SCG Ready to Tackle All Challenges and Aggressively Pursue Green Business

9:48:25 AM | 3/5/2024

SCG has allocated an investment budget of US$ 1.16 billion for 2024. This substantial capital infusion is directed toward green innovations, clean energy and greenhouse gas emission reduction. As the ASEAN market evolves, particular attention is placed on the gradual enhancement of business prospects, with a keen focus on Indonesia and Vietnam.

Long Son Petrochemicals Complex (LSP)

Thammasak Sethaudom, SCG's President and CEO, highlighted the company's resilience in FY2023 despite global economic challenges. Despite a 12% y-o-y decrease in Revenue from Sales to US$14.47 billion, the company achieved a notable 21% y-o-y increase in profit, reaching US$750 million. The fourth quarter saw a 4% q-o-q decrease in Sales Revenue to US$3.38 billion, attributed to lower sales volumes in Chemicals and Cement-Building Materials. The year concluded with a cash balance of US$1.97 billion, even amid challenges like cement asset impairment in Myanmar and fixed costs in Long Son Petrochemicals Complex.

In 2024, SCG is gearing up for full-scale growth in both Thailand and the ASEAN markets across all business groups. This includes the introduction of Low Carbon Cement innovations, smart living solutions, green polymers, sustainable packaging solutions that are reusable and recyclable, end-to-end clean energy solutions, as well as high-quality polymers from the Long Son Petrochemicals Complex. SCG is focused on efficient cost management and seizes opportunities from the recovery of Thailand's tourism and service sectors. The ASEAN market is expected to gradually improve, especially in Indonesia and Vietnam. Aiming to lead in green business that fosters growth while creating a net zero society that is livable for everyone, SCG has set an investment budget of US$ 1.16 billion. This investment is primarily in green innovations, clean energy, and greenhouse gas emission reduction, which have significant potential for demand and growth, as reflected in the sales of SCG Green Choice products in 2023, which accounted for 54% of total sales. Furthermore, SCG is accelerating the development of High-Value Added Products & Services (HVA) to diversify and meet customer needs promptly. SCG is also committed to transforming its business structure in line with the strategy to enhance agility, strength, and long-term growth, to effectively meet challenges in a timely manner, such as international conflicts leading to fluctuating energy costs and transportation expenses or the global economy yet to fully recover.

Operational proceedings at Long Son Petrochemicals Complex

SCGC (Chemicals Business) expects a recovery of the petrochemical market in the second half of 2024, driven by improving demand and lower new supply additions. SCGC is set to accelerate the development of green products and High-Value Added Products & Services (HVA), aiming to increase market share in response to the high demand experienced recently. As a result, HVA sales increased to 39% compared to last year, which is expected to substantially support the company's competitive capability as the market recovers. The recent development of ‘the Long Son Petrochemicals Complex’ includes a successful start-up as planned and within budget, while the machinery operations and comprehensive plant performance test runs have been proceeding smoothly and are planned to be completed in quarter 1 of 2024. In 2023, 'SCGC GREEN POLYMERTM' showed satisfactory growth, achieving sales of 218,000 tons of green polymers, an increase of 56% from the previous year. SCGC set the target to produce 1 million tons of green polymers by 2030.  Additionally, the business is rapidly expanding into the ‘Electric Vehicle Manufacturing Industry Value Chain’ with innovative lightweight plastic components for energy saving. For Denka JV, SCGC invested in manufacturing Acetylene black, a conductive material used in EV batteries, which are in high demand.

SCG Cement and Green Solution has effectively managed its energy costs. In 2023, it increased the proportion of alternative fuel usage to 40%. For 2024, the business is poised to advance production and delivery of solutions in response to the recovery of the Thai market, including both real estate and construction projects. This effort is coupled with meeting the demands of the ASEAN markets, which shows signs of improvement. The business is focusing on offering building design solutions that enable the calculation of carbon dioxide emissions in construction through the ‘KITCARBON’ platform. Additionally, it is progressing with ‘Low Carbon Cement’, which has gained recognition both domestically and internationally for its quality, strength, durability and particularly smooth finish. Sales have increased by 15% from the previous year. Most recently, the business expanded exports to the United States and Malaysia. This year, it is preparing to launch the second generation of Low Carbon Cement, which reduces carbon dioxide emissions by an additional 5% compared to the first generation.

SCG Smart Living has shown continuous growth, focusing on cost efficient management by integrating clean energy into its production processes. It has also developed smart solutions tailored to meet modern lifestyles that prioritize energy savings, good hygiene, protection from PM 2.5, and safety. Innovations include ‘SCG Active Air Quality’, which improves indoor air by preventing pollution, dust, PM 2.5, germs, bacteria and viruses; ‘SCG Metal Roof - Comfort Snap Lock series’, a roofing innovation that reduces outside noise and provides heat protection, thus saving energy inside the home; and ‘SCG Solar Roof Solutions’, which has seen a remarkable sales increase of 105% from the previous year. The business is also expanding its smart solutions to new markets, such as installing the energy-saving indoor air quality system ‘SCG Air Scrubber’ in Keppel Bay Tower, Singapore's largest global real estate project and the first building in Singapore to obtain the Green Mark Platinum (Zero Energy) award for energy-efficient building. This innovation can save up to 30% of energy from air conditioning systems.

SCG Solar Roof Solutions

SCG Distribution & Retail is rapidly expanding its strength into high-growth economic markets, specifically the SAMEA region (South Asia, Middle East and Africa). SCG International has officially established an office in Riyadh, Saudi Arabia, and is ready to serve as an International Supply Chain Partner, managing everything from sourcing products to creating markets for partners from around the world. The goal is to expand business opportunities and penetrate large-scale construction projects (Giga Project), contributing to the creation of a net zero society through a portfolio of green cement and building material products, along with raw materials, industrial components, paper and packaging.

SCG Cleanergy, the end-to-end Clean Energy Business, is experiencing continuous growth with significant potential for further expansion, driven by the increasing demand for clean energy in alignment with global carbon reduction initiatives. Its reliability in service offerings is a key strength, notably highlighted by the smart grid system that enhances accessibility to electricity trading from clean energy sources. In 2023, the business had an operational capacity of 450 megawatts. The latest installations include solar energy facilities in various locations, including the industrial estate groups such as Saha-Union Group in Bang Pakong and the Amata City Industrial Estate Group, as well as the healthcare group such as Phyathai-Paolo Hospital Group. Furthermore, SCG Cleanergy is gearing up for expansion into the ASEAN market, targeting Vietnam, the Philippines and Indonesia in 2024.

SCGP (Packaging Business) witnessed a rebound in packaging demand in Vietnam, while Indonesia began showing signs of recovery, especially in the export sectors of frozen food and pet food in Quarter 4 of 2023. Looking ahead to 2024, the packaging industry is showing signs of improvement, including plans to stimulate tourism and exports. SCGP is focusing on offering packaging solutions for the food and beverage sector, expanding on its production capacity and Merger & Partnership (M&P) in the medical supplies & labware business, foodservice packaging, and bio-solutions, a high-growth megatrend. Alongside cost management and efficient production, SCGP is integrating technologies into its manufacturing processes and increasing its use of alternative energy to 35% of its total energy consumption. SCGP is driving its business forward with the ESG (Environmental, Social, Governance) framework and human development, continuously strengthening the business.

Source: Vietnam Business Forum