Packaging Business (SCGP) continues to witness stable growth through working closely with customers amid the economic volatility caused by the COVID-19 pandemic and various government measures to contain the transmission in many countries. The efforts include creating innovative packaging solutions to accommodate customers’ evolving needs, effective supply chain management to ensure business continuity, and caring for health of customers, business partners, and employees. In addition, SCGP stays focused on progressing to become a leading regional packaging solutions provider through capacity expansion and merger & partnership to respond to the Next Normal in the future.
In 2020, SCGP recorded total revenue from sales of 92,876 million baht, an increase of 4% from the previous year, attributable to the constantly growing demand for consumer goods and the consolidation of PT Fajar Surya Wisesa Tbk. and Visy Packaging Thailand Limited’s operating results. EBITDA was 16,884 million baht, up 11% compared to last year due to our continued focus on delivering a diverse range of products, services, and solutions as well as effective cost management. Net profit for the year amounted to 6,457 million baht, a growth of 23% compared to last year.
SCGP has faced challenges from the economic volatility in ASEAN and across the world in the wake of the COVID-19 pandemic, resulting in a year-on-year decline of demand for durable goods, especially electronics and electrical appliances and automotive, as well as printing & writing paper. However, demand from the consumer goods segment, particularly food and beverages, healthcare as well as E-Commerce have witnessed stronger growth, thanks to consumers growing health conscious and shift in consumer behavior to online shopping.
KEY ACHIEVEMENT IN 2020
- Expanded downstream capacity as well as focused on expanding customer base in the consumer goods segment to enhance growth. In 2020, SCGP has completed merger and partnership with Bien Hoa Packaging Joint Stock Company (SOVI), a leading manufacturer of fiber-based packaging in Vietnam, and expanded capacity of Performance and Polymer Packaging at Tin Thanh Packing Joint Stock Company (BATICO) in Vietnam.
- Enhanced competitiveness by developing innovative packaging solutions and creating unique products and services to deliver value to customers. Last year, SCGP was launched SCGP-Inspired Solutions Studio that offer packaging design and development services.
- Maintained leadership in sustainable development and social responsibility in ASEAN. SCGP operates business in line with the Circular Economy principle to reduce resources consumption and recapture production waste for recycling as much as possible. SCGP currently operates 68 recycling centers across Thailand, Vietnam, and the Philippines and has established a global network to source major raw materials for production process.
RESILIENCE TO RECOVER AND CHANGE TO EMERGE STRONGER
- Listed on the Stock Exchange of Thailand on October 22, 2020 with market capitalization of approximately 150,000 million baht (as at IPO price) and is listed in the SET50 index. The proceeds from the IPO (including over-allotment shares) of approximately 40,000 million baht will be used to finance business expansion both domestic and overseas, capital restructuring, and working capital.
- Entered into partnership with Rengo Co., Ltd (Rengo) in United Pulp and Paper Co., Inc (UPPC). This will result in SCGP and Rengo holding 74.8% and 25.0% stakes in UPPC, respectively. The partnership will provide opportunities for UPPC to expand its sales and customer base in the Philippines, while strengthen SCGP’s integrated packaging chain position in ASEAN.
- Acquired 94.1% shares in SOVI, a leading manufacturer of fiber-based packaging in Vietnam.
- Signed a share purchase agreement to acquire a 100% stake in Go-Pak UK Limited. The transaction has been concluded in January 2021.
- Prepared organizational capability that matches the business and designed a platform to develop people capability through various learning activities to ensure that employees are capable of applying the knowledge and skills to their work efficiently.
- Supported employees to develop themselves continually and promoted leadership development through enrichment of knowledge and skills useful for their work, coaching culture, and developing the mindset and behaviors of leaders who play a vital role in driving corporate value and culture. This ran concurrent with promoting project development and collaboration & teamwork as well as driving change and preparing for rapidly-changing circumstances.
- Created a succession plan to allow for passing on leadership roles at SCGP and help develop their career paths. On top of this was developing functional and transformation leadership through various learning processes to ensure employees who possess future leadership potential are capable of supporting SCGP’s business expansion overseas in particular and rising to the rank of future executive leaders.
Products and Innovations
- R-1 flexible packaging, which consists of multi-layer mono material, offers excellent durability and product protection. It can be recycled into good quality plastic pellets and other materials for reuse in the production process.
