In 2014, revenue from sales of SCG Chemicals totaled 248,118 Million Baht, increased by 18% from the year before on the back of the higher prices and demand of plastic resins. EBITDA was 26,142 Million Baht, and profit for the year was 12,461 Million Baht, up 29% and 10% year-on-year, respectively, attributable to wider product-to-feed margins.
The petrochemical industry in 2014 continued to recover as the U.S. economy had signs of recovery, despite the Chinese and European economic slowdown. The average prices of polyethylene and polypropylene resins were 1,544 USD per ton and 1,560 USD per ton, an increase of 4% and 3%, respectively. Meanwhile, the average price of naphtha, our primary feed, was 861 USD per ton, a decrease of 7% from the previous year due to falling crude oil price triggered by growing supply in the market. This resulted in wider product-to-feed margins compared to the year earlier.
On competition, the price of commodity resin is volatile and cyclical to global market price and oil price, which determines the cost of our primary feed. Consequently, SCG Chemicals aims to consistently develop high value added products (HVA) to minimize impacts from the volatility during the down cycle and increase overall competitiveness.
- Acquired a 51% stake in Norner Holding AS, a leading Innovation and Technology company in Norway, specializing in material and polymer industries. Norner Holding offers a comprehensive array of world-class services in the research and development of plastics, ranging from polymerization to plastics application. The move extended SCG Chemicals' ongoing efforts to develop high value added products. The company plans to acquire the remaining 49% stake by September 2015.
- Streamlined management and operations by adopting the Integrated Business Excellence System (IBE), designed to create integrated connections between operations value chain and human resource development. IBE will align business goals and business operation in order to enhance management efficiency, reduce costs, and increase revenue to achieve sustainable development.
- Revenue from sales of high value added products (HVA) such as special grade resins for medical device, high pressure pipe, electrical appliance, automotive part, and packaging film, totaling 50% of revenue from sales in 2014.
- Commenced manufacturing of T.U.X, a specialty LLDPE film that features outstanding transparency and sealing property, ideal for food packaging. The product is from Siam Tohcello Co., Ltd, a joint venture with Mitsui Chemicals Tohcello, Inc. with a production capacity of 15,000 tons per year.
- Developed WINDSOR Fast Renew, an innovative window and door solution that offers one-day installation of vinyl window and door. Produced using Fast Frame Technology, an in-house technology, WINDSOR Fast Renew's professional team provides full service to significantly reduce installation time and cost.
- For the joint investment in the first integrated petrochemicals complex in Vietnam with Thai Plastic and Chemicals Public Company Limited as well as Vietnamese and Qatari partners, the project has started the negotiation on the financing term sheet with prospective lenders and is in the process of selecting the main contractors for engineering, procurement and construction of the complex. In addition, the project has conducted Environmental Impact Assessment and Environmental and Social Impact Assessment, while the local authorities have already started the land compensation process.
- PT Chandra Asri Petrochemical Tbk. (CAP) started executing its project to expand olefins plant, together with its synthetic rubber project with Compagnie Financière Michelin, such product is high value added product (HVA). The projects will help CAP capture the increasing demand for petrochemical product in Indonesia.
Human Resources Development
- Aligned enterprise's goals to those of the employees', using the New Performance Management System and created organizational culture that promotes common understanding. Added to this was the development of a better performance evaluation between supervisors and subordinates, as well as the development of necessary skills for executives, enabling them to be role models for employees to work collaboratively in an efficient manner.
- Elevated Strategic Workforce Planning, starting from assessing the needs and readiness of human resources in terms of numbers, capability, and traits that are vital to business operations, readying them for business development both today and tomorrow.
- Filed 93 patent applications in the areas of chemistry, chemical engineering, mechanical engineering, and product design.
- Established Licensing Association (Thailand) in cooperation with the Thai government and foreign companies to promote and support activities related to intellectual properties and licensing in Thailand.
- Innovated robots to assess and evaluate the condition of machinery and equipment. Examples include robots to assess the cracking of furnance coils which operate in high temperature condition and underwater robots to monitor underwater objects. The service is available to both internal and external customers.
- Designed a program to assess and analyze the remaining lifetime of stainless steel equipment used in refinery and petrochemical industries. The service is available to both internal and external customers.
- Expanded the market for emisspro®, high emissivity coating material that reduces energy consumption, to Southeast Asian countries, Japan, and South Korea. The product received the Creative Energy Project Award from 2014 Thailand Energy Awards.
- Applied the biological science knowledge to raise earthworm to convert waste from petrochemical plant into organic fertilizer. A learning center was also established to serve as knowledge center for the community to earn extra income.
Sustainable Development in Business Operations
- Set to become a role model in Eco Factory by adopting Eco Innovation in plant management encompassing raw material selection, manufacturing process, and the research and development of eco-friendly products to promote a better quality of life, build community confidence, and enable the industry, the environment, and the community to coexist sustainably.
- Developed a green value chain by applying the industrial symbiosis principle to waste management and embracing Eco Innovation in plant management along with joining forces with business partners and contractors to build a sustainable green network and engaging the community and society in ongoing development.
- Researched and developed eco-friendly products and services, contributing to an increase in sales from SCG eco value to 46% of revenue from sales. Examples include:
- Bioplastic compound for paper coating that has more than 80% of its weight accounted by renewable materials.
- Melamine products from a manufacturing process that reduces greenhouse gas emissions by 15% or approximately 1.5 million kilograms per year.
- Ethylene from a manufacturing process that reduces greenhouse gas emission by 8 kilograms per ton or approximately 14 million kilograms annually.
SCG Chemicals Consolidated Financial Information (Million Baht)
|Information from Statements of Financial Position
|Information from Income Statement
|Revenue from sales
|Cost and expenses
|Profit for the year without non-recurring items **
|Profit for the year ***
* The figure for year 2011 is restated for comparative purpose with 2012.
** Profit before sales of investments, allowance for impairment of investments and others - net of income tax expense.
*** Profit for the year attributable to owners of the parent.
**** Profit before finance costs, income tax expensee, depreciation and amortization and includes dividends rom associates.