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SCG announces 2017 Operating Results, Continues to adapt to market changes, and expands service business to serve needs of digital era customers

Date : 24 January 2018


 

SCG’s 2017 Operating Results are satisfactory, thanks to the company’s strategy of being promptly adaptable to changes in the market and consumer needs, as it prepares to continue to expand its service business. Despite risks such as costs of raw materials and energy, the strengthening Thai Baht, and regional competition coming in this year, the company focuses on strategy of collaborations with digital startups and equipping employees to be adaptable to change, as well as an expansion of its service and logistics business, will help SCG to stay competitive. Meanwhile, its investments in ASEAN are progressing according to plan.

Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed the company’s unaudited Operating Results for FY2017, with registered Revenue from Sales increase 6% y-o-y to 450,921 MB from higher chemicals prices, while Profit for the Period reached 55,041 MB, a decrease of 2% y-o-y, mainly from strong competition in Cement–Building Materials business.

On a quarterly basis, SCG’s Q4/2017 Revenue from Sales increased 14% y-o-y to 113,400 MB, mainly due to higher chemicals product prices and slightly increased 1% q-o-q. Profit for the Period reached 12,567 MB, an increase of 1% y-o-y and 6% q-o-q.

The performances of SCG’s businesses excluding Thailand in 2017

SCG’s Revenue from Sales in ASEAN registered 106,597 MB, representing 24% of total Revenue from Sales which is an increase of 9% y-o-y. And SCG’s Revenue from Sales in other region outside ASEAN, registered 80,084 MB, amounts to 17% of total Revenue from Sales.

The total assets of SCG as of December 31, 2017 amounted to 573,412 MB, while 24% representing assets in ASEAN

The 2017 operating results by business units are as follows:

  • Chemicals Business recorded FY2017 Revenue from Sales rose 10% y-o-y to 206,280 MB. The business unit registered Profit for the Period, remained stable at 42,007 MB. Revenue from Sales in Q4/17 increased 2% q-o-q and 21% y-o-y to 51,834 MB, mainly owing to higher sales volume. Profit for the Period in Q4/17 stood at 9,620 MB, a decline of 1% q-o-q due to lower equity income and 3% y-o-y from higher feed cost.
  • Cement - Building Materials Business recorded FY2017 Revenue from Sales increased 3% y-o-y to 175,255 MB, attributed to the contribution of the newly expanded ASEAN operations. The business unit registered Profit for the Period, dropped 15% y-o-y to 7,230 MB due to softness in domestic market and strong competition. Revenue from Sales in Q4/17 improved 6% y-o-y to 43,372 MB. Profit for the Period in Q4/17 gained 1,231 MB.
  • Packaging Business recorded FY2017 Revenue from Sales increased 9% y-o-y to 81,455 MB from higher sales volume. The business unit registered Profit for the Period increased 32% y-o-y to 4,719 MB from sales of Thai Union Paper’s assets (TUP). Revenue from Sales in Q4/17, improved 3% q-o-q to 21,439 MB and increased 16% y-o-y owing to new capacity in Vietnam. Profit for the Period in Q4/17 registered 1,232 MB, an increase of 60% q-o-q and 97% y-o-y, benefiting from the recovery in the Fibrous Chain.

Mr. Roongrote said “SCG’s 2017 Operating Results are considered to be satisfactory, despite heightened competition in both domestic and region, rising costs of raw materials and strengthening Thai Baht which affected the business. Thanks to increasing chemicals prices, the company’s ability to adapt to changes in several aspects, and an expansion of the services and solutions business such as logistics that serves the needs of customers precisely and in a timely manner, SCG has successfully maintained its standards of business operations while also serving customers more efficiently. However, 2018 brings certain risks such as rising costs of raw materials for chemicals and packaging, higher energy costs, strengthening Thai Baht, as well as an intense competition in the region especially for the cement industry. To mitigate and prepare for these risks, SCG will continue to expand its services and solutions business, and utilize automation and robotics technology to help maximize business efficiency. In addition, the company has established the Reskill Training Program to develop our employees’ capabilities so that they are able to navigate the changes and serve the needs of customers as well as expand the business internationally in the future.”

In terms of the service business, SCG is ready to embark on a new business venture offering school buses and ambulances equipped with GPS technology, ensuring peace of mind for parents for the safety of their children, and facilitating ambulances as they carry patients to hospitals. In addition, SCG EXPRESS has also received good response from customers. It is currently the only service provider in the market that offers chilled and frozen parcel delivery service. Currently, there are more than 500 service points, with plans for nationwide coverage by the middle of 2018.

SCG has also invested in startups that focus on digital and logistics businesses to allow customers to have access to SCG Logistics’ delivery trucks via a digital platform, offering a more convenient and faster service. There are more than 7,000 trucks throughout the ASEAN region.

In addition, SCG also continues to focus on High Value Added products and services to quickly respond to the needs of consumers. In the past year, the company has invested more than 4,178 million Baht in R&D and innovation, accounting for approximately 0.9% of its total Revenue from Sales. Sales of HVA products in 2017 totaled 175,541 million Baht, approximately 39% of the total Revenue from Sales.

Meanwhile, collaborations with digital startups are progressing well, with more than 40 ongoing projects with potential for commercialization. The company also sees business opportunities to connect with startup networks in the USA, Israel, and China.

The cement and building materials businesses in ASEAN are progressing as planned, serving rising demands in the regional market. Currently SCG operates cement plants in six countries, with a total production capacity of 33.6 million tons per year, including the operations in Thailand.

“SCG has also acquired a 68.3% stake in Interpress Printers, a leading manufacturer of fast food packaging in Malaysia with the market cap of 104.5 million Malaysian ringgit or approximately 836 million Baht. The acquisition will benefit SCG’s development of fast food packaging for the fast growing consumer demands in ASEAN,” said Mr. Roongrote.

The Board of Directors of SCC approved to submit for approval at the Annual General Meeting of Shareholders a full year 2017 dividend payment of 19.00 Baht per share for a total amount of 22,800 million Baht, or 41% of profit for the year on consolidated financial statements, of which 8.50 Baht per share totaling 10,200 million Baht was paid as an interim dividend on August 24, 2017. The final payment of dividend will be 10.50 Baht per share, totaling 12,600 million Baht.

The above dividend distribution shall be paid to the shareholders entitled to receive the dividend according to the Company’s Articles of Association and who are listed in the record date on Thursday April 5, 2018 (The XD, or the date on which a purchaser will not be entitled to receive the dividend, will be on Wednesday, April 4, 2018.) The dividend will be paid on Friday April 20, 2018. The receipt of such dividends shall be made within 10 years.

 
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