VDO AGM 2025

Summary

In 2024, the petrochemical industry faces significant challenges due to geopolitical conflicts, economic slowdowns, and environmental crises. With rising competition from low-cost producers, many companies are struggling with overproduction and low capacity utilization. However, GC is proactively managing costs and restructuring to enhance profitability. The company has made strategic decisions to divest unprofitable units and focuses on operational efficiency, sustainability, and innovation. GC aims to grow by expanding production in emerging markets and developing environmentally friendly products, positioning itself for long-term success despite ongoing industry volatility.

Takeaways

• 😀 The petrochemical industry faces significant challenges in 2024, including geopolitical conflicts, economic recessions, and environmental crises.
• 😀 Supply-side pressure comes from increased production capacity, particularly from low-cost producers and countries with self-reliance policies.
• 😀 Overcapacity in the industry has led to low utilization rates, resulting in intense competition and declining profitability for many companies.
• 😀 Some companies, including GC, have implemented strategic measures to manage the negative impacts on their performance, reducing losses through cost-cutting and operational efficiency.
• 😀 GC has focused on improving operational efficiency and controlling costs, resulting in significant financial savings and a reduction in net losses.
• 😀 GC has made the decision to cease operations for non-profitable business units, which is expected to improve profitability and competitiveness in the long run.
• 😀 The company is pursuing a portfolio management strategy to adapt to global economic conditions and market trends, ensuring sustainable growth.
• 😀 GC plans to enhance its competitiveness through digital technologies like AI, machine learning, and predictive analytics to optimize production processes.
• 😀 GC is expanding its capacity in Southeast Asia and aiming to transform its operations in the special chemicals industry to create added value.
• 😀 The company is heavily invested in sustainable solutions, including recycling, bioplastics, and bio-based chemicals, addressing environmental challenges and energy transition trends.
• 😀 GC has achieved significant success, such as producing Thailand’s first sustainable aviation fuel and reducing greenhouse gas emissions beyond its targets, reflecting its commitment to sustainability.

Q & A

What are the primary challenges faced by the petrochemical industry in 2027?

The petrochemical industry faces challenges such as geopolitical conflicts, economic downturns, environmental crises, and increasing supply from low-cost producers. Additionally, some countries' policies to prioritize internal production contribute to overcapacity and low utilization rates in the industry.

How has GC responded to the challenges in the petrochemical industry?

GC has adopted proactive measures to reduce costs, enhance operational efficiency, and improve liquidity. These efforts have resulted in significant cost savings and reduced losses, helping the company navigate both short-term and long-term challenges.

What was the financial impact of GC's efforts in 2027?

In 2027, GC was able to reduce its net loss to -8.9 billion THB, thanks to proactive measures such as operational improvements and financial adjustments. Despite a large impairment loss, the overall financial situation improved compared to previous years.

What strategic changes did GC implement to ensure its long-term survival?

GC restructured its business, focused on asset management, and reduced unnecessary investments. The company also improved cost efficiency and liquidity, positioning itself for sustainable growth while mitigating the impact of global economic fluctuations.

What was the result of GC discontinuing operations in certain unprofitable businesses?

GC's decision to shut down unprofitable business units led to an impairment loss of 29.8 billion THB in 2027. However, this decision is expected to reduce overall losses and improve long-term profitability and competitiveness.

How is GC managing its portfolio to respond to economic conditions?

GC is managing its portfolio by aligning its businesses with global economic conditions and market trends. The company evaluates its businesses based on competitive capabilities and continuously assesses their performance to ensure long-term success.

What steps is GC taking to enhance its competitiveness and profitability by 2030?

GC aims to increase EBITDA by 300 million USD by 2030 through cost reduction, optimizing raw material supply, and improving production processes. It also focuses on market-oriented business transformation and implementing advanced technologies like AI and Machine Learning.

What role does GC's technology strategy play in its operational efficiency?

GC utilizes digital technologies such as Digital Twin, Predictive AI, and Machine Learning to optimize production processes across its plants. This technology strategy aims to enhance efficiency and reduce costs in its supply chain and production lines.

How is GC addressing environmental challenges through its business strategy?

GC is focusing on sustainable innovation in its chemicals and bioplastics businesses. The company has also succeeded in producing the first sustainable aviation fuel in Thailand, contributing to carbon reduction goals and aligning with global environmental trends.

What are GC's goals for the future in terms of sustainability and corporate governance?

GC is committed to achieving sustainability through a balanced approach to economic, social, and environmental growth. The company aims to reduce greenhouse gas emissions, maintain strong corporate governance, and ensure fair responsibility towards stakeholders.