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Message from the Board of Directors

The COVID-19 pandemic plunged the global economy into a severe recession in 2020. It is forecast that the world economy will contract by 4.3% and will recover gradually in early 2021 as several countries are facing a second wave of COVID-19 outbreak, and it will take some time before COVID-19 vaccines are distributed throughout the world. For the ASEAN region, the economy is expected to shrink by 4.4% in 2020 while Vietnam, which has been least affected by COVID-19, is the only country in ASEAN that witnessed economic growth. Meanwhile, the Thai economy is projected to contract by 6.6% due to a sharp decline in the number of tourists and severe drought, and yet is anticipated to grow by 3.2% in 2021. However, despite signs of an economic rebound, uncertainty still looms providing the COVID-19 situation and measures to contain the spread of the pandemic.

  One Way Out is Adjusting to Change  
 
     

SCG swiftly adjusts to changes brought by the COVID-19 threat. To that effect, SCG strives to tighten business continuity management measures without surrendering to challenges, strengthen corporate potential and employees’ capabilities, and maintain the Company’s long-term business stability through proactive commitment and implementation of digital technology to develop solutions and services that address every application need of customers in the ‘New Normal’ era.

To overcome all changes and bounce back even stronger, SCG has prepared for the worst and planned for the best out of conviction that organizational readiness for change and effective business continuity management to enable quick response to emergency are key to overcoming any challenges.

 
     

  Ready for Every Change, Adapt to Move Forward with Sustainability  
 
     

Chemicals Business commits to continuous adjustment to achieve excellent operating results by adjusting strategies to reduce cost and increase competitiveness amid the volatile and challenging markets, stepping up proactively to prevent COVID-19’s spread, and implementing Digital Commerce Platform (DCP) to connect supply chain management data to enable a safe and continuous delivery of products and services to customers. Added to this is developing a larger proportion of high value-added (HVA) products and services, expediting development of product design in accordance with the Circular Economy principles to promote recycling and answer the needs of brand owners, and setting up the I2P Center (Ideas to Products Center) to showcase innovative products and services to customers.

As for the fully integrated Petrochemical Complex project, Long Son Petrochemicals Company Limited in Vietnam, which is designed to increase SCG’s long-term competitiveness in ASEAN, the construction of the project proceeds as planned. This could be attributed to various efforts including adjusting construction plans, the use of remote visual inspection system, and pre-shipment inspection of machinery by third party exports before shipping to Vietnam, allowing the construction work to proceed according to schedule with no COVID-19 cases at the project site.

Cement-Building Materials Business has transformed its business model to elevate the home and construction industry with the focus on utilizing digital technologies. Examples include Active Omni-Channel retail that integrates the online platform (SCGHOME.com) and offline stores (a network of SCG’s building material dealers) to offer maximum comfort and convenience for consumers, and the NocNoc platform that facilitates the changing lifestyles of homeowners. In addition to stepping up proactive hygiene measures in logistics to assure customers of high quality and safety in their services, Building Information Modeling (BIM) and Augmented & Virtual Reality (AR-VR) technologies for the construction industry are also adopted. The 3D model-based process enables efficient planning of the materials and construction techniques, resulting in faster project completion, effective budget control, and less excess materials.

Added to this is taking extra hygiene precautions in providing customer services along with sharing knowledge and precautions against COVID-19 to partners in the construction industry including developers, contractors, builders, and dealers, allowing all to get through this global crisis together.

Packaging Business to focus on progressing to become a leading regional packaging solutions provider, Packaging Business (SCGP) pledges to create various innovative packaging solutions to accommodate the rapidly-changing demands of consumers. Emphasis is placed on adjusting to achieve stable growth through building confidence in hygienic production and transportation of packaging during the COVID-19 outbreak, which has seen a hike in online food delivery and online shipping. On top of this is working closely with customers to streamline the product and service delivery process in response to the changing circumstances, allowing customers’ business to sail away from the port quickly.

