil fuel. That has two benefits. One, the cost will be reduced as well, but also in term of the greenhouse gas is also reduced. The percentage of our increased use of alternative fuel will now increase to 42%. With that, we also win the World Corrugated Awards 2025, recognizing the fact that we developed the carbon footprint calculations.
We update this last quarter that we have achieved some carbon footprint certification. We do this by the formula, and this formula give us the award, as well as to use a renewable energy system for our box business, such as biomass boiler or solar panel. The third one is a Thailand's Top Corporate Brands award, which is a recognition that we are the top brand with a brand valuation of over THB 100 billion in the packaging category. This is the award, and the award is done by Stock Exchange of Thailand in conjunction with Chulalongkorn University and the Manager Online. These are the three key achievements in term of ESG and recognition of our innovations on that front. Finally, I want to recap the progress in the first quarter along the four strategies. The first one is on profitability enhancement and transition growth.
You can see that our EBITDA is THB 4.2 billion, and that is moved along with our target of this year of EBITDA of THB 18 billion, which we believe that we can achieve. The second one is on CapEx. It is still low in the first quarter, but we would be looking into some further investment, valuable and effective investment in M&A coming in the second half of this year. On the second strategy in the people and operational excellence, supply chain excellence, we aim to achieve a cost saving of THB 600 million this year. In the first quarter, we were able to achieve THB 185 million through the use of higher efficiency improvement, better fiber yield optimization, as well as the use of biomass boiler to save cost. In terms of solution and innovation, we achieved 39% of our products compared to the target of 37%.
We already achieved that in Q1. We have to maintain or increase this in the remaining of the years. The same is for alternative fuel percentage, which we achieved 42% in the first quarter. We try to maintain this or achieve higher number for the year. These are the recaps in terms of financial and business update for the first quarter. For the next part, Khun Wichan, please.
Thank you, Khun Danaidej . Next will be the key takeaway and outlook. May I start from the U.S. tariff indication. For this, we do the value chain impact analysis, which we categorize in the supply chain into three groups. The first group, the blue color, we call the SCGP level. The gray color is the customer, and the third one is red color, we call that related stakeholder in the value chain. Meaning, it is a competitor and the competitor of our customer.
With these three categories in the supply chain, actually, there is another one about supplier, but we cut the supplier out because of the impact is not that big, our opportunity for the supplier. With this value chain analysis, we divided into three groups. Each group, we also divide into the three levels. May I start with the level 1, level of SCGP direct export to U.S.
In the first quarter, SCGP did export to U.S. THB 1.2 billion , which a little improved from last year due to the surge demand in March. The product that we export to U.S., there are three categories. Polymer packaging. We have also copy paper, A3, A4, A5 size. And the food service packaging also. These three categories have the production base in Thailand and in Vietnam, only two countries. Our customer in the U.S., and the customer of customer is the end user or retailer already. In this category, we also see the major competitor. The major competitor meaning the country which have the U.S. tariff lesser than Thailand. We can say that this is our competitor in the future. For level 2, is the level of—
Yes. Level 2 is about our customer. Our customer has exposure, meaning our customer who buy, for example, our box, like can and vegetable fruits, rubber gloves. They produce this and they have exposure in term of export. And some of those export going to the U.S. For example, if our customer may export and in their portfolio about 30%-35%, and part of that goes to U.S. Overall, it brings in 5%-10% of the customer revenue that goes to the U.S. For us, our revenue that is linked to that part in the level 2 is about THB 966 million in the first quarter.
The main customer segmentation here, we can see that we have the canned vegetable or canned food. We have rubber glove. We have canned food, electrical appliance, and also processed food. This is the key majority, which we have the base production in Thailand, Vietnam, Indonesia, and also some in the Philippines. We can see that the competitor of our customer are in the country that we mentioned here. This is the thing that we see, and we see the competitor that the country that has lower tariff from the U.S. We can pinpoint, and we can initiate how the mitigation plan for this. We come down to the level 3. Level 3 we call the threat from the China and global demand slowdown.
