SCG is primed to seize opportunities from global market recovery, focusing on four business strategies that align with global mega-trends: namely, high-quality plastic resin production by the largest integrated petrochemical complex in Vietnam to feed the regional market, bio-based plastic from eucalyptus wood chips that are biodegradable, thermal media from clean energy for carbon-reducing industries, and SCG Decor which is poised to be the number one in ASEAN.
Roongrote Rangsiyopash, President & CEO of SCG, disclosed, "The global, Chinese, and ASEAN economies experience a slow recovery. SCG has swiftly adjusted its operational plan by reducing costs, transitioning to clean energy, and developing innovative products and services with high value-added (HVA) and green products. This, coupled with a gradually recovering Thai economy driven by tourism, and an improving building material market in touristic cities, has led to more robust operating results than the previous quarter. In Q2/2023, SCG reported Revenue from Sales of 85.7 Trillion VND (US$ 3.7 Billion), Profit for the Period of 5.6 Trillion VND (US$ 238 Million), and Profit excluding extra items of 3.6 Trillion VND (US$ 154 Million), up 14% q-o-q, primarily due to increased sales volumes of polyolefin in SCGC, decreased energy costs. SCG is prepared to seize opportunities from the global market recovery by accelerating four business strategies that address global mega-trends. These are:
1. The largest integrated petrochemical complex in Vietnam, a strategic production base in the ASEAN region with high potential. This complex produces a full range of chemical innovations from upstream to downstream to serve the global market, for which it already has a customer base.
2. Partnering with global business leaders in sustainable advancements to further enhance green innovations in line with global market demand and ESG trends. This includes the 'Bio-based Plastic from eucalyptus wood chips' innovation, which uses advanced technology to produce raw materials for biodegradable Bio-PET plastic.
3. Investing in technology for thermal media that stores heat from clean energy and can operate at temperatures above 1,000 degrees Celsius. This is a main component of the Rondo Heat Battery, addressing the growth of the green industrial sector aiming towards Net Zero targets.
4. Preparing SCG Decor to enter the stock market with a focus on leading the ASEAN market in surface decoration materials and sanitary ware. This includes the Smart Bathroom innovation, which has a high ASEAN market value of up to 1.6 Trillion VND in 2026.”
Thammasak Sethaudom, Executive Vice President of SCG, said, "SCG has successfully managed energy costs amid volatile energy prices. Particularly, in the first six months of 2023, domestic cement operations significantly increased the use of alternative energy sources to be 40%. Furthermore, SCG Cleanergy, who provides comprehensive electricity trading services for the public sector, businesses, and industry, continues to grow, boasting a production capacity of 231 megawatts in Q2/2023. The company stands out with its operational Smart Grid electrical network at the Saha-Union Group in Bangpakong. Simultaneously, SCG has invested in Rondo Energy, a global clean energy startup from the United States, to jointly produce thermal media capable of storing heat at temperatures higher than 1,000 degrees Celsius. This key component of the Rondo Heat Battery stores solar energy as heat for use in industries worldwide, aiming at achieving Net Zero in alignment with the ESG approach. Furthermore, SCG partnered with Thai Beverage (ThaiBev) and Frasers Property to jointly invest in NocNoc, a marketplace for home and residential products and services, to expand business in Thailand and Asean, targeting 101.4 Billion VND growth by the end of 2023."
Tanawong Areeratchakul, CEO and President of SCG Chemicals Public Company Limited or SCGC, said, "The total sales of SCGC have improved from the previous quarter due to an increase in the sales volume of polyolefins and the spreads of some chemical products have increased. Moreover, The LSP petrochemical complex plant in Vietnam is currently testing systems within the plant in preparation for future commercial operations. Simultaneously, we have partnered with two global green plastics leaders, Avantium N.V. from the Netherlands and IHI from Japan to build a pilot plant to convert CO2 into eco-friendly petrochemical products and develop it into other alternative raw materials based on the principles of a circular economy. This will also contribute to the reduction of carbon dioxide emissions into the atmosphere."
Nithi Patarachoke, President of Cement-Building Materials Business of SCG, said "The ASEAN economy has slowed down, impacting total sales across core businesses. This effect is further compounded by the exclusion of SCG Logistics' sales figures due to its merger with JWD in the first quarter. However, demand is expected to rebound, especially for innovative products and services that meet the requirements of a new lifestyle prioritizing cost-effectiveness, convenience, safety, and environmental friendliness. With ASEAN's population of over 560 million people, SCG is poised to seize the opportunity to take SCG Decor to the stock market, aiming to be number one in ASEAN. The Smart Bathroom innovation has an ASEAN market value of up to 1.6 Trillion VND in 2026.
