SCGC modified strategies in response to the petrochemical trough, fluctuating raw material costs, and decreased product demand brought on by global economic conditions. In 2022, the Company continued to develop and expand green polymers platform, entered the recycling business in Europe, and achieved fivefold increase in green polymers sales volume over the year. The Company also utilized digital technologies in the manufacturing process to lower costs and maximize profitability, and carefully managed and prioritized future investments to maintain a strong financial position. To hold the leadership position in ASEAN, the Company prepared the commercial production of Long Son Petrochemicals Company Limited (LSP), Vietnam’s first integrated petrochemical complex, which will be ready for commercial start-up by mid 2023, while also created growth opportunities through new businesses to support future growth.
SCGC’s total sales revenue was 236,587 Million Baht, a 1% drop from the previous year owing to reduced sales volume. Meanwhile, EBITDA and profit for 2022 were 17,745 Million Baht and 5,901 Million Baht, respectively, down 57% and 80% from the previous year due to lower products’ spreads and a reduction in the earnings from associates.
SCGC faced challenges from the petrochemical trough, driven by huge wave of new production capacity in China, the Russia-Ukraine conflict, and the unfavorable economic condition exacerbated by inflation and China’s zero-Covid policy. All of these had resulted in a steady decline in the products spreads since the beginning of 2022, with PE-N and PP-N’s spreads falling by more than 22% and 35%, respectively, compared to 2021. Due to this, the Company has had to move rapidly to continuously adapt and lessen the impacts of situations.
BUSINESS ADAPTATION TO ADDRESS SITUATION IN 2022
- Managed to enhance financial stability and liquidity. SCGC successfully offered debentures worth a total of 60,000 Million Baht, which reflected investors’ confidence in SCGC business operations and leadership in integrated chemicals in ASEAN.
- Prudently invested and allotted funds emphasizing SCGC’s core business strategies, such as investments in key growth projects such as LSP and recycling businesses in Europe, manufacturing efficiency improvement projects, and investments related to safety of employees and business partners for the continuation of business operations.
- Managed production and sales across the entire value chain to keep up with the dynamic market situation by focusing on sales to the continuously growing markets and on high value-added (HVA) products such as plastic resins manufactured with SMXTM technology, plastic resins for use in the automobile sector, etc.
- Developed green innovation under SCGC GREEN POLYMERTM in line with the principles of the circular economy, which has been well-received on the global market. The sales green polymer volume has reached 140,000 tons, a fivefold increase over the year.
- Developed HDPE resins from SMXTM technology for the film to make plastic packaging, which enhances strength by 20% and can be mixed with recycled resins by up to 30% while maintaining performance, resulting in a 16% reduction in greenhouse gas emissions compared to conventional grades.
- Developed innovative barrier coating technology for flexible plastic packaging, which facilitates the manufacture of mono-material packaging that can be recycled. It has been tested and certified by RecyClass international standards, the first in ASEAN.
- Tapped into the High Quality Post-Consumer Recycled Resin (PCR) market in Thailand and Europe with leading global brands to support the ever-expanding demand. SCGC acquired Sirplaste, a leader in recycled plastics in Portugal with the production capacity of 36,000 tons of PCR and subsequently invests to increase its production capacity to 45,000 tons per year by the second quarter of 2023 adopting new technologies and machinery to enhance washing and deodorization processes to satisfy the needs of customers and brand owners who seek high-quality, and acquired a 60% stake in Recycling Holding Volendam B.V., or Kras, a leading waste management company in the Netherlands with an annual PCR capacity of 9,000 tons and will be doubled by 2023.
- Launched Circular PP, a high-quality recycled resin manufactured from recycled feedstock using Advanced Recycling technology. The Company has also partnered with TOYO Engineering, a leading engineering company, to study the feasibility of expanding the manufacturing capacity of such technology.
- Applied cutting-edge digital technologies to enhance SCGC’s capabilities throughout the value chain. Examples included the implementation of Artificial Intelligence to help manage raw material costs and the use of Digital Twin and Advanced Process Control to develop an Always Optimization system that can forecast, analyze, and visualize production data by minute. This enables constant planning for the manufacturing and sale of products at the most profitable price point.
