SCG announces Q1/2023 operating results

To propel long-term growth, SCG is accelerating its focus on SCG Cleanergy, an end-to-end clean energy business that continuously grows in response to global trends in environmental protection. Successful cost reduction was achieved through the increased use of alternative fuels and solar energy. The petrochemical complex project, LSP, has commenced trial operations, producing plastic resins to supply the Vietnamese market.

Roongrote Rangsiyopash, President and CEO of SCG, disclosed, "SCG's Q1/2023 operating results showed revenue of 89.5 Trillion VND (US$ 3.8 Billion), an increase of 5% q-o-q, and a profit of 11.5 Trillion VND (US$ 487 Million), including the one-time gain from fair value adjustment of investment in SCG Logistics, following SCGJWD Logistics merger transaction in Cement-Building Materials business amounting to 8.3 Trillion VND (US$ 353 Million). Profit excluding extra items amounted to 3.1 Trillion VND (US$ 133 Million). This is an improvement from the previous quarter, with an increase of 2.3 Trillion VND driven by increased sales in all business units, higher chemicals spreads, the recovery of the construction market and booming tourism have led to higher demand for cement, building materials, and packaging in Thailand, coupled with falling coal prices and reduced costs through greater use of alternative fuels and solar energy in business operations. Chemicals Business is well-prepared and able to effectively adapt to market conditions. The Rayong Olefins (ROC) plant has accelerated resuming production since the beginning of February 2023 due to rising regional demand following China's reopening, signifying a progressively positive trend. Recently, the petrochemical complex plant LSP (Long Son Petrochemicals) began trial operations, producing plastic resins for the Vietnamese market. SCG Cleanergy continues to expand its end-to-end clean energy services for the public, business, and industrial sectors. Furthermore, SCG Decor has announced a merging plan with COTTO to expand and grow as an ASEAN leader in integrated decor surfaces and bathroom business, with a focus on innovation, design, and environmental friendliness.

Roongrote Rangsiyopash, President and CEO of SCG (Left) Thamasak Sethaudom, Executive Vice President of SCG (Right).

Regarding the ASEAN market, recovery appears to need more time. High interest rates and inflation rate continue to impact the real estate sector in some countries. Meanwhile, the global economy remains fragile, particularly in the United States and Europe, with risks of an economic slowdown due to the inflation crisis, high interest rates, and fluctuations in energy prices.

Thammasak Sethaudom, Executive Vice President of SCG, said, "With the global trend towards environmental conservation and high electricity prices, SCG Cleanergy, an end-to-end clean energy electricity trading provider for the public sector, businesses, and industries, has been growing continuously and well-received. The Smart Grid technology for buying and selling clean energy electricity is convenient and fast, and it also enables customers to sell their clean energy electricity in the future. Recently, we have been selected to produce and sell solar power to the government in 10 projects, with a total capacity of 367 megawatts, equivalent to the average electricity consumption of 180,000 households. At the same time, investing in Rondo Energy, a rising clean energy startup, which develops the world's highest temperature thermal energy storage battery innovation to supply heat energy to plants as a replacement for boilers, helps reduce the combustion of fossil fuels and lower carbon dioxide emissions. The technology has been recently installed and put into use at Calgren Renewable Fuels in the United States."

Tanawong Areeratchakul, CEO and President of SCG Chemicals Public Company Limited or SCGC, said, "SCGC's total sales have improved due to the readiness and ability to adapt effectively to market conditions. Furthermore, the demand for chemical products has increased after China reopened. As a result, the Rayong Olefins (ROC) plant has accelerated to resume production to meet market demand. Recently, the LSP petrochemical complex project in Vietnam has begun trial operations of the polyolefins (PP, HDPE, LLDPE) segment to produce plastic resins to feed the Vietnamese market, where we already have a customer base, and we will commence commercial operations by the middle of this year. LSP has a strong advantage in cost management, thanks to its feedstock flexibility that allows it to align with market conditions. At the same time, the business is moving forward with SCGC GREEN POLYMERTM, an eco-friendly innovation, which will continue to grow this year following last year's sales volume of 140,000 tons. SCGC has collaborated with global business partners such as Colgate-Palmolive (Thailand) to develop 'Lightweight packaging made from High Quality Post-Consumer Recycled Resin (PCR)' for Care and Protex powder products using SMX™ technology, where the packaging output is 20% stronger than conventional plastics but reduces packaging weight by up to 8%, helping to reduce greenhouse gas emissions. In addition, we worked with SACMI to design 'eco-friendly bottle caps for carbonated beverages' with tethered caps, which helps reduce litter entering the environment and makes recycling more efficient."

