SCG accelerating strategies to address myriad of challenges

August 04, 2022 | 16:31
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SCG announced its Q2/2022 and H1/2022 operating results with robust financial standing, accelerating five strategies to address inflation, soaring energy prices, and climate change.

SCG’s Q2/2022 operating results show continuous revenue growth despite energy costs’ effects on profits, maintaining robust financial standing.

SCG accelerating strategies to address myriad of challenges

Roongrote Rangsiyopash, president and CEO at SCG disclosed, “Despite volatile situations with crisis upon crisis such as inflation, rising interest rates, increased energy and raw material costs, and climate change, SCG continues to adapt, resulting in strong overall business and financial performance. Innovative product and service developments are in full gear, especially eco-friendly items with SCG Green Choice labels and innovations to meet consumers’ demands for safety and convenience, catering to the tourism and service sector’s recovery as borders fully open."

"Moreover, strategic investments are being prioritised, resulting in the delay of new projects that are non-urgent while still going through with quick-return projects and ones that are aligned with the company’s long-term growth plans. This includes the Long Son Petrochemicals (LSP) petrochemical complex project in Vietnam and SCGP’s partnership with Peute, the largest packaging material recycling business in the Netherlands,” he added.

SCG accelerating strategies to address myriad of challenges
Roongrote Ransiyopash, president and CEO of SCG (right) and Chantanida Sarigaphuti, vice president of Finance and Investment and CFO

The company’s unreviewed operating results for Q2/2022 registered revenue from sales of $ 4.4 billion, an increase of 14 per cent on-year due to higher sales across all businesses from higher product prices in line with market prices.

Profit for the period is $289 million, a decrease of 42 per cent on-year from rising feedstock costs in the chemicals business following global oil prices as well as lower equity information. Profit for the period registered an increase of 12 per cent on-quarter due to dividend income from investments businesses.

SCG’s revenue from sales for the first half of 2022 rose 19 per cent on-year to $ 9 billion.

SCG’s revenue from sales of high-value-added products and services (HVA) for H1 2022 reached $ 3.1 billion or 34 per cent of total revenue from sales. New products development (NPD) and service solutions such as SCG Hybrid Cement and Hygienic Tiles made up 17 and 5 per cent of total revenue from sales, respectively.

SCG’s revenue from operations outside of Thailand together with export sales from Thailand for H1/2022 registered $4 billion. This constituted 45 per cent of total revenue from sales, an increase of 1 per cent on-year.

SCG in ASEAN (ex-Thailand)

For SCG’s operation in ASEAN (ex-Thailand), the revenue from sales in Q2 2022 recorded a 78 per cent increase, amounting to $1.2 billion, and 28 per cent 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 June 30, the total assets of SCG amounted to $25.6 billion, while the total assets of SCG in ASEAN (ex-Thailand) were $11.6 billion, 45 per cent of SCG’s total consolidated assets.

In Q2/2022, SCG’s total asset in Vietnam was $6.5 billion, an increase of 24 per cent on-year mainly in the chemicals business from LSP and packaging business.

The company reported Q2/2022 revenue from sales at $482 million, up 13 per cent on-year mainly from the new partnership of Duy Tan, a rigid plastic packaging products producer of SCGP (packaging business).

Understanding the need for comfortable living spaces amid escalating global climate change, SCG CBM introduced the latest SCG Roof Elite series. This premium roof tile with double coating technology provides long-lasting colour bonding for up to 10 years. Besides this, tests under regional extreme weather conditions certified that they help prevent heat absorption, dust, and moss, bringing utmost comfort to Vietnamese homes.

SCG in Vietnam, together with the Ministry of Environmental and Natural Resources and partners, organised the “Kicked-off Conference - National Action Plan on Circular Economy”. This emphasised cross-segment collaborations among public, private, and educational sectors towards the net-zero goal by 2025.

Aligning with ESG strategies, a global-scale ESG Symposium 2022 was organised on July 19 with profound discussions on future ESG for net-zero goals.

Experts from Microsoft, Blackrock, and many others attended the event. Stemming from the event, an activity to empower young generations’ ESG practices, the “Hacks to Heal our Planet: ESG Idea Pitch” competition, gathered fresh ideas from regional participants who address global and local issues.

