By Monsi A. Serrano
SCG presented its strong operating results for third quarter of 2021 despite a decline in profitability due to the region’s lockdown and higher energy and raw material costs in the global market.
Long term, the company is bullish about its growth strategy that points to success by also upscaling its ‘green products’ especially with the ESG (Environmental, Social and Government) plans to manage raw material and fuel costs, and at the same time increase the proportion of renewable energy in biomass and solar.
Along with the sustainable efforts and products, the company also noted how it prepares for the likelihood of higher inflation to ensure sustained business growth and higher profit.
As the market reopens and the economy starts to recover, SCG seeks to beef up its product portfolio by introducing green and sustainable products such as the SCG Green Choice and CPAC Green Solution. Additionally, it will enter the market for the manufacture of raw materials for bioplastics.
SCG President and CEO Roongrote Rangsiyopash disclosed, “The company’s unreviewed operating results for Q3 2021 registered revenue from sales of PHP200,739 million (US$4,004 million), a 1% drop QoQ. Our normalized profit for the period stood at PHP13,805 million (US$275 million), a decrease of 47 percent QoQ on lower chemicals product spreads and equity income.”
Meanwhile, profit for the period, including asset impairment of cement plant in Myanmar and gain from fair value adjustment of investment, totaled PHP10,381 million (US$207 million), down 60 percent QoQ.
Compared with the previous year’s performance, revenue from sales increased by 31 percent, thanks to rising chemical product prices. Normalized profit for the period fell by 11 percent due mainly to the new wave of COVID-19 cases and regional lockdowns, which affected the Cement-Building Materials Business. Profit for the period, including asset impairment and gain from adjustment of investment, dropped 30 percent.
In the first 9 months of 2021, SCG registered a revenue from sales of PHP600,847 million (US$12,294 million), a rise of 28 percent YoY. Profit for the period totaled PHP58,298 million (US$1,232 million), up 49 percent YoY as a result of improved chemical product spreads and equity income.
SCG’s revenue from sales of high value-added products and services (HVA) for the first 9 months of 2021 amounted to PHP207,047 million (US$4,233 million) or 34 percent of total revenue from sales. Furthermore, New Product Development (NPD) and service solutions contributed 15 percent and 5 percent of total revenue from sales, respectively.
SCG’s revenue from operations outside of Thailand together with export sales from Thailand in the first 9 months of 2021 registered PHP270,606 million (US$5,532 million) or 45 percent of total revenue from sales, up 35 percent from last year.
SCG in ASEAN (ex–Thailand)
For SCG’s operation in ASEAN (ex-Thailand), revenue from sales in Q3 2021 recorded a 32 percent increase YoY to hit US$1,012 million, or 25 percent 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 September 30, 2021, total assets of SCG amounted to US$25,086 million while total assets of SCG in ASEAN (ex-Thailand) reached US$10,981 million, 44 percent of SCG’s total consolidated assets.
Based on the Q3 2021 report, SCG’s total assets in the Philippines totaled PHP19,934 million (US$392 million), an increase of 10 percent YoY mainly from the Cement Building Material business. The company reported Q3 2021 revenue from sales of PHP3,890 million (US$78 million), a 17 percent increase YoY.
Despite escalating building materials demand, bottlenecks in the global supply chain restricted supply and hindered shipping activities in key industries. However, the trend is expected to turn in the coming months, in time for the December holidays with rebounds forecasted.
With a continuous focus on growth, SCG Marketing Philippines Inc. maintains its multifaceted approach to diversity, equity and inclusion. This quarter marked the launch of the hardware business for local brands in five major Ceramic Tiles and More (CTM) branches in Batangas, Antipolo, Balintawak, Bacoor and Calamba, with further plans to expand before year-end. The company is also in the final planning phase to diversify and increase its product portfolio to continue its online and physical stores expansion.
Mariwasa, true to its commitment to provide quality and stylish building materials, introduced two new products. As a provider of decorative surfaces and bathroom solutions, Mariwasa launched new vinyl resilient flooring and tile grout, which comes in a 30x30cm size with 14 new designs to match customers’ preferences. Aside from being an affordable option for flooring needs, it requires simple maintenance, making cleaning hassle-free, the perfect choice for every Filipino home. The Mariwasa tile grout is a ready-to-use cementitious grout that helps prevent cracking and chipping. It can provide strength to tile installation while ensuring a clean display.
For one of SCG’s subsidiaries, United Pulp and Paper Co., Inc. (UPPC), the leading manufacturer of high-quality and cost-efficient industrial grade paper used for corrugated packaging products in the Philippines, Q3 2021 operations remain strong despite the rising cost of raw materials due to supply chain disruptions in the region. The industry experienced a slowdown in Q3 due to quarantine restrictions and suppressed market demand. But despite this, UPPC continues to support manufacturers of essential goods from the food and beverage, personal care items, pharmaceuticals and other industries to ensure that local supplies are not hampered. Amid the challenges of the pandemic, the company continues to provide high-quality products and services to satisfy customers.
Mr. Roongrote said, “SCG’s financial position remains strong despite a dip in profits as a result of regional lockdown and higher fuel and raw material costs.”
As the country reopens and purchasing power picks up with businesses and consumers adapting to living with COVID-19, SCG hopes to seize opportunities for long-term growth through green and sustainable products such as the SCG Green Choice, which reduces the use of natural resources while saving energy and promoting good hygiene, and the CPAC Green Solution, which uses digital technology to increase construction speed, reduce dust pollution and cut construction waste. Furthermore, SCG continues to invest in environment-friendly businesses such as the production of bioplastics.
SCG Chemicals aspires to be a “Chemicals Business for Sustainability” by implementing energy-saving projects and accelerating the expansion of its circular economy business. It recently signed MOU with Braskem to explore the viability of entering into joint ventures to build a bio-ethylene plant in Thailand to address the demand for bioplastics. In terms of the progress of the share acquisition of Sirplaste, Portugal’s leading plastic recycler, the shares are expected to be transferred by the end of the year.
Meanwhile, the advanced recycling demonstration plant has been certified “ISCC PLUS” by the International Sustainability and Carbon Certification (ISCC). Additionally, RIL Industrial Estate under SCG Chemicals has been certified Eco-World Class, the top tier certification by the Industrial Estate Authority of Thailand (IEAT), for the third straight year. This makes SCG the first in Thailand to sustain these continued achievements.
Cement-Building Materials Business aims to secure more renewable energy by acquiring agricultural waste to use as fuel, recycling waste heat generated from cement manufacturing process, and boosting the use of solar power from solar farm and solar floating solutions. In the first 8 months of 2021, the proportion of biomass usage from agricultural waste and RDF was 12 percent (Cement-Building Business’ biomass and RDF use was up to 25 percent) and solar energy accounted for 3 percent or 77,744 megawatt-hours.
SCG Packaging (SCGP) strives to develop a diverse range of packaging innovations to fulfill the needs of customers and the megatrends of the Thai and ASEAN economies. SCGP has implemented a number of technologies to assist with operations, including mechanization and automation of artificial intelligence (AI) to assess, predict and improve production efficiency and improve product quality to the industries. SCGP also works on packaging innovation that may be reintroduced into the recycling process, increasing the share of renewable energy in the manufacturing process. Meanwhile, it will continue to expand its company through organic and inorganic expansion (merger and Partnership) to become ASEAN’s integrated packaging solutions provider and meet the rising demand for consumer packaging.
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