SCG Announces Operating Results for Q1/2022

2:39:21 PM | 5/9/2022

SCG recently reported its operating results for Q1/2022, demonstrating a solid performance with strategies to deal with soaring energy and raw materials costs as a result of the Russia-Ukraine conflict.

To act proactively and foster sustainable and long-term stability, SCG is emphasizing four strategies: 1) proactive business management with flexibility, 2) timely delivery of innovations to capitalize on opportunities during the country's reopening, 3) complete construction of LSP project in Vietnam to commence commercial operations in the first quarter of 2023, expand production capacity of High-Quality Post-Consumer Recycled Resin of Sirplaste in Portugal, and 4) acceleration of ESG (Environmental, Social and Governance) to build business immunity for long-term growth.

Mr. Roongrote Rangsiyopash, President and CEO of SCG, at the Operating Result of Q1.2022

Mr. Roongrote Rangsiyopash, President and CEO of SCG, disclosed, "The Company's unreviewed Operating Results for Q1/2022 registered Revenue from Sales of 108.9 trillion VND (US$ 4.6 Billion), an increase of 7% q-o-q, due to higher sales across all businesses. Meanwhile, Profit for the Period reached 6.3 trillion VND (US$ 268 Million), an increase of 6% q-o-q, largely owing to the improved business performance of the Cement-Building Materials Business and higher non-chemical equity income (agricultural machinery business).

On a y-o-y basis, Revenue from Sales increased 25% from higher sales revenue across all businesses mainly from higher product prices in-line with the market. However, Profit for the period fell by 41%, mainly due to rising feedstock costs from Chemicals Business in Q1/2022, along with the fact that the Chemicals industry had better performance in Q1/2021 compared to normal business operations from the winter freeze which caused supply shortage in the United States.

In Q1/2022, SCG's Revenue from Sales of High Value-Added Products and Services (HVA) reached 36.7 Trillion VND (US$ 1.5 Billion), accounting for 34% of total Revenue from Sales. Moreover, New Products Development (NPD) and Service Solution amounted to 17% and 5% of total Revenue from Sales.

Besides, SCG's Revenue from outside of Thailand together with exports from Thailand was 44% of total Revenue from Sales or amounted to 44.4 Trillion VND (US$ 2 Billion) in Q1/2022, an increase of 30% y-o-y.

SCG's total assets as of March 31, 2022 amounted to 610.5  Trillion VND (US$ 26.7 Billion), of which 45% represented assets in ASEAN”.

SCG in ASEAN (ex-Thailand)

For SCG’s operation in ASEAN (ex-Thailand), the Revenue from Sales in Q1/2022 recorded a 30% increase y-o-y, amounting to 29 Trillion VND (US$ 1.3 Billion), and 28% of SCG’s total Revenue from Sales. This includes sales from both local operations in each ASEAN market and imports from the Thai operations.

SCG’s CEO met with Vietnam Prime Minister and discussed on expanding Long Son Petrochemicals 2 (LSP2)

As of 31 March 2022, the total assets of SCG amounted to 610.5 Trillion VND (US$ 26.7 Billion, while the total assets of SCG in ASEAN (ex-Thailand) were US$ 356.8 Trillion (15.6 Trillion, 58% of SCG’s total consolidated assets.

Owing to commitment to creating value for Vietnam's economy, in February, SCG President & CEO attended a courtesy meeting with the Prime Minister of Vietnam to seek guidance on the expansion of Long Son Petrochemicals Phase 2 (LSP2) in Ba Ria-Vung Tau, south of Vietnam. The project incorporates green, advanced technologies, and sustainable development to meet rising demands aligning with the country and ASEAN economic growth.

SCG in Vietnam consistently pursues the sustainability framework of ESG (Environmental, Social and Governance) in driving sustainable business growth by contributing to the local communities where it operates. In Q1/2022 SCG was listed in the Top 50 Green Growth Foreign Invested Enterprises (FIEs) in Vietnam at the 21st Golden Dragon Award. Moreover, an outdoor gym at Binh Duong was completed to enhance well-being while SCG with its subsidiary, PRIME Group, provided hand-washing equipment to schools in Hai Duong and Vinh Phuc to help curb COVID-19. Also, PRIME carried out renovations and supports for homes in the community.

