SCGP announced its Q1/2023 operating results, demonstrating growth from the previous quarter with revenues of Baht 33,729 million, an increase of 1%. Net profit reached Baht 1,220 million, up by 171%. This improvement was attributed to the gradual recovery of packaging’s sales volume with rising demand in ASEAN market, surging tourism and service sectors, China’s reopening, cost reduction, and strategic business expansions through M&P (Merger & Partnership), which bolstered overall operations. Furthermore, SCGP announced the interest to acquire 70% in Starprint, a premium-quality packaging provider in Vietnam, along with the collaboration with Origin Materials for joint research and development of cutting-edge global innovation, “Bio-based Plastic from Eucalyptus Woodchip” into Bio-PTA and further to Bio-PET production to meet the demand for eco-friendly products.
Wichan Jitpukdee, Chief Executive Officer of SCG Packaging Public Company Limited or SCGP, disclosed the Q1/2023 results, which showed significant improvement compared to the previous quarter, reflecting the recovery of the packaging market especially on packaging paper operation. SCGP generated revenue from sales of Baht 33,729 million, an increase of 1% from the previous quarter, with EBITDA of Baht 4,471 million, up by 26% from the previous quarter, and net profit for the period of Baht 1,220 million, an increase of 171% from the past quarter.
The growth was attributed to the increased demand of consumer packaging products in ASEAN and China, particularly in food and beverage, amid easing of COVID-19 concerns. This aligns with SCGP’s strategy to expand its integrated packaging business, with emphasis on investments in consumer packaging which related to daily consumption and the evolving consumer behavior & lifestyles, along with the capability to quickly adapt and cope with the impact from macro-shift in the economy and packaging market.
In addition, the growth was also fueled by surging tourism & recreation sector and the positive impact from recovery in China’s manufacturing sector after country reopened which resulted into higher packaging paper export volumes from ASEAN to China. Furthermore, continuous decline in costs including energy, raw materials, and freight costs, contributed to profit margin uplift. Meanwhile, global economy remains volatile amid inflationary pressures, rising interest rates, and the decreasing consumer’s spending power which affected exports of durable and non-essential goods. Nonetheless, positive indicators of a gradual recovery are beginning to emerge.
Wichan stated that the overall packaging market in Q2/2023 is expected to continue its recovery, particularly in domestic demand, due to the continuous improvement of the economy and services sector. Additionally, raw material prices are beginning to adjust back to normal level and are expected to stabilize. Energy and freight costs are trending downward, which will be a positive factor in cost management.
SCGP is committed to quality growth by moving forward with its strategic expansion in consumer packaging. On 25 April 2023, SCGP notified the Stock Exchange of Thailand that the board of directors approved an investment project to acquire 70% stake in ordinary shares of Starprint Vietnam JSC (“SPV”), an eminent offset folding carton packaging manufacturer in Vietnam, for a total enterprise value of not exceeding Vietnam Dong 1,050 billion or approximately Baht 1,534 million. This Merger & Partnership (M&P) will be carried out through strategic partnership with Starflex Public Company Limited (“Starflex”), a leading flexible packaging manufacturer based in Thailand, which plans to hold a 25% stake in SPV. This transaction is proceeding under the standard M&P procedures and expected to be completed in Q3/2023. Total size of the transaction including the shareholding structure will be further disclosed as per the rule and regulation for the acquisition and disposition of assets of the Stock Exchange of Thailand (SET).
SPV is one of Vietnam’s leading producer of offset folding cartons, rigid boxes and luxury packaging with distinctive printing capability and quality. It has a prominent client base and long-term track record of commercial relationship with renowned multinational and national companies with portfolio that is highly linked to high growth & fast-moving consumer products. SPV has a combined capacity of 16,500 tons of offset printing per year and 8 million pieces of rigid boxes per year, with two manufacturing facilities located in Long Binh (Amata) Industrial Zone, Dong Nai in southern Vietnam. In FY2022, SPV recorded revenue of Vietnam Dong 1,013 billion (approximately Baht 1,480 million), net profit after tax of Vietnam Dong 92.5 billion (approximately Baht 135 million), and assets of Vietnam Dong 440 billion (approximately Baht 643 million).
In addition, SCGP has continued to develop innovations and solutions for the evolving mega-trends and consumer lifestyles. Recently, it signed a Joint Development Agreement (JDA) with Origin Materials, a leading technology company from the USA, to jointly develop “Bio-based Plastic from Eucalyptus Woodchip”. This world-class innovation involves processing Eucalyptus woodchip using advanced technology to produce Bio-PTA, which is then used to manufacture Bio-PET for packaging and other products, such as beverage packaging, food packaging, textile & apparels. This project would support the use of Bio-PET in multiple industries which require sustainable raw materials while also enable efficient recycle operation.
At the same time, SCGP continues to drive its business along the ESG 4 Plus framework. As a result, the Company is globally recognized and received Gold class level in the Containers & Packaging industry from S&P Global Corporate Sustainability Assessment (CSA). SCGP was placed in the top 1% of Industry Mover, a listed company with outstanding progress and stable growth rooted in sustainability.
