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SCG Announces 2018 Operating Results, Launches Strengthening Strategies with Aim to Deliver Total Solutions & New Business Models

Date : 30 January 2019


 

SCG’s 2018 Operating Results showed overall profit decrease from Chemicals Business while Packaging Business exhibited consistent and robust growth and Cement - Building Materials Business enjoyed favorable prospects. SCG is thriving to push forward two key strategies in 2019, focusing on financial stability and long-term growth management by delivering integrated solutions and new business models that harness digital and deep technologies, and collaborate with leading startups in various regions and research and development institutes

Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed the company’s unaudited Operating Results for FY2018, with registered Revenue from Sales increase 6% y-o-y to 478,438 MB. Profit for the year registered 44,748 MB, a decrease of 19% y-o-y from global economic uncertainties, primarily driven by trade war, volatile oil market and a strengthening Thai baht, in which affected the overall performance of SCG.

In 2018, SCG’s Revenue from Sales of High Value Added Products & Services (HVA) reached 184,965 MB, representing an increase of 5% y-o-y and accounting for 39% of total Revenue from Sales. Spending on Innovation Research & Development totaled 4,674 MB or 1% of total Revenue from Sales.

SCG’s Revenue from Sales of Q4/2018 dropped by 4% q-o-q to 117,223 MB from the lower chemicals product prices but increased 3% y-o-y from increased chemicals sales volumes, and the domestic growth in the Cement - Building Materials Business. Profit for the Period rose 11% to 10,468 MB q-o-q, attributed mainly from seasonal dividend contribution from the investment business in Q4/2018 but decreased 17% y-o-y, mainly due to the decline in performance from the Chemicals business. SCG’s Revenue from export Sales registered 130,895 MB or 27% of total Revenue from Sales, a rise of 6% y-o-y.

The performances of SCG’s businesses excluding Thailand in 2018: SCG’s Revenue from Sales in ASEAN registered 118,014 MB, representing 25% of total Revenue from Sales which is an increase of 11% y-o-y. Furthermore, SCG’s Revenue from Sales in other regions outside ASEAN, registered 86,155 MB, amounts to 18% of total Revenue from Sales.

The total assets of SCG as of December 31, 2018 amounted to 589,787 MB, while 28% representing assets in ASEAN.

The 2018 operating results by business units are as follows:

  • Chemicals Business recorded FY2018 Revenue from Sales rose 7% y-o-y to 221,538 MB from higher product prices and sales volume. Profit for the year stood at 29,166 MB, a decline of 29% y-o-y due to weaker petrochemical cycle and higher feedstock costs with lower equity income from associated companies. Meanwhile, Q4/2018’s Revenue from Sales declined 7% q-o-q to 53,905 MB mainly from lower product prices, but grew 4% y-o-y. Profit for the Period in Q4/2018 recorded 5,415 MB, dropped 28% q-o-q and 43% y-o-y due to lower equity income from associated companies, and inventory loss.
  • Cement - Building Materials Business recorded FY2018 Revenue from Sales increased 4% y-o-y to 182,952 MB, attributed to the government’s public infrastructure which drove the growing demand for cement as well as the recovery in real estate projects and construction expansion in the region. Profit for the year stood at 5,984 MB, a decline of 7% y-o-y, derived mainly from the asset impairments in Q3/2018. Without these impairments, SCG would still have recorded 7,304 MB in Profit for the year. Revenue from Sales of Cement - Building Materials Business in Q4/18 dropped 1% q-o-q to 45,728 MB but increase 5% y-o-y, attributed to the operational expansion of Thailand and international. Profit for the Period recorded at 1,558 MB, up 488% q-o-q from the asset impairments which occurred in Q3/2018, an increase of 49% y-o-y from the higher sales in Thailand and ASEAN.
  • Packaging Business recorded FY2018 Revenue from Sales increased 7% y-o-y to 87,255 MB. The business unit registered Profit for the year increased 36% y-o-y to 6,319 MB from cost saving initiatives of Packaging chain and steadily rising demand for packaging in domestic and international markets. Revenue from Sales in Q4/2018 of Packaging Business weakened 4% q-o-q to 21,283 MB and 1% y-o-y owing to lower sales volume both Packaging Chain and Fibrous Chain. Profit for the Period in Q4/2018 registered 1,492 MB, a decrease of 13% q-o-q but grew of 23% y-o-y.