- Prepared to operate Long Son Petrochemicals Company Limited (LSP), Vietnam’s first integrated petrochemical complex, and planned sales management, product management, customer base, and system setup to be ready to start commercial production while handling the rapidly changing market situation. The Company also emphasize on the safety of employees and business partners in preparation for a mid-2023 market entry.
- SCGC (Chemicals Business) received SEC approval. SCGC has assessed the timing of its IPO and listing on the Stock Exchange of Thailand based the economic conditions and external factors.
- Continuously developed high value-added (HVA) products utilizing innovation management processes and the i2P Center to accelerate innovation and adapt to the changing market environment. The Company also enhanced research efficiency and production development, which resulted in over 100 innovative development projects in pipeline and an average of 20 to 25 new products to the market per year which estimated to increase profitability by more than 400 Million Baht annually.
- Entered into a joint venture agreement with Denka Company Limited (Denka), Japan, to manufacture and distribute Acetylene Black, a specialty carbon black product used as a component in the production of lithium-ion batteries for electric vehicles. This joint venture aims to manufacture approximately 11,000 tons per year, with production anticipated to begin in early 2025.
- Developed local and foreign employees in Vietnam to perform their tasks to the best of their abilities in line with SCGC’s standards and in compliance with Vietnamese laws through various classroom, supervisory engagement, and hands-on learning processes. This included educational trips to study the Company’s operation in Thailand. In addition, the Company has promoted cultural interchange through various activities.
CONDUCT BUSINESS FOLLOWING ESG FRAMEWORK FOR SUSTAINABILITY
- SCGC announced ESG targets gearing towards “Chemicals Business for Sustainability” in ASEAN and continued to drive resource maximization based on circular economy principles and aim to reduce the impact of global warming. To achieve these goals, SCGC has put efforts into increasing energy efficiency, developing low-carbon technologies to attain carbon neutrality, improving the quality of life for communities, promoting job creation, and creating a low-carbon society to contribute to building a sustainable world and society.
- Accelerated the development of green polymer innovations in line with circular economy principles, with an annual sales target of 1 million tons by 2030.
- Efforts were made to achieve carbon neutrality by 2050 using the “Low Carbon Low Waste” strategy. Actions included improving or modifying processes and equipment to increase energy efficiency, using clean energy to replace fossil fuels, developing and investing in technologies that do not release carbon dioxide into the atmosphere, applying circular economy principles throughout the value chain, and engaging in carbon offsetting activities.
- From 2007 to 2022, SCGC lowered its carbon footprint by 577,130 tons per year, or 14.4%, compared to the base year of 2021. Furthermore, additional solar energy-producing systems were installed in 2022. SCGC currently consumes 11,431 MWh of solar electricity or 0.7% of its overall electricity demand.
- With regard to social development, SCGC created a favorable setting for a low-carbon society through the “Plant-Cultivate-Protect Campaign”, a project to increase green space for the Rayong Province in collaboration with various sectors and employees for mangrove and terrestrial reforestation. Over 230,000 trees were planted, which absorbed over 2,995 tons of carbon dioxide. SCGC has concurrently implemented the “Upcycling Milk Pouches” and “Waste-Free Communities” projects to encourage the effective use of resources, which helped reduce carbon dioxide emissions by more than 483 tons.
- Supported a decade-long effort to reduce inequality by generating income through the restoration Plant-Cultivate-Protect Campaign to increase green space for the Rayong Province of water resources in drought-stricken areas on Yaida mountain in Rayong province, in collaboration with local communities, government officials, and academic experts, resulting in sustainable management. This increased the community’s ability to retain sufficient water, improving its quality of life and agricultural output. The activities contributed to the community’s income generation and skills development for Rayong’s community enterprises. Furthermore, SCGC incorporated innovations to promote product development and extend distribution channels so that locals could become self-reliant in a sustainable manner.
Chemicals Business Consolidated Financial Information (Million Baht)
|Information from Statements of Financial Position
|Information from Income Statement
|Revenue from sales
|Cost and expenses *
|Profit for the year **
* The figures for year 2019 are reclassified and the business segment information for year 2018 are restated.
** Profit for the year attributable to owners of the parent.
*** Profit before finance costs, income tax expense, depreciation and amortization and includes dividends from associates.