Bangkok--7 May--SCG
SCG’s operating results for Q1/2015 show profit has increased thanks largely to the performance of its chemical business. SCG continues to reinforce its position as a leading innovative corporation by partnering with leading research institutes to develop technology that enhances the quality of living. Its plan to expand investments within the region is on course, as ASEAN continues to grow.
Mr. Kan Trakulhoon, President and CEO of SCG, said that the operating results (unreviewed) for Q1/2015 show Revenue from Sales is at 109,276 MB, a 6% drop q-o-q and a 10% y-o-y decrease reflecting lower chemicals prices as a result of the drop in naphtha and oil prices. The Profit for the period, however, stands at 11,073 MB which is a 25% rise q-o-q and a 32% increase y-o-y. The rise in profit is credited to the better earnings in the chemical business, despite the stock loss adjustment during the period worth 930 MB. The Q1/2015 profit is also aided by the 1,485 MB divestment gain (after tax) of the remaining 10% stake in Michelin (Thailand).
As for businesses in the ASEAN region outside of Thailand in Q1/2015, SCG has recorded a Revenue from Sales of 24,122 MB from its operations in ASEAN and from exports within the region, approximately 22% of its total Revenue from Sales, which is a 2% increase y-o-y. As of March 31, 2015, the total assets in ASEAN (excluding Thailand) are worth 88,960 MB, accounting for 19% of the total assets.
SCG’s total assets as of March 31, 2015 are worth approximately 475,039 MB.
The Q1/2015 operating results by company are as follows:
SCG Cement – Building Materials recorded a Revenue from Sales of 47,081 MB in Q1/2015,
a 4% increase q-o-q due to seasonal effect. The Revenue from Sales dropped 1% y-o-y due to domestic market softness. Q1/15 Profit for the period is at 3,558 MB, a 40% increase q-o-q but a 14% drop y-o-y.
SCG Chemicals recorded a Revenue from Sales of 47,956 MB, a 17% decrease q-o-q and a 21% drop y-o-y. The decline in Revenue from Sales is due to the drop in product prices. The company’s quarterly Profit for the period is at 4,938 MB, a 40% rise q-o-q and a staggering 99% increase y-o-y thanks to a hugely expanded sales volume and an improved spread from last year. Despite the quarter’s stock loss adjustment at 930 MB, the company still sees its profit soar this quarter.
SCG Paper recorded a Revenue from Sales of 17,111 MB, a 4% increase q-o-q and a 7% y-o-y increase, thanks to a growth in sales volume both in the Fibrous Chain and the Packaging Chain. Profit for the period in Q1/2015 registered 878 MB which increased 49% q-o-q, due to higher sales volume, but decreased 30% y-o-y, mainly from lower margin, lower extraordinary income, higher depreciation as PM16 started commercial run, and higher financial expenses.
Mr. Kan added “SCG continues to operate its businesses with an aim to become a sustainable leader in the ASEAN region. Our investment expansion plan is still on track and we continue to export our products within the regional markets as we anticipate growth within the ASEAN region. We are confident that the region’s overall economy is continuing on an upward trend and is extremely favorable. Thus, SCG’s investments regionally will continue to grow. For Q1/2015, the Revenue from sales for exports to other ASEAN markets is at 13,739 MB, a 2% increase y-o-y despite the lower prices of chemical products.”
Even though the cement and building materials market in Thailand weakened in the first quarter of this year, SCG believes the market will improve from the second quarter thanks to the government’s policies for economic stimulation and investment plans, which will start to show results in the latter half of 2015. This is expected to stimulate Thailand’s economy. The chemical business is also seeing an upward trend thanks to the growth in global demands and the drop in oil prices. The continued rise in demands for packaging paper and packaging products in ASEAN is expected to also boost exports to neighboring countries for SCG’s paper business.
The company’s board of directors recently approved an approximate 4,125 MB investment for the second production line of Vina Kraft Paper Company Limited (VKPC) in Vietnam. The significant investment will push production capacity for paper packaging by an additional 243,000 tons per year. With this, SCG will have a combined production capacity in Thailand and ASEAN of 2.6 million tons per year, maintaining the position of SCG as a sustainable packaging paper leader in ASEAN. VKPC is a 70/30 joint venture between Siam Kraft Industry Company Limited under SCG Paper and Rengo Company Limited (Japan).
In addition, SCG continues to focus on promoting the development of high value added products and services (HVA) to answer the various needs of consumers and improve quality of life. Revenue from Sales from HVA products and services in Q1/2015 is at approximately 41,068 MB, a slight increase y-o-y, accounting for 38% of the total Revenue from Sales. Recently, environmentally-friendly products and services under the brand SCG eco value adhere to new standards that are more stringent compared to the previous one. As a result, Q1/2015 Revenue from Sales of these products is recorded at 29,052 MB, 9% rise y-o-y and a 27% share of the total Revenue from Sales (39% by the previous standards). In 2015,
SCG has set aside a total investment of 4.8 billion Baht toward its research and development to drive the creation of new innovations that will enhance the quality of life for consumers.
SCG continues to reinforce its positioning as a leading innovative corporation by expanding its partnerships with leading research institutes in Thailand and abroad. This includes the extension of the MOU with the Faculty of Engineering at Chulalongkorn University to continue the long-standing research partnership which has been ongoing for almost 10 years consisting of funding for laboratories, analytical tools and state-of-the-art research equipment to support the improvement of know-how and intellectual property for future business development. SCG has also partnered with the University of Oxford, UK, to build the Center of Excellence with a goal of achieving sustainable R&D management and strengthening research personnel and equipment. In addition, SCG has recently joined hands with the University of California, Berkeley, USA, to develop the world’s advanced cement innovation from the 3D printing technology. The forefront innovation will be showcased at SCG Experience booth at ARCHITECT’15 from now until May 3, 2015 at Challenger Hall, Impact, Mueng Thong Thani.