- OptiSorb-X packaging provides an exceptional barrier against oxygen and moisture and also absorbs oxygen within the sealed package to preserve the packaged contents and extend shelf life, suitable for snacks, bakery products, processed meat, etc.
- Odorlock packaging controls permeation of the odor of packaging contents such as durians to other products, allowing it to be transported and displayed on the same shelf as other products.
- The Detect Odor & Monitoring (DOM) system is designed to monitor and assess odor impacts at emission sources. It constantly detects and monitors odor emissions, gases, and pollutants, and the results in combination with weather conditions will be displayed on an easily-accessible web-based platform with an alarm system to signal risks. The system uses a learning tool to create database for use in identifying the odors, allowing for more accurate and faster analysis and processing in the future.
SUSTAINABLE DEVELOPMENT IN BUSINESS OPERATIONS
- Managed industrial waste continually following the 3R strategy (Reduce, Reuse, Recycle) and the Circular Economy principles by updating and developing production processes as well as driving research & development to fully utilize materials and production waste to achieve resource efficiency. To that end, materials are recycled for reuse across the supply chain or processed into value-added products to reduce natural resources consumption.
- Managed climate change risks through reducing energy consumption and greenhouse gas emissions. Efforts included enhancing energy efficiency in the manufacturing process, increasing the utilization of renewable and alternative energy, and performing reforestation around the production facilities and the communities to increase carbon capture.
- Met with the water situation monitoring and analyzing sub-committee comprising the Royal Irrigation Department and other involved agencies every two weeks to analyze water situations in different areas nationwide. At the same time, the Business Continuity Management function closely monitored water situations in areas where SCGP production facilities are located to jointly define measures to prevent water shortage at the plants.
- Joined forces with the Thai Chamber of Commerce to buy sugarcane leaves from farmers for use as alternative energy in the steam boilers equipped with highly efficient electrostatic precipitators to reduce emissions from sugarcane field burning and greenhouse gas emissions from coal combustion while generating income for farmers in line with the Circular Economy principles that promote resource efficiency.
- On top of this was the carrying out of reforestation and nature conservation projects, growing terrestrial plants both within and outside the plants’ areas in Kamphaeng Phet, Khon Kaen, Kanchanaburi, Ratchaburi, and Prachinburi for a total of 48,170 trees; and joining hands with the communities to construct over 687 check dams in an attempt to restore watershed forest.
Social and Environmental Activities
- The “Sang Boon” (Merit-making) Classroom project is designed to improve food security by teaching the locals vegetable growing techniques to increase production efficiency, equipping them with knowledge and techniques to grow vegetables to provide food sources for families or to make a living as a means to ease financial hardship and uplift quality of life of the community in a sustainable way.
- Developed paper capes for use in barber shops and beauty salons nearby the plants to avoid reuse of a cape to prevent the transmission of COVID-19 and increase clients’ health safety.
- Created 3-in-1 foldable paper desk in conjunction with World Vision Foundation of Thailand to hand over to students in rural areas throughout Thailand. Ergonomically designed, the 3-in-1 paper desk can also be repurposed as a bag and a box for storing school supplies.
- Organized the Conserving Water from Mountain to Mighty River project in collaboration with the HQ 9 Corps Infantry to construct 268 check dams in Kanchanaburi in honor of H.M. the King on the occasion of H.M. King Maha Vijaralongkorn Phra Vajiraklaochaoyuhua’s birthday anniversary on July 28, 2020 at Ban Mai Huai Nam Khao, Ban Kao Subsistrict, Mueng District, Kanchanaburi. The initiative has restored forest land to health, brought back biodiversity and the balance in nature, and generated more income for the community. It has also instilled awareness about the importance of water resources and forests, inspiring the collaboration in preserving natural resources.
- Supported the Circular Economy concept to make Ban Pong District a zero waste community role model. The initiative was continued for the second year by setting a goal for all participating communities to achieve a reduction of 40% waste, resulting in 41 communities engaging in the initiative and a large number of people coming to study the execution.
Packaging Business Consolidated Financial Information (Million Baht)
|Information from Statements of Financial Position*
|Information from Income Statements*
|Revenue from sales
|Cost and expenses
|Profit for the year **
Included financial performance of Fajar since July 2019 and Visy Thailand since September 2019.
* The figures for year 2019 are reclassified and the business segment information for year 2018 and 2017 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.