By Victoria “NIKE” De Dios
After chartering the challenging global economic downturn, SCG announces operating results for Q1 2021 and attributed the ESG business model to ensure sustainable growth and leadership in innovative chemical products, home solutions and integrated packaging chain drive SCG’s profit growth
SCG reported profit growth in Q1 2021 operating results driven by High Value-Added Products and Services (HVA) chemical products in line with global market recovery, the commencement of the phase two operation of Map Ta Put Olefins Debottleneck and sales of service solutions for work-from-home renovation demands. F&B packaging and e-commerce also experienced consistent growth. Efficiency improvements also enabled cost savings.
With a goal to embrace environmental, social and corporate governance (ESG) as a business model, SCG announced the acquisition of a stake in Portugal’s recycled plastic business, medical and healthcare and electric vehicles (EV) solution development to pursue long-term growth and sustainability.
Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed, “The company’s unreviewed operating results for Q1 2021 registered revenue from sales of PHP194,714 million (US$4,034 million), an increase of 26 percent QoQ, as a result of better performance across all businesses. Meanwhile, profit for the period reached PHP23,790 million (US$493 million), an increase of 85 percent QoQ from all businesses. This was driven by the chemicals business’ higher sales volume from the completion of Map Ta Phut Olefins (MOC) in Q4 2020, the start of MOC Debottleneck phase two operations, and healthy global demand and higher equity income. The quarterly growth was also driven by seasonal improvements in the cement-building materials business and higher contribution from the packaging business by active downstream portfolio expansion and existence of a diverse customer base.”
On a YoY basis, revenue from sales increased 15 percent. Profit for the period increased 114 percent, which is largely attributed to improved chemicals product spreads and higher equity income.
In Q1 2021, SCG’s revenue from sales of HVA reached PHP 66,159 million (US$1,371 million), accounting for 34 percent of the total revenue from sales. Moreover, new products development (NPD) and service solutions such as solar energy solution and smart and functional solutions amounted to 13 percent and 5 percent of total revenue from sales, respectively.
SCG’s revenue from outside of Thailand together with export from Thailand registered PHP81,519 million (US$1,689 million) or 42 percent of total revenue from sales in Q1 2021, an increase of 14 percent YoY.
SCG in ASEAN (ex–Thailand)
For SCG’s operations in ASEAN (ex-Thailand), revenue from sales in Q1 2021 recorded an 11 percent increase YoY, amounting to US$1,067 million (PHP 51,485 million), which is 26 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 March 31, 2021, SCG’s total assets amount to US$25,542 million (PHP 1,241,178 million) while the total assets of SCG in ASEAN (ex-Thailand) are valued at US$9,661 million. (PHP 468,469 million) These make up 38 percent of SCG’s total consolidated assets.
Based on the Q1 2021 report, SCG’s total assets in the Philippines are valued at PHP18,841 million (US$388 million), a decrease of 6 percent YoY mainly from the packaging and chemicals business. The company reported a Q1 2021 revenue from sales of PHP3,832 million (US$79 million), a 14 percent increase YoY mainly from operations in Mariwasa and United Pulp and Paper Co., Inc. (UPPC), which have been meeting rising ceramic demands. Moreover, in an attempt to ease the domestic supply shortage, UPPC maintains its operations to support manufacturers of essential goods in industries such as F&B, personal care and pharmaceuticals.
Mariwasa signed a memorandum of agreement with Batangas State University to offer hands-on training and real-life simulations for ceramics engineer students. Mariwasa also partnered with the local government in planting 500 mangrove trees as part of its commitment to the environment and surrounding communities.
Mr. Roongrote said, “The Q1 2021 operating results are a testament to the global economic recovery. Nevertheless, uncertainties remain, particularly in the second half of 2021, and SCG is committed to building resiliency by driving higher sales from HVA and adopting digital technology to enhance production line and cost management. Meanwhile, SCG continues to prioritize safety and has implemented strict COVID-19 preventive measures for its employees, customers and stakeholders. Business continuity management (BCM) enables the company to continue delivering products and services and providing solutions to customers.”
SCG is committed to doing business that is aligned with the Environmental, Social, and Governance (ESG) framework. The company seeks to develop innovative products, services and solutions that cater to circular economy and the medical and healthcare and EV industries.
At present, there are 103 products classified as SCG Green Choice. This number is expected to increase to 135 products this year. These products reduce natural resource use and energy consumption and have an extended shelf life, providing viable alternatives to environmentally conscious consumers. In Q1 2021, revenue from sales of SCG Green Choice products accounted for 45,635 MB (US$1,508 million) (PHP 72,795 million) or 37 percent of total revenue from sales.
SCG has also been increasing the use of solar energy in its production processes. In 2020, SCG’s solar energy use totaled 88,125MWh. For January to February 2021, this dropped to 14,769MWh. Meanwhile, SCG’s use of alternative fuel increased in line with its zero coal initiative. In 2020, coal use amounted to 14.3 percent. For January to February 2021, this increased to 16 percent.
The chemicals business performed well locally and internationally, with operations geared toward the “Chemicals Business for Sustainability” approach. Aside from focusing on HVA such as SMX™ HDPE and HDPE Pipe PE112, the chemicals business seeks to enter high-growth markets such as circular economy businesses.
SCG is in the process of exploring the feasibility of restructuring the chemicals business to fuel further growth and expand capacity in ASEAN, including the possibility of a public offering of SCG Chemicals’ shares. The feasibility study and business restructuring are expected to be completed by the end of 2022.
The cement-building materials business continues to pursue growth through products, services and solutions that empathize sustainable construction in line with the ESG framework. Examples include the green construction solution by CPAC, which encompasses digital technologies to enrich Thailand’s construction standards toward becoming eco-friendly from end to end. This is made possible by CPAC construction solutions such as CPAC BIM, CPAC Drone, CPAC 3D Printing and CPAC Smart Structure. These solutions should help turn approximately 10 to 20 percent of construction waste into community wealth.
Additionally, the cement-building materials business is rolling out the SCG solar roof solution to residential segments such as homeowners and nonresidential segments such as entrepreneurs who use electricity during the daytime. With a target total revenue from sales of 600 MB (US$ 20 Million) (PHP 957 million) in 2021, the solution hopes to help lessen electricity costs and offer clean energy to consumers. Recently, the EV solution platform was also launched to help support the EV demand in Thailand.
The packaging business also developed innovative packaging solutions in line with the circular economy principle. An innovative film that controls gas and vapor flow, the OptiBreath® is a packaging that retains the freshness of fruits and vegetables, lessens food waste and unlocks logistics limitations. The Odor LockTM packaging seals food odor to ease transport and give convenience when placed alongside other items. It is available for purchase online to assist entrepreneurs and consumers this upcoming fruit season.