Mr. Roongrote said, “In 2019, SCG will continue to focus on two key strategies. One is Stability which the company has maintained continuously and acted promptly to cope with recent global economic volatility, resulting in the overall 2018 SCG’s Profitability Ratios at 9%, a considerably strong figure compared to the overall industry performance. In addition, the financial position remains robust, with Net Debt to EBITDA ratio of 1.7 times, while most loans are in Thai Baht with over 90% of them are at a fixed rate. The cash flow is stable due to the healthy performance of core businesses.

Another strategy is Long-term Growth Management. In addition to heightening the development of innovative high value added products and services to raise the living standard and build a sustainable business growth, this year, SCG will focus on delivering solutions to more adequately fulfill customer needs. A series of solutions are from its core businesses: Chemicals Business that offers energy-saving industrial furnaces coating service, floating solar solution for solar power generation with a comprehensive range of services including space design, installation and after-sales service; Packaging Business, a total packaging solutions provider, that aims to drive the circular economy approach in its services and practices such as customer-engaged packaging design service, raw materials recycling process; and Cement - Building Material Business that introduced Construction Solutions which combined high-quality production expertise with advanced technologies to develop 9 core solutions, namely, Life-time solution that provides precise assessments of buildings prior to method design, building expansion and structural strengthening with help of advanced engineering equipment. Furthermore, SCG also aims to develop new business innovation models to improve competitiveness and stay relevant in a fast-paced ever-changing world.

SCG harnesses a broad range of digital technologies which include Artificial Intelligence (AI) to help analyze consumer insights; Blockchain, a digital ledger automatically connecting financial institutions to vendors, that enable efficient information sharing; Robotic Process Automation (RPA) development and Machine Learning that help resolve production system complexity, allowing adequate productivity to meet the market demand; Deep Technology investment to reap knowledge of future trends i.e. New advanced materials and Clean technology to help streamline the production process throughout the value chain and cut reduction costs; and the path toward the development of Industry 4.0 with a series of internal staff capability development programs “Internal Startup,” to create agile organization and encourage design thinking and startup work practices to help acquire customer insights. This program has helped guided solution for over 40 out of 100 teams of clients and businesses to successfully develop business models that meet the market demand. The success stories include the platform for meal box delivery, logo design service for all business and customer management system and sales tracking for construction equipment stores.

Another sustained effort is forging Open Collaboration by investing in leading startups in various regions that own technologies or innovations in line with 3 SCG’s core business through “AddVentures,” as well as enhancing potentiality to the invested startups. SCG has made direct investment in 10 startups that own distinctive technologies such as tech expert matching platform to further digital businesses, robot developer on top of investing through funds focusing on startups. Furthermore, SCG also extends more commercial deals with almost 100 projects with tech companies, aiming to leverage innovation to strengthen core business or create new businesses. Plus, the company collaborates with research and development (R&D) institutions around the world through Open Innovation Center to scale up innovation network.

In addition to creating long-term business growth, SCG will continue to expand opportunities to export innovative products and services following up on the global market direction to meet the consumer needs. Also, it will accelerate investment projects to help generate business growth in the future in both growing ASEAN market and new emerging and potential market, such as chemical export to the Chinese market, conducting retail and logistics business in the region.”

In addition, the Board of Directors of SCC approved to submit for approval at the Annual General Meeting of Shareholders a full year 2018 dividend payment of 18.00 Baht per share for a total amount of 21,600 million Baht, or 48% 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 22, 2018. The final payment of dividend will be 9.50 Baht per share, totaling 11,400 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 4, 2019 (The XD, or the date on which a purchaser will not be entitled to receive the dividend, will be on Wednesday, April 3, 2019.) The dividend will be paid on Friday April 10, 2019. The receipt of such dividends shall be made within 10 years.

 
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