By Alithea De Jesus
Business agility and a solid business continuity management plan have enabled SCG, a leading ASEAN business conglomerate specializing in cement-building materials, chemicals and packaging, to maintain company operations and production during the COVID-19 pandemic, even achieve strong profit for Q2 2020. To ensure long-term business stability, the company underscores the development of total solutions and innovations to match market demands in the new normal, use of digital channels to serve its customers and boost its Packaging Business.
Improved performance of SCG’s three key business units resulting from cost optimization efforts and business continuity boosted Q2 2020 profits by 33 percent YoY to hit PHP14,797 million (US$294 million). This is despite a 12 percent decrease YoY in revenue from sales at PHP141,388 million (US$3,006 million) due to lower chemicals product prices and a 9 percent dip QoQ due to decreases from all core businesses as indicated in the company’s unreviewed Q2 2020 operating results. The profit for the period reflects a 35 percent increase QoQ, mainly on the back of improved chemicals business performance.
Addressing continued demand for reliable products for home requirements at the same time acknowledging that the pandemic has altered customers’ way of life, SCG is optimizing digital solutions to continue to serve the market while keeping both consumers and its people safe. The company offers a full range of products and solutions through its e-commerce platform scgshop.com.ph. The platform has been revitalized to serve as a one-stop online shop, offering not only SCG products but all kinds of products related to home and living, and construction such as electrical, lighting, furniture and even appliances.
SCG ensures business continuity even as it complies with safety protocols to safeguard the safety and health of its stakeholders through its a new norm of work called the Hybrid Workplace. Through this setup, SCG’s employees can work from home or in sites closest to their homes for safety and convenience.
SCG President and CEO Roongrote Rangsiyopash said, “Even though SCG isn’t in industries severely affected by the pandemic, the company constantly monitors and assesses the situation to be able to respond accordingly. We have put in place morefocused business strategies such as Prepare for the Worst, which sets up sales plans and transport arrangements for a possible lockdown; Plan for the Best, which optimizes production capacity to meet the growing demand; and Digital Transformation to bring about an Optimization Model. We take a dynamic approach by offering solutions, products and services that better fulfill the needs and capture the untapped market in the wake of growing trends in e-commerce, on-demand food delivery service, and health and wellness. As a result, the operating results for Q2 2020 and H1 2020 were relatively less affected by the global economic slowdown.”
Innovative solutions, strong business management initiatives
SCG recently launched the instant concrete SCG SmartCrete, a new innovative product that offers a more convenient process of mixing cement compared to the conventional method of mixing onsite. The SCG SmartCrete is a cost-effective solution as it prevents incorrect proportioning while providing enough ready-mix concrete for use anytime.
Mariwasa Siam Ceramics, Inc., the country’s largest ceramic tile manufacturer, recently introduced the Mariwasa Tile Adhesive. This tiling solution is a cementitious adhesive that comes in 25kg per bag for 5sqm to 6sqm of tiling area. This new adhesive has undergone standard quality tests to prove its strong bond and high tensile strength in conformance to ISO 13007-1 requirements.
SCG continues to bolster its Packaging Business, with the outlook for this unit promising with the merger and partnership of Fajar Surya Wisesa Tbk, a leading Indonesian packaging paper company, and Visy Packaging (Thailand) Limited, and planned acquisition of Bien Hoa Packaging Joint Stock Company or SOVI in Vietnam. These efforts have helped strengthen the company’s portfolio in the ASEAN market and enabled the company to better satisfy customer needs.
For business continuity management, the company’s Packaging Business focuses on optimizing manufacturing procedures in Thailand and other ASEAN countries, namely Vietnam, Indonesia, the Philippines and Malaysia to streamline processes and introduce new standards. Packaging Business also works closely with clients throughout the supply chain to ensure reliable raw material sourcing and logistics management and enforce strict hygiene practices in delivering packaging solutions.
SCG’s business continuity management for its Chemicals Business ensures maximum production capacity and emphasizes seizing business opportunities in a challenging market environment brought about by the pandemic. To ensure the safety of its staff, the company provides accommodation and transportation, arranges working groups and area divisions at the plant, and maintains a high standard of quality control and cleanliness. It implements production flexibility to be able to cater to rapid changes in demand and secure increased sales volumes amid market volatility. The business continues to expand the proportion of High Value-Added Products & Services (HVA) to improve competitiveness, ride a market upturn and meet customers’ needs.
Cement-Building Materials Business has taken an adaptive approach by focusing on offering products and services with total solutions and developing an Active Omnichannel to increase retail sales and construction innovations that help improve the convenience, precision and efficiency of construction.
Q2 2020 operating results
The company’s unreviewed operating results for Q2 2020 registered a revenue from sales of PHP141,388 million (US$ 3,006 million), a decrease of 12 percent YoY, mainly from lower chemicals product prices and a drop of nine percent q-o-q due to decreases from all core businesses.
SCG’s revenue from sales for the first half of 2020 dropped 9 percent YoY to PHP322,775 million (US$6,381 million) due to lower chemicals prices. Profit for the period declined 13 percent YoY at PHP26,166 million (US$517 million) because of decreased chemicals margins during Q1 2020.
Revenue from sales of High Value-Added Products & Services (HVA) for H1 2020 reached PHP145,593 million (US$2,878 million) or 45 percent of total revenue from sales.
SCG’s revenue from operations outside of Thailand, together with export sales from Thailand, for H1 2020 registered PHP138,610 million (US$2,740 million) or 43 percent of the total Revenue from sales, a dip of 2 percent YoY.
SCG in ASEAN
Q2 2020 revenue from sales from SCG’s operations in the ASEAN dropped 13 percent YoY at PHP37,600 million (US$747 million), which is 25 percent of SCG’s total revenue from sales for the same period. The ASEAN Q2 2020 revenue includes sales from both local operations in each ASEAN market and imports from the Thai operations.
As of June 30, 2020, SCG’s total assets amounted to PHP1,137,926 million (US$22,880 million) while total SCG assets in ASEAN (ex-Thailand) amounted to PHP411,854 million (US$8,281 million), which is 36 percent of SCG’s total consolidated assets.
Based on the Q2 2020 report, SCG in the Philippines owns PHP19,042 million (US$383 million) worth of total assets, an increase of 46 percent YoY mainly from the Packaging Business. The company reported Q2 2020 revenue from sales of PHP1,995 million (US$ 40 million), which includes sales from both operations in the country and imports from the Thai operations. This represents a decrease of 53 percent YoY.
For H1 2020, SCG in the Philippines reported PHP5,336 million (US$105 million) revenue from sales, a 39 percent decrease YoY mainly from the Cement-Building Materials Business and exports from Thailand.