As of now, we do export to China lastly in the first quarter, 2 billion, which we have the packaging paper and also the dissolving pulp. The key product are that two. The indication of the impact that the decreased demand from the imported paper into China may be reduced because of the slow export China to U.S., things like that. This is the thing that we are analyzing. Also, as mentioned earlier at the very beginning for the sale by revenue destination. We do loose coupling from China since last year. However, we still sell to China, but not tight coupling as before. With this value chain impact analysis, we go to the next strategy for the strategic execution. We execute the cross-functional solution in a changing competitive landscape.
From this map, you see that the blue color is our production base: Thai, Vietnam, Malaysia, Indo, Philippines, and also in Europe, and the trading office in the U.S. The orange color mentions about those countries that get the U.S. tariff lower than Thailand. When we see the country, we divided the group that the ASEAN operation with the tariff range from 24%-46%. This area in ASEAN, we will diversify our focus to ASEAN domestic, and also we have potential market in South Asia, Middle East, and Oceania that we started in the first quarter. In addition to that, through collaboration with the international account, we can do OEM or streamline our relocation and production transition in Indonesia or Malaysia, which the tariff effect lower than Thailand and Vietnam. This is a good one.
The second one, those company in the Europe operation, the tariff rate in the range between 10% and 20%. By this, we can do the outsource of the food packaging, for example, to Turkey and Eastern Europe. Because we have a very good portfolio of the customer, we can do outsource to Turkey, which has the lower tariff effect. Last but not least, the most important, the other business opportunity. We can see the opportunity here, especially for the sales and marketing. We improve the chain integration, and that evidence show in the Indonesia that Khun Danaidej already mentioned, that the chain integration, that help a lot to improve the volume. In addition to that, we have the onshoring, offshoring, and nearshoring to lower the tariff area. Now they have another word, friend-shoring. That will be the opportunity for us.
For raw material, of course, China and some area that the high tariff number, so they might have a problem in term for the supply. However, we can source from them with a cheaper price that we are sourcing now, so that the raw material. For the investment in USA, we consider exploring setting up the business operation in U.S. Next week, Khun Danaidej and myself will go to the U.S. to join the SelectUSA convention, and also we go to see a few factory and also to understand the situation and market there. In fact, during the COVID, customer in the U.S., especially for those rigid packaging, already request us to put up the factory in U.S., but we see still no benefit at that time. We decided to put warehouse instead.
Now with the tariff and so on, we go to U.S. to see the situation there and discuss with the customer, and also see the location, how the thing happened there. That will be result from the impact from the U.S. tariff. For looking further into the 2025 of this year, we still are focused on the speed of execution, which the evidence already in the first quarter. We also add up the flexibility and also cash management is the key criteria to success for this time. Also we will be capturing ASEAN domestic growth, especially for the consumer packaging business. In addition to that, Khun Danaidej already mentioned that we invest in healthcare supply. We use our competency in the injection molding. Next one is the cost saving.
I think to survive in the industry from now on, the cost saving, which in our hand will be the most important. We also see the industry consolidation will be coming more in the near future, especially those who have no customer diversify of the portfolio of the customer, no diversification, things like that. Last but not least, for the internal. We expanding the solution and service, and shift to customer focus. SCGP start the business from the manufacturing. At that time, some of the managed costs are commodity. In the past few years, we moved from manufacturing to be a product focus, which help a lot to understand and more close to consumer.
Now we see that to survive in this changing world a lot, so now we are transformation to product focus, to customer focus, which we will understand customer more, and keep the customer, and keep relation with the customer, so we can focus and expand in the future. In term of the external, in term of the transformation of the business. We see that ASEAN still remain relatively outperform in other region, and still remain the most competitive manufacturing sector. We have good people, we have a very working hard people, and also we have the lower cost of the people, this thing. We think that Southeast Asian, ASEAN, will be still the competitive, and we can compete with the other area in this world.
In term of the financial market, we see that it seem to be quite a fluctuation in the near term here, especially in exchange rate and also interest rates also. That's all the update from the first quarter of this year. We look forward to seeing you again in the next quarter. Today we would like to thank and [Non-English content].