Good afternoon, ladies and gentlemen. We are delighted to welcome you again to the analyst conference in the third quarter. Today, we will cover the performance of nine months and also for the third quarter of this year. 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 from our management, and we will have the Q&A session right after. Without further delay, may I introduce and hand over the floor to SCGP CEO, Khun Wichan Jitpukdee , and SCGP CFO, Khun Danaidej Ketsuwan . Thank you, [Non-English content].
Good afternoon and [Non-English content] . Once again, time flies so fast. We meet again in the result of the third quarter and ninth month of this year. Today, Khun Danaidej , CFO, sit with me, unlike the previous time that he was get the COVID-19. This time we are two together. May I start with the revenue from sales in nine months, we have THB 101 billion , which improved 4% year-on-year. In term for the percentage cost of goods sold at the same as nine months last year at 82%. The top line growth mainly come from the enlarge of the packaging paper volume and also the downstream expansion, especially increase in the food packaging and also increase dissolving pulp. Consumer packaging continue to deliver resilient profitability, especially in the ASEAN.
In term of the EBITDA, nine-month EBITDA is THB 13.2 billion, which reduce 1% year-on-year, while the EBITDA margin down from 14% to 13%, and core EBITDA is THB 13.3 billion also. In term of the net profit, this nine months ended with THB 3.7 billion , which reduce 7% year-on-year, while we still maintain the profit margin at 4%, which allow of this amount. The core profit is at THB 3.8 billion . The EBITDA and profit drop mainly due to, in the third quarter, the rising of the RCP cost in the third quarter. In term of the business segmentation nine months, left-hand side integrated packaging business. The revenue from sale was THB 75.5 billion , which improved 3% year-on-year, mainly come from the volume improved compared to last year.
For the EBITDA, THB 10.4 billion , which reduce 4% compared to last year, which lead to EBITDA margin 14% down from 15%. The main reason that EBITDA reduce come from the packaging paper operation in the third quarter, as mentioned, due to the RCP increase in the third quarter. In term of the fiber business, which account for 20% of the total revenue. The revenue from sale is THB 19.8 billion , which improved 6% year-on-year. This mainly come from the dissolving pulp and the food service packaging expansion, especially in the U.S. In term of the EBITDA, fiber chain, fiber business have the EBITDA THB 3.1 billion , which improved 12% year-on-year compared to last year, which lead to the EBITDA margin increase from 15% to 16% nine months of this year.
In terms of the business portfolio, starting from the revenue from sale by business unit. This time, polymer packaging and the fiber packaging expand from 36% to 37%. As we met last time about the medium-term plan in 2030, we targeted that the polymer packaging and fiber packaging will be 1/2 , meaning half, 50% of the total revenues. Fiber business improved from 19% to 20% this year, while the recycling business still maintain at 6%. In terms of the revenues by destination, Thailand still account for 42%, ASEAN account for 35% this time. The sales in Europe and in U.K., Spain, and Italy has been improved 1%, while the export to rest of the world reduce from 18% to 17%. In addition to this, normally, last year, China export is laying between 7% and 8% to China.
This year down to 6% due to the weak demand in China. On top of that, there is a very strong Thai baht. In terms for the consumer link portfolio, this time, nine month, we achieved 75%, 3/4 of the portfolio was still consumer linked. This help the healthy and help the healthy of the customer portfolio. In terms of the market movement in this third quarter, we see that the consumer price index in the third quarter, especially July, August, and September, seem to be reduced a little bit compared to previous quarter. In addition to that, we see that the manufacturing PMI in ASEAN and U.S. has been reduced while the China mixing feeling because of the injection of the money into the business in China.
