SCG's operating results slow down in Q3/2023 amidst regional economic stagnation

SCG registered revenue from sales of $3.57 billion, down 12 per cent on-year due to a reduction in sales across all business units and the exclusion of the deconsolidation of SCG Logistics that led to a change in its status from a subsidiary to an associate company following the SCG-JWD Logistics merger transaction.

Meanwhile, profit for the period stood at $69 million, closely similar to the same period last year. The operating profit reached $86 million, reflecting an increase of 26 per cent on-year.

Compared to the last quarter, profit for the period decreased by 70 per cent due to the previous quarter gaining from the fair value adjustment of investments and dividend income. Additionally, this quarter experienced a loss item related to regional cement asset degradation. When excluding this, operating profit decreased by 42 per cent on-quarter.

Over the first nine of 2023, SCG reported revenue from sales of $10.97 billion, marking a decline of 15 per cent on-year. This decrease was primarily attributed to the reduced sales across all business units due to the market situation in the region.

Profit for the period totalled $769 million, an increase of 27 per cent on-year. Operating profit amounted to $364 million, representing a drop of 40 per cent. This decline was predominantly driven by the slump in the petrochemical market and weakening conditions in ASEAN.

Meanwhile, SCG’s revenue from the sales of high-value added products and services reached $3.67 billion over the first three quarters, making up 34 per cent of the total from sales. Revenue from the sales of green products – SCG Green Choice – totalled $5.86 billion, constituting 54 per cent of the sales total.

Roongrote Rangsiyopash, president and CEO of SCG disclosed, "The Q3/2023 operating results slowed down compared to the same period last year and have decreased from the first half of this year. The main cause was reduced sales, combined with the chemicals business experiencing stagnation and the regional economy not rebounding yet."

"SCG has continuously adjusted its business strategy and operated with caution and prudence, thereby maintaining its financial stability. For Q4, the ASEAN economy is expected to improve, especially in Indonesia, which will see increased investment and consumption due to the construction of the new capital, Nusantara."

"Meanwhile, the Thai economy is projected to recover, driven by the real estate and tourism sectors. Electricity costs and diesel prices might adjust downwards, leading to better control over energy costs," he added.

In addition, SCG’s revenue from operations outside of Thailand (including export sales from Thailand) over the first nine months of 2023 hit $4.65 billion, or 43 per cent of the total revenue from sales.

For SCG’s operations in ASEAN (ex-Thailand), the revenue from sales in the first nine months of 2023 recorded a 28 per cent decrease on-year, amounting to $2.61 billion. This decline can be attributed to factors such as reduced export activities and lower business performances across strategic markets within the region. This contributed to 24 per cent of SCG’s total revenue from sales, including those from the local operations in each ASEAN market and imports from the Thai operations.

As of September 30, SCG's total assets amounted to $26.28 billion. Of these, the total assets of SCG in ASEAN (ex-Thailand) were $11.91 billion, or 45 per cent of its total consolidated assets.

Thammasak Sethaudom, executive vice president of SCG said, "The global economy remains highly uncertain due to volatile energy costs, soaring raw material prices, a slowing Chinese market, petrochemical stagnation, rising interest rates and inflation, and continuing conflicts. SCG is swiftly advancing three strategies to ensure business continuity."

"The first is to manage costs and increase the use of clean energy to mitigate the volatility of fossil fuel prices. Secondly, business plans will be reassessed, delaying non-urgent projects and emphasising investments in high-growth businesses. Finally, there will be a push for green innovation to cater to the high demand in line with global megatrends," he added.

In Vietnam, the company reported revenue from sales for the first nine months of $926 million, a decrease of 28 per cent on-year. This drop across all businesses mainly resulted from lower sales, as well as reduced exports from Thailand.

Building on its environmental, social, and governance (ESG) commitments, SCG is collaborating with the Ministry of Natural Resources and Environment to organise the Vietnam Circular Economy Forum 2023 on November 16. It will be themed Vietnam’s National Action Plan for the Circular Economy, following the success of its ESG Symposium in Thailand.

SCG in Vietnam, in collaboration with the Central Youth Union and the Ho Chi Minh City Student Assistance Centre, has launched the SCG Sharing the Dream 2023 Scholarship programme. Providing support to over 100 of the country's exemplary students, this year's theme is A Change-Maker Generation: Transforming Challenges into Sustainable Dreams.

It aims to empower students to navigate challenges through an ESG-focused lens. This effort solidifies SCG’s dedication to reducing inequality and fostering a sustainable future, in line with ESG 4 Plus.

"SCG prioritises business growth alongside environmental stewardship in line with the ESG 4 Plus strategy. We are also ready to build on the success of the ESG Symposium 2023 in Thailand by expanding it to ASEAN, with events scheduled in Indonesia and Vietnam this November," said Sethaudom.

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