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SCG announces Q2/2022 and H1/2022 operating results with robust financial standing

SCG boosted its strategies to address inflation, soaring energy prices, and climate change

SCG’s Q2/2022 operating results show continuous revenue growth maintaining a strong financial standing despite energy costs’ effects on profits. To further drive the previous quarter, SCG deployed strategies to tackle the global economic crisis including tightening expenses, lowering costs, increasing the use of biomass and solar energy, consistent push for innovative products and services, increasing financial liquidity, Reassessing and carefully prioritizing strategic investments such as LSP (96 percent progress) and acquiring a major packaging material recycling operator in the Netherlands; and accelerating ESG with eco-friendly innovations, continuing occupational development programs to help reduce inequality and creating stable income.

Mr. Roongrote Rangsiyopash, President & CEO, SCG discloses that “Despite volatile situations with crisis upon crisis such as inflation, rising interest rates, increased energy and raw material costs as well as climate change, SCG continues to adapt, resulting in strong overall business and financial performances.”

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, strategical investments are being prioritized, resulting in the delay of new projects that are unurgent while still going through with quick-return projects and ones that are aligned with the company’s long-term growth plans. This includes the LSP petrochemical complex project in Vietnam and SCGP’s acquisition of Peute, the largest packaging material recycling business in the Netherlands.

The Company’s unreviewed Operating Results for Q2/2022 registered Revenue from Sales of 233,697 Million PHP (US$ 4,434 Million), a flat q-o-q and an increase 14% y-o-y mainly due to higher sales across all businesses and higher product prices in-line with market prices. Profit for the Period is 15,224 Million PHP (US$ 289 Million), a decrease 42% y-o-y from rising feedstock costs in the Chemicals business following global oil prices as well as lower equity inform at Chemicals business. Profit for the Period registered an increase 12% q-o-q due to dividend income from investments businesses.

SCG’s Revenue from Sales for the first half of 2022 rose 19% y-o-y to 471,412 Million PHP (US$ 9,043 Million).

SCG’s Revenue from Sales of High-Value Added Products & Services (HVA) for H1/2022 reached 161,230 Million PHP (US$ 3,093 Million) or 34% of total Revenue from Sales. New Products Development (NPD) and Service Solution such as SCG Hybrid Cement and Hygienic Tiles, made up 17% and 5% of total Revenue from Sales respectively.

SCG’s Revenue from operations outside of Thailand together with export sales from Thailand for H1/2022 registered 135,822 MB 209,893 Million PHP (US$ 4,027 Million).This constituted 45% of total Revenue from Sales, an increase of 1% y-o-y.

SCG in ASEAN (ex-Thailand)

For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in Q2/2022 recorded a 78% increase y-o-y, amounting to US$ 1,233 Million, and 28% 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 30 Jun 2022, the total assets of SCG amounted to US$ 25,594 Million, while the total assets of SCG in ASEAN (ex-Thailand) were US$ 11,559 Million, 45% of SCG’s total consolidated assets.

Based on the Q2/2022 report, SCG’s total asset in the Philippines was 20,935 Million PHP (US$ 381 Million), an increase of 5% y-o-y. The company reported Q2/2022 Revenue from Sales at 4,869 Million PHP (US$ 92 Million), a 7% increase y-o-y.

SCG Marketing Philippines launches its second Hardware And More (HAM) store at Bocaue. With the dedication to increasing local hardware supplies, HAM aims to further expand online and physical stores for better alternatives as a one-stop with More Choices, Best Value.

United Pulp and Paper Co., Inc. (UPPC), with the new paper machine no. 3, began operations in February and is ramping up production to meet demands. The machine provides an additional 220,000 MT per year of corrugating medium paper produced in state-of-the-art facilities. Currently, the machine’s products are marketed and welcomed by both local and foreign manufacturers.

Mariwasa Siam Ceramics, Inc. (MSCI) launched its TikTok account, @mariwasaphilippines with young consumers as a priority. This aims to offer engaging, fun, and practical informative content to attract and expand young generation followers’ brand awareness.

Mr. Roongrote further elaborates that at present, the global economy is highly unpredictable. SCG closely monitors the situation and aligns its operations with 5 strategies.

  • 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 percent.
  • Continuously developing High Value-Added Products & Services (HVA) while seeking new markets to create distinctiveness and increase competitiveness. Examples of chemical innovations include high-quality odorless 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 cooling load in buildings and saves 20-30% on electricity expenses, anti-bacteria 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.
  • Expanding financial liquidity with proper working capital management, inventory level that reflect markets demand, and trade credits that are closely monitored. Additionally, SCGP digital bonds are to be issued on August 1, 2022.
  • Prudent strategic investments, revisiting investment plans, delaying new, unurgent projects or those that require longer runway to generate returns, and targeting quick-return projects that are aligned with SCG’s growth strategy. Examples are the Long Son Petrochemicals Company Limited (LSP) in Vietnam which is progressing as planned with 96% 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 USA’s Imprint Energy Inc. in the printed battery business. Imprint has solid growth potential while its know-how and expertise can be be applied in ASEAN and used for smart packaging.
  • Emphasizing ESG with ESG 4 Plus guidelines (Set net-zero – Go green – Reduce inequality – Embrace collaboration, PLUS trust through transparency in all operations). In H1/2022, sales of eco-friendly innovations under the SCG Green Choice label amount to 153,240 MB, 50 percent of the total Revenue from Sales.

SCG focuses on reducing inequality for those affected by the economic crisis. In H1/2022, the projects welcomed 4,366 participants in all 3 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 organized 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 implementation with guidelines to establish collaborations for innovation towards net-zero. This contributes to timely development of a roadmap for the best carbon emissions reduction innovation for use in Thailand. Also, plans were underway for collaborations toward a low-carbon society with 60 private organizations 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, SCG collaborated with the Thai Cement Manufacturers Association (TCMA), Thailand Concrete Association (TCA), and Global Cement and Concrete Association (GCCA) to establish the “Thailand Chapter: Net Zero Cement & Concrete Roadmap” which was presented at the GCCA CEO Gathering 2022 in Atlanta, USA. This was done to help drive CO2 emission reduction in cement and concrete businesses worldwide.

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