In terms for the export value of Thai, Vietnam, and China, we see here in September, especially Vietnam, has been reduced, but in China and Thailand increased a little. This trade will increase a little in terms of the export. This means implication in terms of the demand. We see that the demand will get real improvement, especially in the global, but very slowly. Also the rising household debt, this will be the burden in the future. In terms for the ASEAN domestic and service sector, we see that the very fast appreciation of the currency, especially with Thai baht, will be a burden also. In terms for the China economic, the slowdown of the economy in China that threaten the export of the packaging paper to China also. That the main figure for the nine months and some economic update for the third quarter.
Next, may I pass to Khun Danaidej?
Yes. Let's start from the demand movement for the various countries that we operate. If you look at the year-on-year number, we can see that in all the countries, the demand has improved. That's a good news that our consumer are spending more this year than last year. In term of Q-on-Q , in most of the countries also similar stories. Indonesia also have a long holiday in the second quarter, so there's an improvement in the third quarter. For Thailand, however, the third quarter demand seem to be dropping a little bit compared to the second quarter. One of the reason is because of the Buddhist Lent period, in which the lower sales of alcoholic beverage also couple with the floods in some area. Also export segment from Thailand is also suffering a little bit from the appreciation of the Thai baht.
One thing to remind is also in the second quarter in Thailand was actually quite well compared to the second quarter of the previous year. So we have a very strong second quarter in April, May, which then meaning that in the third quarter, it didn't improve so much from the very good second quarter. If you look at the consumer and in term of the segment by segment, fiber and polymer packaging, we see on the consumer side, the segment that is still growing are food and beverage, FMCG consumer products. As in any other quarters, these are the segment that's still going well, including for food exports. For garment and textile, it's quite a steady demand. Still continue to be okay. The drop was mainly in term of the E&E household appliance, electronics, and automotive sectors.
This also linked to the packaging paper, in which the domestic demand in ASEAN continue to grow along with the consumption in the region. But the downside, the lower part is come from the export volume, particularly to China, which has been slowing since toward the end of the second quarter and into the third quarter. If you look at the food service packaging, there's a mix. In the domestic part in ASEAN, the demand in term of B2B and also in the retail segment are going quite okay. But demand in Europe start to decline because of all the stocking is now less. Europe is entering winter, so the stocking of the food service packaging is reduced because it's not a high season for them over there.
In term of demand for pulp, especially dissolving pulp, is still quite okay, remain quite strong, and that's in line with the situation in the garment sector. The drop in price is mainly in term of the short fiber, mainly from the increased supply globally. Now let's move to the financial performance for the company in the third quarter. Revenue from sale was THB 33.4 billion, and that's an increase of 6% year-on-year. The increase in this come from both volume and price. Volume particularly from the polymer and fiber as well as dissolving pulp. For Q-on-Q, revenue dropped about 3%, and that's from the drop in term of volume, mainly from the packaging paper operation. Price remained quite stable between Q2 and Q3. You can observe from the chart the cost of goods sold portion has increased from 82% to 84%.
So that means the margin has been squeezed from the previous quarter, and that is reflected into the EBITDA figure, which is at THB 3.49 billion for the quarter. That is a drop of about THB 1.1 billion from the quarter earlier. The main factors are, one is the appreciation of Thai baht, which affects the revenue in term of the Thai baht terms. Also the volume that was decreased earlier mentioned particularly on the packaging paper. Also a majority of this is come from the higher RCP cost in the third quarter, which is a result of the higher price from the second quarter and going to our consumption and production in the third quarter. Overall, the EBITDA margin is reduced to about 10% for the company. In term of net profits, it is at THB 578 million, and the drop is actually in line with the EBITDA and for the same reason.
Now going to each segment of the business, starting from the integrated packaging business. Revenue is THB 24.6 billion in the third quarter, an increase of 4% year-on-year, mainly from higher volume of polymer and fiber, especially in Thailand and Vietnam. If you look at Q-on-Q , our revenue declined about 3%. For polymer packaging, revenue slightly dropped mainly from the medical supply labware in Europe, in which in the summer the business operation is less so the volume of order is reduced. That is a seasonality factor also in that one. If you look at the consumer packaging, it is actually improving, especially in the segment that is related to food, pet food and seafood, for example. Fiber packaging revenue increased slightly, mainly from Vietnam and Indonesia. But Thailand has the effect of the demand that was reduced, so Thailand operation slightly declined.
