Press Release
SCG ANNOUNCES OPERATING RESULTS FOR Q1/2021, RECOVERING FROM GLOBAL ECONOMIC DOWNTURN, LEADS THE MARKET IN INNOVATIVE CHEMICAL PRODUCTS-HOME SOLUTIONS-INTEGRATED PACKAGING CHAIN, EMPHASIZES ESG BUSINESS MODEL TO ENSURE SUSTAINABLE GROWTH IN THE LONG RUN
Bangkok: April 29, 2021 – SCG reported its operating results for Q1/2021 with profit rising from HVA chemical products in-line with global markets recovery, the commencement of Map Ta Put Olefins Debottleneck phase 2’s operations, and sales of service solutions for Work-from-Home renovation demands. F&B packaging and E-commerce experienced consistent growth. The results were also aided by efficiency improvements which enabled cost savings. With a goal to embrace ESG as a business model, SCG announced the acquisition of a stake in Portugal’s recycled plastic business, Medical & Healthcare and EV Solution development in pursuit of long-term growth and sustainability.
Mr. Roongrote Rangsiyopash, President and CEO of SCG , disclosed, “The Company’s unreviewed Operating Results for Q1/2021 registered Revenue from Sales of 93,897 Billion VND (US$ 4,034 Million), an increase of 26% q-o-q, due to better performances in all businesses. Meanwhile, Profit for the Period reached 11,472 Billion VND (US$ 493 Million), an increase of 85% q-o-q from all businesses. This was driven by Chemicals Business’ higher sales volume from the completion of Map Ta Phut Olefins (MOC) turnaround in Q4/20, the start-up of MOC Debottleneck phase 2’s operations, healthy global demand and higher equity income. The quarterly growth was also driven by seasonal improvements in Cement-Building Materials Business as well as higher contribution from the Packaging Business by active downstream portfolio expansion and existence of a diverse customer base.
On a y-o-y basis, Revenue from Sales increased 15%. Profit for the Period increased 114%, largely attributable to improved Chemicals product spreads and higher equity income.
In Q1/2021, SCG’s Revenue from Sales of High Value-Added Products & Services (HVA) reached 31,904 Billion VND (US$ 1,371 Million), accounting for 34% of total Revenue from Sales. Moreover, New Products Development (NPD) and Service Solution such as Solar Energy Solution and Smart and Functional Solutions, amounted to 13% and 5% of total Revenue from Sales.
Besides, SCG’s Revenue from outside of Thailand together with export from Thailand registered 39,311 Billion VND (US$ 1,689 Million), in Q1/2021, or 42% of total Revenue from Sales, an increase of 14% y-o-y.
SCG in ASEAN (ex-Thailand)
For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in Q1/2021 recorded an 11% increase y-o-y, amounting to US$ 1,067 million, 26% of SCG’s total Revenue from Sales. This includes sales from both local operations in each ASEAN market and imports from the Thai operations.
As of 31 March 2021, the total assets of SCG amounted to US$ 25,542 million, while the total assets of SCG in ASEAN (ex-Thailand) were US$ 9,661 million, 38% of SCG’s total consolidated assets.
In Q1/2021, SCG’s total asset in Vietnam was 116,878 billion VND (US$ 5,062 million), an increase of 41% y-o-y mainly from the Chemicals Business. The company reported Q1/2021 Revenue from Sales at 8,206 billion VND (US$ 356 Million), a 34% increase y-o-y mainly from operations from packaging (VKPC), chemicals (TPC), and Thailand exports.
In tackling the COVID-19 pandemic, SCG Packaging (SCGP) extended assistance to local authorities in Hai Duong province and donated 100 paper beds to the field hospitals. The ongoing “SCG Sharing the Dream Scholarship” flagship program has reached its 14 th -year milestone, having funded over 5,000 students nationwide to pursue educational aspirations. The program manifested its impact by encouraging the young, providing financial aids, and initiating knowledge-sharing communities on sustainability, ethics, and leadership.
In business, SCG is growing alongside local partners. In February, SCGP partnered with Duy Tan Plastics Manufacturing Corporation. Duy Tan caters PET preforms, plastic bottles, caps and closures, and industrial plastic products to multinational companies and local FMCG brands. SCG together with Duy Tan will upgrade technologies, cultivate branding, and enhance human resources. As for the ceramic business, SCG and Prime Group successfully exported ceramic tiles under the “Made in Vietnam” label to the global market.
Mr. Roongrote said , “The operating results for Q1/2021 is the testament to the global economic recovery. Nevertheless, there remains a high degree of uncertainties, particularly in the second half of 2021, and SCG is committed to building resiliency via driving higher sales from High Value-Added Products & Services (HVA) and adopting digital technology to enhance production line and cost management . Meanwhile, SCG continues to prioritize safety and has implemented strict COVID-19 preventive measures for employees, customers, and stakeholders. Business Continuity Management (BCM) enables the company to continue delivering products and services as well as providing solutions to customers.
