SCG announced Q2/2018 Operating Results as satisfactory similarly to the previous quarter, despite the impact of higher feed costs and seasonality.
SCG unveiled that it has taken key steps to strengthen core businesses to sustain its continued ASEAN expansion, for example, moving forward with the modern retailing business platform and product distribution that leverages upon digital technologies to meet customer expectations.
In addition, SCG further highlighted its logistic expansion into southern China, and its continued support towards innovations and high value-added products and services which enhances the quality of living. All of this will drive the company’s future sustainable growth.
Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed the Company’s unaudited Operating Results for Q2/2018, with registered Revenue from Sales of 120,447 MB, an increase of 11% y-o-y and 2% q-o-q due to higher sales volume and prices from most businesses.
Meanwhile, Profit for the Period decreased by 6% to 12,402 MB compared to last year, primarily caused by the lower performance of the chemicals business and lower dividend income from the investment business.
Still, the Q2/2018 operating profits remained similar to the previous quarter, as it was bolstered by seasonal dividends from associates in other businesses despite lower seasonal demand in the cement-building materials business.
SCG’s Revenue from Sales for the first half of 2018 increased by 6% y-o-y to 238,697 MB, largely due to higher chemicals prices. Profit for the Period fell 19% y-o-y to 24,808 MB, owing to non-recurring gain on sales of investments in the previous year,
The appreciation of Thai baht and higher naphtha costs. Additionally, export revenue for the first half of 2018 stood at 64,993 MB or 27% of SCG’s consolidated Revenue from Sales which remained unchanged compared to the same period last year.
The H1/2018 Performance of SCG’s Businesses Outside of Thailand:
SCG’s Revenue from Sales in ASEAN registered 57,044 MB, representing 24% of SCG’s total Revenue from Sales, which is an increase of 10% y-o-y. Furthermore, 18% of total Revenue from Sales or 43,019 MB, was from other regions outside of ASEAN.
The total assets of SCG, as of June 30, 2018, amounted to 590,719 MB, while 25% represents assets in ASEAN.
The Q2 and first half of 2018 operating results by business units are as follows: Chemicals Business recorded Q2/2018 Revenue from Sales of 57,053 MB, an increase of 15% y-o-y and 8% q-o-q, mainly from higher sales volume.
Profit for the Period dropped by 10% y-o-y to 8,131 MB but remained similar to the previous quarter. This decrease is attributed by the appreciation of Thai Baht and higher feed costs. As a consequence, Revenue from Sales for H1/2018 improved 6% y-o-y to 109,920 MB due to higher product prices.
The business unit registered Profit for the Period of 16,266 MB, down 27% y-o-y mainly because of Baht appreciation and higher feed costs.
Cement-Building Materials Business recorded Q2/2018 Revenue from Sales of 44,658 MB, a rise of 5% y-o-y but declined 4% q-o-q from seasonal fluctuations of building materials and ceramics products. Profit for the Period amounted to 1,677 MB with growth of 6% y-o-y but a decrease of 32% q-o-q due to seasonal factors.
Revenue from Sales for H1/2018 increased by 4% y-o-y to 91,119 MB, attributed to the expansion of regional market. Meanwhile, Profit for the Period gained 8% y-o-y to 4,161 MB.
Packaging Business recorded Q2/2018 Revenue from Sales of 21,792 MB, an increase of 12% y-o-y mainly due to the higher selling price and sales volume of Packaging Chain, but dropped 1% q-o-q. Profit for the Period stood at 1,598 MB, a surge of 59% y-o-y and 6% q-o-q.
Revenue from Sales for H1/2018 improved 11% y-o-y amounted to 43,773 MB. Profit for the Period registered 3,110 MB or 16% y-o-y increase.
Mr. Roongrote said, “SCG is moving forward to expand core businesses in ASEAN market. One of our prominent projects is Vietnam’s first Petrochemicals Complex, Long Son Petrochemicals Company Limited (LSP) which is steadily progressing after the groundbreaking ceremony joined by Vietnam’s Prime Minister and high-ranking officials this February.
SCG increased its stake from 71% to 100% recently in June and is scheduled to sign the $3.2 billion loan package with domestic and international financial institutions in August.
The project is set to proceed with the Engineering, Procurement, and Construction (EPC) phase within Q3/2018 and begins commercial operations by Q1/2023 which will create jobs and income as well as boosting industries and economy in Vietnam.
For Thailand, SCG increased its production capacity in Map Ta Phut Olefins plant (MOC) from 1.7 million tons per year to 2.05 million tons per year. This provides raw material flexibility and allows the use of low-priced propane to meet customer demand and heighten competitive capabilities.
Apart from the core businesses, SCG keeps pace with rapidly changing market and customer behaviors by making further headway in pushing forward integrated service, retailing and distribution businesses. SCG has partnered with startups in developing software and platforms for cost management and e-commerce.
The technologies provide customers with efficient access via offline and online platforms. Besides, the partnership also promoted knowledge exchange and helped expand the customer base.
To continue its growth, SCG has acquired a 29% stake in PT Catur Sentosa Adiprana Tbk (CSA), a leading Indonesia company in the modern retail space.
Its business involves the retail sales of home product and building materials. Operating the tradename of “Mitra10” the company has the largest store coverage nationwide at 27 stores, and aims to grow upward to 50 stores by 2021, in order to meet soaring demand potential.
CSA also has a distributions business that has a network covering over 30,000 retail shops nationwide with enhanced storage system and innovations.
In another development, SCG’s joint venture company, Global House International (GBI), has acquired a 30% stake in PRO 1 GLOBAL Company Limited, which is a leading distributor of building material and home decoration products in Myanmar.
Pro1-Global currently has 6 retail stores, and there are plans to expand the store coverage, in addition to the integration of future supply chain management and IT to support Omni Channel efforts.
In the logistics business, SCG has entered into a joint-venture agreement with Jusda Supply Chain Management International (JUSDA) to establish an integrated logistics and supply chain Management Company, with the focus into southern China.
And ASEAN where there is currently growing demand for economic trade in high-tech electronics, agricultural products, foods and cross-border e-commerce. The joint-venture company is expected to begin operations in Q3/2018.
SCG aims to foster innovation to coherently promote better living conditions and create high value-added products and services. As a result, Revenue of High Value-Added Products & Services (HVA) Sales for Q2/2018 reached 45,257 MB or 38% of total Revenue of Sales, an improvement of 6% y-o-y.
The HVA Sales in H1/2018 stood at 91,101 MB. SCG has recently signed an R&D agreement to develop the innovative dental product with the Faculty of Dentistry Mahidol University and Dental Council of Thailand,
Aiming to promote innovation to establish the country’s independence which will replace imports of foreign products and lower expenses by 20-30%.
Besides, it will provide the public more access to medical care as the products will be listed as Thai innovation under the Ministry of Finance. SCG also developed products and services to satisfy customer’s HVA demand in digital age, such as the Smart Toilet by COTTO.
In addition, The Board of Directors of SCG has approved a H1/2018 interim dividend payment of 8.50 Baht per share (10,200 MB), which is payable on August 22, 2018, XD-date on August 8, 2018 and record date on August 9, 2018.