Leading ASEAN Conglomerate to Focus on Packaging and Cement-Building Materials’ Retail Businesses
SCG Q1 2019 operating results reveal 11 percent revenue growth quarter-on-quarter (QoQ) despite a 6 percent dip year-on-year due to oil price fluctuations and global economic slowdown. The company is looking to exponentially accelerate growth, especially the Packaging Business and retail offshoot of Cement-Building Materials Business, which display a consistent growth track.
SCG President and CEO Roongrote Rangsiyopash disclosed that the company’s unaudited operating results for Q1 2019 with a registered revenue from sales of PHP185,812 million (US$3,554 million) dipped 4 percent QoQ and 5 percent YoY mainly because of lower chemicals product prices due to weak global demand. Meanwhile, profit for the period reached PHP19,282 million (US$369 million), an increase of 11 percent QoQ, thanks chiefly to all businesses that performed better than the previous quarter. The figure decreased 6 percent YoY due mainly to the decline in performance of Chemicals Business in light of decreased product margins.
SCG’s revenue from High Value-Added Products & Services (HVA) sales for Q1 2019 reached PHP75,172 million (US$1,438 million), close to that of the previous year and accounting for 40 percent of the total revenue from sales. The company’s spending on Innovation Research & Development totaled PHP2,379 million (US$46 million) or 1.3 percent of total revenue from sales.
SCG in ASEAN (ex-Thailand)
For SCG’s operation in ASEAN excluding Thailand, revenue from sales in Q1 2019 recorded a 1 percent decrease YoY at PHP44,286 million (US$847 million), which is 24 percent of SCG’s total revenue from sales. This includes sales from both local operation in each ASEAN market and imports from the Thai operations.
As of 31 March 2019, total SCG assets amounted to PHP989,231 million (US$18,814 million) while total SCG assets of SCG in ASEAN, excluding Thailand, amounted to PHP269,154 million(US$5,119 million), which is 27 percent of SCG’s total consolidated assets.
SCG in the Philippines
Based on the Q1 2019 report, SCG in the Philippines owned PHP13,075 million (US$249 million) worth of total assets, an increase of 9 percent YoY. The company reported Q1 2019 revenue from sales of PHP4,411 million (US$84 million), which includes sales from both operation in the country and imports from the Thai operations. This represents a decrease of 8 percent YoY due to the lower global market price of packaging paper.
For the latest movement in the Philippines, SCG Philippines Country Director Anuvat Chalermchai assured continuous growth, with the cement-building materials business now shifting from a product-based business model to a solution-based one. SCG is also developing an omnichannel platform to provide customers with more a convenient way to access information on construction materials. This approach is also designed to enhance construction material industry at all levels. Customers have been able to conveniently buy SCG products through www.scgshop.com.ph addition to physical stores nationwide since the initiative was launched in 2018.
To strengthen the growth of the cement-building materials business in the Philippines, Mariwasa Siam Ceramics, Inc., one of the leading ceramic tile providers established by SCG and Mariwasa, has been importing ceramic and porcelain tiles and sanitary ware products to be able to offer a wider range of quality building materials. The company now offers cement, roofing products, and SCG Smartboard and SCG Smartwood – fiber-cement boards and wood substitute that can be applied for the ceiling, wall and floor.
Roongrote said, “All SCG business units continue to apply core strategies to build healthy growth and act promptly when needed to handle challenges. The Packaging Business aims to become a Total Packaging Solutions Provider by establishing more packaging production bases in the ASEAN, particularly in markets with constant growth opportunities, and developing innovations and technologies to add value to products, services and production processes toward fulfilling the needs of enterprises and consumers.”
SCG is also driving the Circular Economy in line with the SCG practice of SCG Circular way which aims to maximize resource utilization, recycle waste materials and reduce materials used in production while maintaining excellent product properties. Examples include the newly-developed paper straws built to last up to four hours and are safe for everyone, the fibro zeal coated paper bag and the mono-material plastic packaging manufacturing process.
SCG has also taken a leap to increase its competitive edge and joined forces with international partners to expand its portfolio of products, services and integrated solutions for the ASEAN, China and India markets. This resulted in the change from SCG Trading to SCG International and fostered international trade with its modern technologies to create total solutions and improve logistics business that meets the needs of market.
In addition to the LSP Petrochemical Complex project in Vietnam that is moving forward as planned, Chemicals Business has accelerated innovative development in its High Value Added Products & Services (HVA) to meet the needs of customers and industries. An example is the collaborative effort with the Provincial Waterworks Authority to develop the Submarine Water Pipeline to Koh Samui. The project, which is a first in Thailand, helps alleviate water scarcity and improve the living quality of the locals. The pipes used in the project is made from world-class PE112 innovative compounds developed by SCG. The pipeline features greater pressure resistance.
Furthermore, SCG focuses on forging more business partnerships to promote the Circular Economy. It has collaborated with CP All and Dow Thailand Group to transform plastic wastes collected from the office, distribution center and 7-Eleven stores into asphalt mixtures to improve road efficiency in the convenient store areas.
SCG likewise is advancing the adoption of digital technology to boost business efficiency. For the first time in the world, SCG has adopted the Blockchain Corda R3 digital platform to streamline its Procure-to-Pay system with vendors. This has meant a great leap forward, especially in the Chemicals Business and Packaging Business, as the platform allows for as much as 70 percent cost reduction in procurement and payment processes. As a result, SCG won several awards such as from Asset Triple A Treasury, Trade, Supply Chain and Risk Management Awards 2019 for Best Supply Chain Solution, presented by The Asset, Asia’s leading financial magazine, and Gold Awards Excellence in Automation from 21st Asian Shared Services & Outsourcing organized by Shared Services & Outsourcing Network (SSON), the largest global community for Shared Services and Outsourcing professionals. SCG also plans to incorporate Blockchain in other areas to provide greater convenience to vendors in buying products from SCG.