Mr. Wichan Jitpukdee, Chief Executive Officer of SCG Packaging Public Company Limited or SCGP, said "The Q2/2023 operating results have demonstrated robust profit growth, stemming from ongoing effective cost management strategy. Simultaneously, SCGP is investing in the development of innovations and solutions to cater to consumer needs. Currently, we are developing bio-based plastic from eucalyptus wood chips in collaboration with Origin Materials. The latest test results have successfully completed stage 1, the laboratory testing, and stage 2, the production optimization. We are now ready to proceed to stage 3, which involves the pilot plant and selecting partners to further technology development. Additionally, SCGP is researching and developing the biodegradable wooden foodservice packaging made from eucalyptus, in line with the trend of using eco-friendly foodservice packaging. This adds value to eucalyptus wood and benefits all stakeholders, from the planting to the processing of eucalyptus wood, contributing to the creation of sustainable income and environment."
The Company's unreviewed operating results for Q2/2023 are as follows:
SCG registered Revenue from Sales of 85.7 Trillion VND (US$ 3.7 Billion), down 3% q-o-q. The Cement–Building Materials Business and SCGP saw a decline in sales revenue. Meanwhile, SCGC recorded an increase in Revenue from Sales q-o-q due to an upsurge in sales volume. SCG's Profit for the Period stood at 5.6 Trillion VND (US$ 238 Million), a drop of 51% q-o-q, mainly attributable to the one-time gain from fair value adjustment of investment in SCG Logistics, following SCGJWD Logistics merger transaction in the previous quarter. Profit excluding extra items reached 3.6 Trillion VND (US$ 154 Million), an increase of 14% q-o-q, largely due to dividend income from the investment business (automotive business).
For the H1/2023, SCG reported Revenue from Sales of 174.3 Trillion VND (US$ 7.5 Billion), down 17% y-o-y. This decrease was attributed to a reduction in all business groups' sales due to softened demand. Despite this, Profit for the Period increased by 31% y-o-y to 16.9 Trillion VND (US$ 726 Million), primarily due to the one-time gain from fair value adjustment of investment. Profit excluding extra items was 6.7 Trillion VND (US$ 289 Million), a decrease of 49% y-o-y.
SCG's Revenue from Sales of High–Value Added Products & Services (HVA) for H1/2023 reached 59.5 Trillion VND (US$ 2.5 Billion) or 34% of total Revenue from Sales. Revenue from Sales of environmentally friendly products, Green Choice, amounted to 94.4 Trillion VND (US$ 4 Billion), accounting for 54% of total sales.
SCG's Revenue from operations outside of Thailand together with export sales from Thailand for H1/2023 registered 74.8 Trillion VND (US$ 3.2 Billion). This constituted 43% of total Revenue from Sales.
For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in H1/2023 recorded a 24% decrease y-o-y, amounting to 29.5 Trillion VND (US$ 1.3 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 17% of SCG’s total Revenue from Sales. This includes sales from both local operations in each ASEAN market and imports from Thai operations. As of 30 June 2023, SCG's total assets amounted to 623.9 Trillion VND (US$ 26.5 Billion). Of these, the total assets of SCG in ASEAN (ex-Thailand) were 279.7 Trillion VND (US$ 11.9 Billion), or 45% of SCG’s total consolidated assets.
The company reported H1/2023 Revenue from Sales at 14.7 Trillion VND (US$ 626 Million), a decrease of 29% y-o-y. This drop was largely due to downturns across all businesses, from all businesses mainly from chemicals (TPC VINA) and Packaging (VKPC, Duytan) and lower export from Thailand.
Duy Tan Plastics, a subsidiary of SCGP and leader in Vietnam's market with 36 years of experience, has been recognized as one of the country's 500 fastest-growing enterprises for the 10th year in a row, according to FAST500 rankings released by Vietnam Report JSC, a provider of comprehensive financial data and market intelligence to foreign investors. The award underscores Duy Tan Plastics' consistent growth and reinforces SCGP's robust business operations in Vietnam.
In line with its ESG strategy, the company, in partnership with social enterprise Limloop, launched the "Green Dream of Childhood" initiative at the Ba Ria Vung Tau School for Children with Disabilities on International Children's Day 2023. The event empowered students through inspiring talks and hands-on training sessions and showcased a student recycling exhibition to promote creativity and environmental awareness. To enhance this commitment further, SCG donated school equipment and eco-friendly gifts to promote a green lifestyle among the students.