Mr. Roongrote said, "SCG has remained strong both in Thailand and overseas despite rising costs owing to the Russia-Ukraine situation. To respond proactively in a fast-paced manner and tap into global markets, SCG is accelerating four strategies: 1.) proactive business management, 2.) timely delivery of innovations, 3.) growth strategy-driven investments, and 4.) acceleration of ESG (Environmental, Social and Governance) to strengthen business immunity for long-term growth.

1.) Proactive business management. SCG adapts rapidly and with the flexibility to eliminate any potential risks associated with rising energy and raw material costs and protracted uncertainty that may persist in the next 3-6 months as a result of the Russia-Ukraine crisis and the COVID-19 pandemic. Among the approaches are to keep tracking of energy prices and entering into futures contracts carefully (Hedging), manage inventory to adequately meet the demand, and boost alternative energy use to reduce costs. In Q1/2022, biomass energy consumption from agricultural waste materials and RDF fuel waste was 16.4%, and for 30% of energy use by domestic cement production. Other approaches also include the use of digital technologies to increase energy efficiency and value chain management. For example, SCGC employs artificial intelligence to manage energy used in production, reduce energy consumption, and analyze cost pricing and purchasing opportunities to efficiently procure feedstock based on market conditions. And last but not least is to closely monitor the situation to ensure swift adaptability.

2.) Timely delivery of innovations. SCG is capitalizing on the country's reopening and economic recovery by offering High Value-Added Products & Services (HVA) to tap into a new and green lifestyle and well-being sector. Examples include the High-Quality Post-Consumer Recycled Resin "Circular PP" from Advanced Recycling technology, which has qualities comparable to virgin plastic resins and is suitable for environmentally friendly food packaging; "SCG Solar Roof Hybrid System" with hybrid system technology that utilizes batteries to store electric energy for use during the day and night, saving up to 60% on energy costs; "SCG HVAC Air Scrubber," an air purifier system that minimizes the cooling load on the air conditioning system, ideal for large buildings and capable of saving up to 20-30% on energy costs; using technology to improve the efficiency of construction services such as "CPAC BIM," a digital technology for precise construction design that helps minimize resource waste and adds investment value; and "CPAC Low Rise Building Solution," a building innovation that utilizes a precast concrete system that enables rapid, precise, and waste-free installation. In addition, SCG also intends to expand packaging solutions to meet the needs of customers and consumers, such as offering a diverse range of food packaging designs and consumer goods packaging.

3.) Growth strategy-driven investments. SCGC has recently completed the acquisition of a 70% share in Sirplaste, a leading plastic recycler in Portugal. Together with plans to increase production capacity and enhance the quality of High-Quality Post-Consumer Recycled Resin (PCR) to fulfill the global market demand under the brand "SCGC GREEN POLYMER™." The approach aligns with SCGC's environmental aims of selling 1 million tons of products under the brand SCGC GREEN POLYMER™" per year by 2030.

Long Son Petrochemicals Company Limited (LSP) has progressed to 93 percent construction completion on its petrochemical complex project in Vietnam as planned. It is readying Manpower in production and sales to prepare for commercial operations in the first half of 2023.

4.) Acceleration of ESG (Environmental, Social and Governance) with ESG 4 Plus (Net Zero, Go Green, Reduce inequality, and Embrace Collaboration, plus harness good governance). SCG continues to carry out its efforts to attain its goals of zero net greenhouse gas emissions by 2050 and at least a 20% reduction by 2030.

SCG will also strive to deliver green innovations and promote environmental stewardship through SCG Green Choice products, whose sales in Q1/2022 was 51% of total Revenue from Sales or 77,214 MB, an increase of 27% q-o-q. SCG also promotes SCG Cleanergy, a clean energy provider with cutting-edge technology providing end-to-end solutions from obtaining permission, installing, operating, maintaining, grid connecting, and facilitating power purchase on a virtual trading platform to drive broader use of alternative energy.

The global economic situation, on the other hand, continues to be volatile. Mr.Roongrote concluded, "Keeping a close eye on the situation, forecasting scenarios in a timely manner, and adapting rapidly can enable businesses to continue operating in the face of a crisis. SCG has prepared for a short-term crisis through proactive risk management and long-term opportunities through a business transformation in accordance with the ESG (Environmental, Social, and Governance) approach."

Van Luong (Vietnam Business Forum)