Last year, SCGP launched an initial public offering (IPO) to raise capital on the Stock Exchange of Thailand. It is a major step to enhance business potential backed by a strong financial status to cater to future business expansion. As part of its business expansion through mergers and partnership, SCGP acquired Bien Hoa Packaging Joint Stock Company (SOVI) in Vietnam to consolidate business and further its reach across the ASEAN region. SCGP also introduced SCGP – Inspired Solutions Studio to offer the design and development of packaging that accommodates the diverse application needs of consumers and future market demands.

 
     

  Moving Forward and Fostering Partnerships to Achieves Sustainability  
 
     

SCG conducts business with commitment to the Sustainable Development Goals (SDGs) of the United Nations in accordance with the EGS approach, spanning environmental, social, and governance aspects with the focus on uplifting the quality of life for communities, promoting resource efficiency in line with the Circular Economy principles and to mitigate global warming, and operating business in alignment with good corporate governance principles. Nevertheless, SCG alone might not be able to achieve sustainability, but it takes the collaborative efforts of partners to develop a prototype model and continue to build on the successes to a larger extent.

SCG has been dedicated to driving the Circular Economy in Thailand and the ASEAN region. In 2020, SCG hosted online a world-scale “SD Symposium 2020” (Sustainable Development Symposium 2020) themed “Circular Economy: Actions for a Sustainable Future”, bringing along 180 partners from across the public and private sectors, academia, communities, and younger generations to solve four critical global issues:1. Solving drought through using a circular water system; 2. Solving PM 2.5 dust by promoting 100% zero-burning agriculture and providing better access to agricultural machinery to help farmers generate steady income; 3. urging the government to set plastic waste management as a national agenda; and 4. promoting the construction industry toward Green and Clean Construction.

Moreover, all business units continue to expand their collaboration networks. Chemicals Business, for instance, has joined forces with the public and private sectors as well as civil society in the Public Private Partnership for Sustainable Plastic and Waste Management, The Ocean Cleanup, and Alliance to End Plastic Waste (AEPW) with more than 50 member companies across the world. Likewise, Cement-Building Materials Business has supported the Circular Economy in the Construction Industry (CECI) to propel construction industry toward sustainable development. In the meantime, Packaging Business has teamed up with Ban Pong District in Ratchaburi Province to expand the community waste management initiative to cover all the 183 communities, making Ban Pong a model district for effective waste management and extending the successful efforts to other areas. These are designed to create a balanced business growth and sustainable future for all.

 
     

In the wake of challenges caused by the outbreak of COVID-19, SCG has closely monitored and assessed the situation so as to be able to prepare an emergency response plan in a timely manner. Given last year’s situation, the Group reported revenue from sales of 399,939 Million Baht, a drop of 9% from the previous year. Profit for the year totaled 126,115 Million Baht, an increase of 32% year-on-year.

SCG’s financial status as at year end remained strong. Net Debt to EBITDA ratio stood at 2.1 times while average loan interest rate was 2.9%. Cash flows were relatively stable as a result of the strong operating results of SCG’s core business units. At the 2021 Annual General Meeting of Shareholders, the Board of Directors resolved to propose a full year dividend payment of 16,800 Million Baht, or 14 Baht per share for the 2020 financial performance, representing a payout rate of 49%. This comprised an interim dividend of 5.5 Baht per share, and a final year-end dividend of 8.5 Baht per share.

The Board of Directors would like to express its sincere gratitude to all shareholders, debenture holders, joint-venture partners, supplies, contractors, clients, and all other relevant parties including domestic and international financial institutions for their continued contributions and support toward SCG. This gratitude also extends to all SCG employees for their hard work and dedication during the crisis that has enabled SCG to deal with uncertainties and get through the difficult situations. Despite the second wave of COVID-19 infection that has spread across Thailand, SCG strives to handle all challenges, drive innovations, deliver product and service solutions that match customer needs, embrace digital technologies, and foster collaboration networks to create stable and sustainable growth for SCG.

Bangkok, January 27, 2021

   
Air Chief Marshal Satitpong Sukvimol
Chairman
 
Roongrote Rangsiyopash
President & CEO