SCGP has released 2022 operating results with revenue of Baht 146,068 million, an increase of 18% from the same period of last year. The growth is attributed to merger and partnership (M&P), and continuous organic expansions. Meanwhile, profit has dropped with impact from lower sales volume and higher energy prices. Looking forward to 2023, overall outlook of the packaging industry is projected to be improved with support from China’s country reopening. The company has targeted a continuous growth in revenue to Baht 160,000 million while laid out 5 strategies to strengthen the business amidst economic recovery, including the expansion of packaging & adjacent businesses with high growth potential, the development of innovation & packaging solutions, enhancing operational excellence throughout the supply chain, proactive management to drives resiliency, and the focus on sustainable development driven by ESG 4 Plus.
Mr. Wichan Jitpukdee, Chief Executive Officer, SCG Packaging Public Company Limited, or SCGP, has announced that the 2022 performance continued to grow amidst challenging factors. The sales revenue was Baht 146,068 million, 18 percent growth year-on-year, with main contribution from production capacity expansion and M&P, full-year financial consolidation of completed M&P in Duy Tan, Intan Group and Deltalab, and partial revenue consolidation of Peute and Jordan; and lastly, the product prices adjustment in line with rising costs. Meanwhile, EBITDA was Baht 19,402 million, 8-percent drop from the same period of last year. The profit was Baht 5,801 million, or a 30-percent drop from the previous year, attributed to heightened energy costs and lower sales volume amidst softened packaging paper demand globally and regionally as an effect from stringent lockdown in China.
In the fourth quarter of 2022, the revenue of SCGP was Baht 33,509 million, a drop of 5%, with EBITDA at Baht 3,554 million, a 34-percent drop year-on-year. Profit for the period was Baht 450 million, a drop of 79 percent year-on-year. These were a result of the slowdown in packaging paper demand and price, particularly in Indonesia and Vietnam. Meanwhile, with gradual opening of countries in ASEAN region, fiber and polymer packaging demand which are related to daily consumer consumption, such as food and beverage, continued to grow from the previous quarter.
SCGP has laid out investment plan of Baht 100,000 million for the period of 5 years (2021-2025) with the goal to achieve the revenue of Baht 200,000 million in 2025. During 2021-2022, SCGP invested approximately Baht 37,000 million mainly through M&P and capacity expansion in growing business with high growth opportunities. The successful returns amid the challenging economic crisis was a manifest to efficient business model with solid strategic direction toward future growth of SCGP.
In consideration of the FY2022 financial performance, the Board of Directors has proposed for shareholder approval at the Annual General Meeting (AGM), a full year 2022 annual dividend payment of 0.60 Baht per share, of which 0.25 Baht per share was previously paid as an interim dividend on 24 August 2022. The final dividend payment of 0.35 Baht per share will be on 24 April 2023, record date of 5 April 2023, and XD-date of 4 April 2023.
The CEO said that the overall outlook of the packaging industry in the first quarter of 2023 is heading toward a continued recovery as China has started to re-open the country. Additionally, ASEAN region will be beneficiary of tourism recovery, import & export, and the normalization of supply chain of manufacturing sector. These factors exert a positive effect on the overall economy and the consumption of products while bolstering the demand for packaging. However, the ongoing challenges include a prolonged volatility within global economy, high inflationary pressures, interest rate hikes and a fall in consumers’ purchasing power in many regions such as the European Union and North America, which are major customer bases of the ASEAN export business sector.
SCGP is closely monitoring the market situation and proactively prepare to support and fulfill a growing packaging demand amidst the economic recovery. The company gears up the operation to continue the business growth with this year’s revenue target of Baht 160,000 million. Listed below are 5 core strategies as pathways toward the target:
1. Expedition of growth through focused M&P, expansion of packaging and related businesses with high growth potential especially in consumer products, healthcare related products, Medical supply & Labwares. Efforts to capture internal synergy are carried out via the knowledge and technology sharing, customer network expansion and co-sourcing of raw materials to enhance overall capability and operational efficiency. The investment budget for this year has been set at Baht 18,000 million.
2. Continuous development of innovations and packaging solutions, collaboration with customers to develop innovations and value-accretive packaging solutions to meet the evolving consumers’ lifestyles. Budget for research, development and innovation spending is set at Baht 800 million.
3. Enhance supply chain integration, further strengthen the business via operational excellence by applying data-driven approach and automation system to analyze, forecast and optimize the efficiency of production and productivity. Using data analytics to ensure data visibility throughout the supply chain (end-to-end).
4. Proactive management and effective planning to cope with uncertainties, regular risk management and planning are carried out as preparation for surging interest rate environment along with prudent cash and CAPEX management. Expand portfolio to cover new growth markets, i.e., South Asia, Middle East, Southern Africa.
5. Driving the business through the ESG 4 Plus concept. Goals and action plans are clearly identified with target to enlarge the proportion of environmentally friendly packaging while increase the recyclability rate of all products to 100% in 2025. Meanwhile, GHG emission reduction efforts are being executed as planned in order to achieve Net Zero in 2050.