For packaging paper, sale volume dropped about 6% Q-on-Q , and the majority of that would be from the export to China. The selling price, however, remained quite flat. Slightly improved in term of domestic overall and a slight decline in Indonesia. But Indonesia, if we look at the domestic prices still maintain the part of Indonesia that reduces the export price. Coming to EBITDA for this packaging chain is THB 2.888 billion for the quarter, and that is reduced about 20% both year-on-year and Q-on-Q . Mainly from the higher RCP cost. So the margin for the chain is reduced from 14% to 12%. Next up is the fibers business. For fibers business, revenue is about THB 6.7 billion, and that is increased both year-on-year and Q-on-Q .
For year-on-year, the increase is mainly from the dissolving pulp, both in term of volume and price. If you look at Q-on-Q , the increase about 1% overall, but for food service it is slightly declined, mainly from the reduced sales in the Europe, like I mentioned. But actually we try to diversify or shift our portfolio towards more in term of the U.S. and Thailand and ASEAN. Also for paper, especially a specialty paper, the volume slightly increased, so that is how we adjust the portfolio to shift more towards special grades. For pulp, Q-on-Q is improved mainly from dissolving pulp. So EBITDA of the fibers business is THB 799 million, dropped slightly year-on-year from lower sales of food service packaging. But in term of the Q-on-Q , the drop was mainly from the appreciation of Thai baht.
If you look at the graph here, you can see that for fibers business, the export portion is more than half. That has a bigger effect in term of the Thai baht movement. Next will be to align our core profit and net profit. The core profit is at THB 677 million , and the adjustment for this quarter is THB 99 million. So net profit is THB 578 million . The majority of that adjustment is from the cost of the M&P transaction, particularly in term of the purchase of Fajar. So the brokerage fees and other legal fees, for example. This is the part that account for this difference between core profit and net profit. If we look at our financial position in term of balance sheet, our net debt to EBITDA. Net debt is increased to THB 55 billion from THB 32 billion .
The increase of THB 23 billion mainly from the Fajar acquisition that we did in August. So net debt to EBITDA stands at 3.1x while D/E stayed at 0.97 . With this THB 55 billion net debt, about 65% is the interest-bearing debt, and we have cash on hand about THB 10 billion. The cost of debt remain unchanged at about 4.1%. In term of CapEx, for nine months is THB 27.5 billion, and that includes THB 23 billion for Fajar. For this year, we expect the CapEx to be roughly about THB 30 billion. But going forward, for next year, the budget is set about THB 13 billion, which will include about THB 8 billion- THB 10 billion for growth CapEx, and the remaining THB 3 billion- THB 5 billion will be the regular maintenance ESG CapEx.
This amount of CapEx is so that we maintain our net debt to EBITDA at around 3x . That's the financials. Next will be business update. Let me start off with this new partnership with Once Medical, which is a specialty design and solutions for some certain type of medical device. Particularly right now, the existing product portfolio that we have consists of the labware disposable things like syringe, pipette tip, as well as some of the reagent and test kit, which is done by Deltalab, Bicappa and VEM that we just acquired. We have opportunity to expand this healthcare business to be more complete solution in packaging as well as in the medical device and supply. For Once, they are doing specialty syringe and also needles.
For example, the safety syringe in which the needle can be tucked in the syringe and protecting the healthcare worker from getting poked by the used needles or special type of syringes that can preserve or increase the amount of the medicine or use of the vaccine, for example. We believe this is the extension to move. Once has a lot of IP and a lot of innovation that we can actually leverage and use with our production capability within Deltalab and VEM to enhance and move forward to a more of a specialized and more high-end type of medical and labware going forward. That's part of the business update. The next will be on Indonesian updates, which Wichan will explain.
