SCG upbeat despite falling operating results

16:18 | 02/11/2019
SCG's operating results for the third quarter of this year and the first nine months of 2019 recorded lower profit compared to last year, primarily driven by the drop in profitability in the chemicals business due to the current low cycle and the global economic slowdown which was exacerbated by the trade war and the appreciation of the Thai Baht.
scg upbeat despite falling operating results
Roongrote Rangsiyopash, president and CEO of SCG, announces the results

Cement-building materials business reported increased profit with sales growth in the distribution and retail businesses. Moreover, packaging business has significant growth potential in the ASEAN.

According to Roongrote Rangsiyopash, president and CEO of SCG, the company's unaudited operating results in this year’s third quarter registered a sales revenue of VND83.39 trillion ($3.63 billion), decreased by 10 per cent on-year primarily due to lower chemicals product prices but showing a 1 per cent increase on-quarter.

Meanwhile, profit for the period totalled VND4.68 trillion ($203.48 million), a drop of 35 per cent on-year and 12 per cent on-quarter, resulting from the lower performance of the chemicals business due to lower product margins. Without the recognition of the deferred tax assets reversal, SCG would have recorded VND5.49 trillion ($238.7 million) in profit for the period, a drop of 23 per cent on-year but an increase of 3 per cent on-quarter.

scg upbeat despite falling operating results
scg upbeat despite falling operating results
Innovations from SCG's chemicals business

As for operating results for the first nine months of 2019, SCG registered a sales revenue of VND246.26 trillion ($10.7 billion), a decrease of 8 per cent on-year due to lower chemicals prices.

Profit for the period totalled at VND18.48 trillion ($803.48 million), a 27 per cent drop on-year. In this regard, the notable transactions during the first nine months of 2019 were the second quarter severance pay adjustment in light of the Labour Law of VND1.5 trillion VND ($65.22 million), the third quarter deferred tax assets reversal of VND803 billion ($34.9 million) and assets impairment of VND576 billion ($25 million) mainly from the regional non-Thai ceramics business and the global trade war concerns which continue to affect the margins of both subsidiaries and associated companies.

SCG's revenue of high value-added products and services (HVA) sales for the third quarter reached VND33.59 trillion ($1.46 billion), accounting for 40 per cent of the total revenue from sales, down 8 per cent on-year and 6 per cent on-quarter. As a result, the revenue from sales of HVAs for the first nine months of 2019 amounted to VND10.73 trillion ($466.52 million) or 41 per cent of the total revenue from sales, declining 2 per cent on-year.

scg upbeat despite falling operating results
scg upbeat despite falling operating results
Various packaging innovation from SCG

Besides, SCG’s revenue from business outside of Thailand, including export sales from Thailand, in the first nine months of 2019 registered VND99.84 trillion ($ 4.34 billion) or 41 per cent of total revenue from sales, a dip of 12 per cent year-on-year.

In the Vietnamese market, SCG’s third quarter revenue from sales amounted to VND7.31 trillion ($317.83 million), which represents a decrease of 10 per cent on-year, mainly due to the decrease in the packaging business. For the first nine months of 2019, SCG recorded a sales revenue of VND22.005 trillion ($956.74 million) in Vietnam.

SCG in Vietnam has been active in CSR projects to deliver its promise “Passion for Better”. SCG has recently kicked off its flagship project SCG Sharing the Dream, which will be rolled out in nine provinces and cities nationwide and provide support to 290 students with the total value of VND1.9 billion ($82,600).

Besides, SCG's cement-building materials business in Vietnam has also fostered collaborations with Bach Khoa University in Ho Chi Minh City and Quang Binh Agricultural Industrial Vocational College via MoU signings.

These initiatives are to leverage local insights for innovation, as well as to support local human development via co-research and training programmes. In terms of community development, Long Son Petrochemicals Co. Ltd. has continuously supported charitable housing as well as education programmes for local children in the southern province of Ba Ria-Vung Tau.

Roongrote said, "Even though SCG's operating results in the third quarter and the first nine months of 2019 were affected by the reduced profits of the chemicals business, we have placed a considerable emphasis on research and development of innovative and high value-added products and services, especially the products developed to fit the circular economy principles to support the global market demand."

“SCG recently showcased its plastic innovations for sustainability, themed 'Passion for a Better World', at K2019, the world's largest trade fair for plastic and rubber held in Germany. The exhibited innovations include superior strength polyethylene resins by SCG's breakthrough SMX technology which minimises material consumption, the eco-friendly recyclable Mono-Material Packaging, and plastic resins made from a mixture of special-grade SCG plastic resins and Post-Consumer Recycled Resin (PRC), along with SCG service solutions offering cost management and operational efficiency enhancement to boost businesses' capabilities and competitiveness.”

scg upbeat despite falling operating results
scg upbeat despite falling operating results
Innovation from the cement-building materials business

He added that the cement-building materials business has remained instrumental in generating revenue for the group, despite a relatively weaker regional ceramics markets. However, SCG instills a heightened focus on accelerating retail and distribution businesses, providing customers with greater access to innovative products and services and diverse solutions. In addition, SCG also develops construction solutions to enhance efficiency and provide comprehensive solutions to construction needs as well as strengthen Thailand’s construction industry.

In the packaging business, SCG will continue to develop and improve its strengths and create opportunities for itself by developing packaging with multi-materials (both fibre-based and polymer-based), along with the offering of integrated packaging solutions, efficiency improvement through the use of digital technology, and collaborating with world-class business partners.

SCG has recently been expanding its operations through acquisitions with high growth potential in the ASEAN. Such acquisitions included the acquisitions of Visy Packaging in Thailand and PTFajar Surya WisesaTbk in Indonesia.

The packaging business’ aim is to rapidly enhance overall production efficiency and expand its market coverage and increase its range of expertise in Thailand, Vietnam, the Philippines, Malaysia, Indonesia, and other countries within and outside of the ASEAN.

“Packaging business’ expansion of its production base in various geographies will enable it to maintain its position as the leading integrated packaging solutions provider that can address world-class customers’ needs at all levels of operations, from upstream to downstream,” said Roongrote.

By Anh Duc

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