Additionally, SCG is committed to doing business in ways that are aligned with the Environmental, Social, and Governance (ESG) framework . We seek to develop innovative products, services, and solutions catering to circular economy, medical and healthcare, and Electric Vehicles (EV) industries. Recently, SCG signed an agreement to purchase a stake in Portugal’s recycled plastic business in order to pursue longer-term business opportunities in these aforementioned segments.
At present, there are 103 products classified as SCG Green Choice, and are expected to increase to 135 products in this year. These products reduce natural resource use and energy consumption, as well as have extended shelf life, providing viable alternatives to environmentally conscious consumers. In Q1/2021, Revenue from Sales of SCG Green Choice products accounted for 35,104 Billion VND (US$ 1,508 Million), or 37% of the total Revenue from Sales.
Furthermore, SCG increased the use of solar energy in its production processes. In 2020, solar energy use amounted to 88,125 MWh. For January to February 2021, the amount totaled 14,769 MWh. Similarly, SCG’s use of alternative fuel increased in-line with our Zero Coal Initiative. In 2020, alternative fuel was 14.3 %. For January to February 2021, the proportion grew to 16.0%.
Chemicals Business performed well locally and internationally with operations geared towards “ Chemicals Business for Sustainability” . Aside from focusing on HVA such as SMX™ HDPE and HDPE Pipe PE112, the Business also seeks entry into high-growth markets such as circular economy businesses. Recently, the business entered into Europe’s circular economy by signing an agreement to purchase shares of Sirplaste, leading plastic recycling company in Portugal . This acquisition not only promotes full use of resources in-line with circular economy principles, but also allows SCG to further improve its plastic recycling technology in ASEAN, and expand its sales channel in European market.
The MOC Debottleneck project , a collaboration of SCG’s Chemicals Business and DOW, is completed ahead of plan and has started initial production. Production is expected to reach full capacity in May 2021, adding 350,000 tons per year to olefins production. State-of-the-art technology of MOC Debottleneck project enables the production process to have a lower investment cost, promotes energy saving, and is environmentally-friendly (Green Process).
Long Son Petrochemicals Company Limited (LSP) in Vietnam is progressing as planned at 76% completion and will commence commercial operations in the first half of 2023.
For the future growth opportunity in Chemicals business such as a potential to further expand capacity in ASEAN, SCG is in the process of exploring the feasibility of Chemicals business restructuring, including the possibility of a public offering of SCG Chemicals’ shares. This feasibility study and the business restructuring are expected to be completed by the end of 2022.
Cement-Building Materials Business pursues growth via products, services, and solutions that empathize sustainable construction, aligned with the ESG framework. Examples include the Green Construction solution by CPAC that encompasses digital technologies to enrich Thailand’s construction standards towards becoming eco-friendly from end-to-end. This is made possible by CPAC Construction Solutions including CPAC BIM, CPAC Drone, CPAC 3D Printing, and CPAC Smart Structure. These solutions should help turn approximately 10-20% of construction waste into community wealth (waste to wealth concept).
Additionally, the business rolls out the SCG Solar Roof Solution to residential segment such as homeowners and non-residential segments such as entrepreneurs who use electricity during the daytime. Targeting total Revenues from Sales of 4,615 Billion VND (US$ 20 Million) in 2021, this helps lessen electricity costs and offer clean energy to consumers. Recently, the EV Solution Platform, was also launched to help support the EV demand in Thailand.
Packaging Business witnesses continuous growth with sustainable solutions. The business has continued to focus on downstream packaging business in ASEAN and has continued to advance its investment strategy, encompassing production capacity expansions and merger and partnership (M&P) deals, and synergies among production bases. The business recently commenced the operations of a new 400,000 tons-per-annum capacity at its packaging plant Fajar in Indonesia. It also expanded production capacity for high-performance and Polymer packaging totaling 347 million pieces a year at Visy Packaging (Thailand) Limited. Packaging business successfully managed risks associated with raw materials and freight costs , enabling it to benefit from market recovery.
Meanwhile, the Business developed innovative packaging solutions in line with circular economy principles. An innovative film that controls gas and vapor flow, the OptiBreath ® is a packaging that retains the freshness of fruits and vegetables, lessens food waste, and unlocks logistics limitations. The Odor Lock TM packaging seals food odor to ease transport and give convenience when placed alongside other items. Sales are available online to assist entrepreneurs and consumers in this upcoming fruit season.
Some photos of SCG Operating Result Q1/2021:
Mr. Roongrote Rangsiyopash, President and CEO of SCG, at the Operating Result of Q1/2021 press conference.
Aligned with the Environmental, Social, and Governance (ESG) framework, SCG seeks to develop innovative products, services, and solutions catering to circular economy, medical and healthcare, and Electric Vehicles (EV) industries.
SCG Solar Roof System is an energy-saving option for homeowners.
Cement-Building Materials Business provides Green Construction solution by CPAC that encompasses digital technologies to enrich Thailand’s construction standards towards becoming eco-friendly from end-to-end (including CPAC Drone, CPAC 3D Printing, etc).
SCG also developed innovative packaging solutions in line with circular economy principles such as an innovative film that controls gas and vapor flow including Opti Breath, Odor Lock.
The MOC Debottleneck project, a collaboration of SCG’s Chemicals Business and DOW, is completed ahead of plan and has started initial production.