Okay, thank you [Non-English content] , Danaidej . Still on the visit update agenda. This will be update for the Fajar, Indonesia. May I start with the packaging paper and the fiber packaging player landscape in Indonesia. This data with our intelligence data and information that we are gathering from the market. May I start with the top left corner. That is the player of the packaging paper in Indonesia. You can notice that the top four player account for the market share are more or less 80%, which are huge number in term of the market share of the top four. Especially for top one and top two, it is more than 60%. For the circle graph on the right-hand side, the fiber packaging that the same. The top four here also have their own box plant. This box plant has the market share half, roughly 50%, while the SCGP has the market share of 7%.
This demand both packaging paper and the fiber packaging at the same level, roughly 3.1 million ton per year of the demand of the paper and the fiber packaging. Moving to the right-hand side here. This is the amount of the export volume from Indonesia, mainly to China. The orange color is a FajarPaper, the other blue and gray are from other competitors. You can see that this year nine month, the export volume to China has been reduced a lot, as we reported earlier that the demand in China now is quite soft. So the export volume to China has been reduced compared to last year, roughly a 50% reduced. In the good year, in some year, the paper export from Indonesia to China reached 1 million ton in the past. But this year, almost a 50% reduced from the peak.
This reduce the export number to China, lead to the bottom left corner for the right graph, you see that. We see here at the red color of Fajar market share. Fajar still maintain market share roughly in 29% or 30% here. But we can see other competitor increase in market share or reduce in market share, as you see here, we call the X1. They gain the market share, while the X2, X3, X4 and other reduce the market share. In addition to this, we can see that we have one line that X2 bought X3 . These two player are, has merged since 2022. So this is the movement of the paper packaging and also the packaging paper in Indonesia in the past nine months. This is moving in the market share.
We see here some player, they lost market share, some player they gain market share because they have the reason to gain the market share. Next is the current situation here. We can see here the regional price gap has been squeezed in the third quarter, especially in the third quarter here, we see that the RCP price has been increased while the selling price still stable. However, there is still good news that the ICI3 core in Indonesia are steady reduced from the past year. For right side, for Fajar key performance. We see here in the third quarter, the selling price just a little drop a bit. We could say that is maintained Q3 and Q2, while the sale volume also drop from 296,000 to 290,000 ton. However, the EBITDA are negative quite a bit higher compared to the second quarter this year.
This is mainly because of the RCP surge in the price in the third quarter. However, we see that in terms of the monthly in the third quarter, in terms of monthly performance, Fajar has been improved by monthly. In terms of the plan to turn around Fajar, this is our top priority in SCGP. We prove that we have ability to compete in this Southeast Asia and also in this Asia and also in this global. We have three main strategy and action to turn around Fajar. First one, we start with those we can handle in our hand, we call the operation improvement. The operation improvement start from the variable cost reduction. This time we optimize raw material by utilizing AOCC with the network that we are sourcing the local corrugated container. Also we try to improve the energy mix.
In Fajar, we also try to improve the energy mix to reduce the cost. In terms of the quality regionalization, we initiate the new paper specification, which can reduce the quality giveaway because of the marginal cost reduction and marginal quality improvement that will help strengthen the cost of operation in Indonesia. The second strategy that we are handle is to improve the factory overhead. In other words, its fixed cost. We try to optimize the fixed cost, reduce and use automation, and some of that we use AI to help to improve this thing. This will improve the competitiveness. Third, strategically increase the sale volume. Actually, increase sale volume, we strategically, we call the strategic alliance with some box plant that turn to use our paper.