Furthermore, SCG also conducted the ESG camp for talents from SCG Sharing the Dream scholarship. Additionally, to enhance children’s educational opportunities, SCG organised activities on International Children’s Day and engaged environment enthusiasts on Recycling Day at Ba Ria-Vung Tau School for Disabled Children.

Roongrote further elaborated, “At present, the global economy is highly unpredictable. SCG closely monitors the situation and aligns its operations with the five strategies."

These strategies include:

SCG accelerating strategies to address myriad of challenges
Floating Solar Solutions

1. Reducing costs and increasing alternative energy by adopting efficient manufacturing technologies, reducing waste, and increasing the proportion of alternative energy such as biomass and solar power. At present, SCG’s alternative energy consumption stands at 16.4 per cent.

SCG accelerating strategies to address myriad of challenges

2. Continuously developing HVA while seeking new markets to create distinctiveness and increase competitiveness. Examples of chemical innovations include high-quality odourless PCR for eco-friendly packaging, especially those that require fragrance, and barrier coating technology that substitutes multi-material packaging with mono-material to ease the recycling process.

Examples of better living innovations are SCG HVAC Air Scrubber, an air treatment system that reduces the cooling load in buildings and saves 20-30 per cent on electricity expenses, antibacterial tiles, touchless faucets and sanitary wares, and Ultraclean+ coated sanitary wares by COTTO Health & Clean that help curb bacterial accumulation.

Examples of construction innovations under the CPAC Green Solution brand use technology to enhance construction solutions such as farm solution, a one-stop farm design and construction service with quick completion and bio-security standards, as well as gas station solution, a one-stop gas station design and construction service.

An example of packaging innovation is Fest Chill food packaging from paper, coated with peelable films for convenience in recycling and degradable with durable designs suited for food delivery services.

SCG accelerating strategies to address myriad of challenges
SCG HVAC Air Scrubber

3. Expanding financial liquidity with proper working capital management, inventory levels that reflect market demand and trade credits that are closely monitored. Additionally, SCGP digital bonds are to be issued on August 1.

4. Prudent strategic investments, revisiting investment plans, delaying new, unurgent projects or those that require a longer runway to generate returns, and targeting quick-return projects that are aligned with SCG’s growth strategy.

Examples are LSP which is progressing as planned with 96 per cent completion and is expected to begin commercial operations by H1/2023. Recently, SCGP expanded into the packaging materials recycling business with Peute Recycling B.V., Netherlands’ largest packaging materials recycler and invested in the US' Imprint Energy Inc. in the printed battery business. Imprint has solid growth potential while its know-how and expertise can be applied in ASEAN and used for intelligent packaging.

SCG accelerating strategies to address myriad of challenges
The Long Son Petrochemicals Co., Ltd. in Vietnam

5. Emphasising ESG with ESG 4 Plus guidelines. In H1/2022, sales of eco-friendly innovations under the SCG Green Choice label amounted to $4.5 billion.

SCG focuses on reducing inequality for those affected by the economic crisis. In H1/2022, the projects welcomed 4,366 participants in all three facets addressed.

Firstly, creating sustainable income such as knowledge development to add value to community products, career development for the disabled, home renovation skills development, and in-demand skills development for young generations.

Secondly, enhancing skills for job stability such as for contractors. And expanding work opportunities such as allowing credits for contractors to facilitate the purchasing of construction materials by Siam Saison.

Recently, SCG organised the ESG Symposium 2022 which welcomed over 130,000 on-site and online participants and collaborations from 315 coalitions across sectors to relieve the Earth’s crises and reduce inequality.

The event expanded brainstormed ideas to establish collaborations for innovation towards net-zero. This contributes to the timely development of a roadmap for the best carbon emissions reduction innovation in Thailand.

Also, plans were underway for collaborations towards a low-carbon society with 60 private organisations that extend across alternative energy, circular economy, sustainable consumption, and enhancing women and youth’s roles in driving the economy and resolving crises together.

Besides this, SCG collaborated with the Thai Cement Manufacturers Association, the Thailand Concrete Association, and the Global Cement and Concrete Association to establish the “Thailand Chapter: Net Zero Cement & Concrete Roadmap” which was presented at the GCCA CEO Gathering 2022 in Atlanta. This was done to help drive emission reductions in cement and concrete businesses worldwide.

By Mai Dang

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