Nithi Patarachoke, President of Cement-Building Materials Business of SCG, said, "The performance of the Cement-Building Materials Business has improved due to the gradual economic recovery and cost reduction by increasing the use of alternative fuels, from 34% last year to 38%, and increasing the use of solar energy from 177 megawatts last year to 179 megawatts in Q1/2023. As green innovations have gained ground, the use of ‘SCG Hybrid Structural Cement’ to help mitigate global warming has increased by 50%, helping to reduce carbon dioxide emissions in the production process by more than 80,000 tons in Q1, equivalent to planting 8 million trees. The product offers robustness and aesthetics, and it has been used in several projects adhering to green building standards, such as the ONE BANGKOK project and the Supalai Loft Ratchada-Wongsawang project. As summer approaches and electricity costs rise, the 'SCG Solar Roof Solutions' business grew by 313% y-o-y, and the 'SCG Air Scrubber' innovation for large buildings has been accelerated, helping to save 20-30% of energy and reduce greenhouse gas emissions such as carbon dioxide. Recently, we have increased our investment in enVerid, a leading American startup, to improve energy efficiency and indoor air quality in buildings worldwide."

Wichan Jitpukdee, Chief Executive Officer of SCG Packaging Public Company Limited or SCGP, said, "SCGP's operating results have improved owing to its ability to fulfill the domestic demand for consumer packaging and the recovering tourism industry. In addition, SCGP is gearing up to invest in Starprint Vietnam Joint Stock Company (SPV), one of Vietnam’s leading producer of offset folding cartons, rigid boxes and luxury packaging, that has a prominent client base and long-term track record of commercial relationship with renowned multinational and national companies. Furthermore, SCGP is partnering with Origin Materials, a leading US technology company, to develop 'Bio-based Plastic from Eucalyptus Woodchip’ by processing Eucalyptus woodchip using advanced technology to produce Bio-PTA. This material will be used to manufacture Bio-PET for packaging and other products, such as beverage packaging, food packaging, textile & apparels. This project would support the use of Bio-PET in multiple industries which require sustainable raw materials while also enable efficient recycle operation."

Roongrote revealed, "The Company's unreviewed Operating Results for Q1/2023 registered Revenue from Sales of 89.5 Trillion VND (US$ 3.8 Billion), an increase of 5% q-o-q. Profit for the Period was 11.5 Trillion VND (US$ 487 Million), which includes gain from fair value adjustment of investment in SCG Logistics, following SCGJWD Logistics merger transaction in Cement-Building Materials business amounting to 8.3 Trillion VND (US$ 353 Million. Meanwhile, Profit excluding extra items would have been 3.1 Trillion VND (US$ 133 Million), which increased 2,395 Billion VND q-o-q, due to higher chemicals spreads and sales volume, as well as lower energy cost.”

Compared to the same period of the previous year, Revenue from Sales fell by 16%, mainly from Chemicals Business. Meanwhile, Profit excluding extra items decreased by 42% y-o-y, largely attributable to lower sales volume and equity income in Chemicals Business, as well as higher energy cost compared to the previous year.

In Q1/2023, SCG's Revenue from Sales of High Value Added Products and Services (HVA) reached 42.2 Trillion VND (US$ 1.2 Billion), accounting for 33% of total Revenue from Sales.

SCG's Revenue from operations outside Thailand, including export sales from Thailand, registered was 36 Trillion VND (US$ 1.5 Billion) in Q1/2023 or 42% of total Revenue from Sales.

SCG in ASEAN (ex-Thailand)

For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in Q1/2023 recorded a 20% decrease y-o-y, amounting to 15.4 Trillion VND (US$ 653 Million), and 17% 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 2023, the total assets of SCG amounted to 636.2 Trillion VND (US$ 27.1 Billion), while the total assets of SCG in ASEAN (ex-Thailand) were 283.6 Trillion VND (US$ 12.1 Billion), 45% of SCG’s total consolidated assets.

The company reported Q1/2023 Revenue from Sales at 7 Trillion VND (US$ 296 Million), a decrease of 26% y-o-y mainly from the Chemicals business and lower export from Thailand.

As a recognition for relentless contributions to the country’s sustainable development, SCG was among the Top 50 exceptional Foreign Invested Enterprises (FIEs) in Vietnam and honored as a Pioneer in ESG Practices at the 2023 Golden Dragon Awards. The event was hosted by the Ministry of Foreign Affairs, VnEconomy - Vietnam Economic Times, and Da Nang City People's Committee. This recognition is a testament to an unwavering commitment to ESG practices and contributions to Vietnam's sustainable development toward green development.

In fulfilling commitments to ESG 4 Plus goals, SCG provides opportunities for SCG Sharing the Dream university students to experience sustainable manufacturing processes such as CO2 emission reduction roadmap and clean energy e.g. solar roof systems at Vina Kraft Paper and Prime – Vinh Phuc JSC. This aims to foster sustainable mindsets among young people, enabling them to become responsible citizens who prioritize long-term sustainability.” concluded Roongrote.