Especially you see that the X2, X3, X4 and other, their market share has been reduced because of ability to compete in the market . By this way, we can offer the paper to replace in the others. That will help a lot to improve the performance. In addition to this, we also adjust the customer portfolio, customer segmentation, and some also we apply adjustment. By this action, we confident that by second quarter next year, we can make the breakeven EBITDA of Fajar. By the fourth quarter of next year, we can breakeven the profit. That the summary of Fajar Indonesia improvement. However, looking into the future, we can see that the Indonesia is a promising economy. We see that in term from the packaging consumption per capita in Indonesia compared to Thai and Vietnam. Thailand now 60 kilos per capita.
That the paper in term of polymer is 15.5. Vietnam used to very low number, but this time Vietnam catching up Thailand. However, Indonesia still lack and still far from Thailand. So we still see the opportunity to grow and to compete in Indonesia in the future. In term of the economy in Indonesia and so on, we see that the GDP of Indonesia range from 4.7%- 8%. If projection in the future is 4.8%. Just one point from this one. A lot of research and news that in next four year, Vietnam and Philippine GDP will overtake Thailand. In term of the foreign direct investment here, we see that every year, 2021- 2023, the foreign direct investment Indonesia has been improved big amount compared to Thailand. So this is the opportunity in the future.
However, we have to overcome short-term obstacle to improve the performance of Fajar in Indonesia. Next will be the outlook heading toward end of this year and also into next year. We see that China demand will extend the soft demand until the fourth quarter. Even this fourth quarter, we still see that this is the high season, especially October and November. In December, end of December, it just slows down a bit. So this will be a high season because of this prepare for New Year, Thai New Year, and also prepare for the Chinese New Year. In case of the China soft demand, we will focus on the portfolio optimization to serve the target domestic and also the export, which we are on in the Middle East and some other product that we have carbon footprint we send to the U.S.
Of course, the second is we have to turn around Fajar improvement, and we see that it is a clear sign of the improvement by monthly July, August, and September, we see that it is improved by monthly. However, in term of the third quarter, it dropped compared to the second quarter. In term of the expansion enlarge the downstream business. This downstream business include the M&P box plant still in our growth path. However, the price now are still missing, still not match between the buyer and seller. In term of the external factor, we see that ASEAN still continue to grow, especially in term of the domestic in this ASEAN. In addition to this, Vietnam and Indonesia will be outperform in this region because of the population and the management from the government.
In term of the global economy, we see that the soft landing, I mean, this good soft landing will be finished in the first half of the next year. Despite the inflation that also reduce and also the exchange rate that also Thai baht are very strong. In term of the geopolitical instability and political transition here, we see this still has a risk, but it will be going to improve, we see that. ASEAN quite neutral also. The movement and relocation of European and U.S. that they invested in China, we see that they also move to ASEAN, especially Thai, Vietnam and Indonesia. In summary, first thing, we must improve the packaging paper performance in Indonesia through our effort and continuous improvement.
In term of the investment, as Khun Danaidej mentioned, next year we plan THB 13 billion with the M&P and expansion about THB 8 billion- THB 10 billion . So this will be prioritized on the strengthen of the value chain integration and also support the strategic growth segment. Also we will shift more toward downstream business and also sustainable innovative solution. Last but not least, in the third quarter, we did the upgrade of the rating, especially from MSCI, from rating BBB to rating A. Can you change the slide, please? Yes. Okay. From MSCI, we upgrade the rating from BBB to a rating A. This will help improve in term of the social and the governance part in the category here. In addition to that, we also rating excellent level from the Carbon Neutral Network, which by the Climate Action Leading Organization, or CALO, in this year.
This is the good movement in term of the sustainability. For carbon footprint product now, we improve a lot in term of the carbon footprint product. We have the cradle-to-gate assessment 19 product. C radle-to-gate assessment 136 product. Total 145 product. In addition to this, we also have the process that pass the certification. This is help SCGP to a more easier to certify the carbon footprint product because of this 16 process, they are the same and quite fit in term of the emission from each process. That all the update from the third quarter of this year. We would like to thank our participants for joining our virtual conference today, and we look forward to seeing you again in January. Thank you and [Non-English content] for today.