In 2012, the petrochemicals business continued to face downward pressure since the second half of 2011 due to the global economic slowdown, especially in Europe and the US. Price of Naphtha, main feedstock, remained high on the back of rising crude oil prices triggered by the Middle East tensions, resulting in narrower product-to-feed margins. The average prices of Naphtha and PE resin were 943 USD and 1,373 USD per ton respectively, which were at the same level as the previous year. The average PP resin price was 1,452 USD per ton, a decrease of 137 USD per ton from the year before.
Revenue from sales of SCG Chemicals totaled 203,539 Million Baht, up 5% year-on-year as a result of the streamlined production process which increased the productivity. However, EBITDA was 8,628 Million Baht, a 40% decrease from the previous year, and profit for the year was 2,690 Million Baht, a decline of 76% attributed to the cyclical downturn in the petrochemicals industry and the sluggish global economy.
- Collaborated with PT Chandra Asri Petrochemical Tbk, an associate company in Indonesia, to reduce cost through various activities such as supply chain management and financing cost reduction to increase economic value and profitability for both companies.
- Acquired higher stake in Thai Plastic and Chemicals Public Company Limited from 46% to 91%. The acquisition strengthened and expanded SCG Chemicals' business potential and opportunity for high value added product (HVA) development.
- Acquired a 23% and 20% stake in Tien Phong Plastics Joint Stock Company and Binh Minh Plastics Joint Stock Company, respectively. Both are major PVC pipe manufacturers in Vietnam.
- Studied a 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. In addition to the Joint Venture Agreement Amendment, the partners also signed a Memorandum of Understanding for supply of long-term feedstock for the project including Propane, Naphtha, and Ethane, which was a key contributing factor to increasing business competitiveness.
- Formed a joint venture with Mitsui Chemicals Tohcello, Inc. (MCTI), with SCG Chemicals holding a 45% stake in the joint venture which will produce and supply T.U.X? (Tohcello Ulzex), a highly functional sealant film mainly used in food packaging. The company is scheduled to commercialize in the first quarter of 2014.
- Developed special grades of plastic resin for various applications such as medical devices, pipes, electrical appliances, automotive, and packaging. Consequently, sales of high value added products (HVA) increasing to 45% of the revenue from sales, compared to 38% in the previous year. Moreover, SCG Chemicals continuously worked with business partners in product development and competitive strategic planning to increase the competitiveness.
Human Resources Development
- Developed matrix organization that links work functions across the company. The matrix organization helps speed-up work process and better aligns the company with customer's needs by modifying the new product development process and supply chain management process to ensure accurate and on-time delivery of product to customers.
- Formulated specialty PVC resin for various applications such as fire-resistant electrical conduit which is safe and environmentally-friendly, and wood plastic composite product; for instance, flooring and lattice, with surface finishing technology to simulate wood surfaces.
- Reduced cost of production by 25% via increasing production capacity of specialty HDPE and developed special grade plastic resin for sack and woven bag coating, which increases customer's production flexibility.
- Cooperated R&D with Phoenix Pulp & Paper Public Company Limited, a subsidiary of SCG Paper, and were granted a patent for converting spent caustic soda from olefins plants to mixed-salt for using in kraft pulping process. The companies have also generated revenue from licensing the patented technology to the industries which generate waste caustic soda from their manufacturing processes.
- Added value to products through design innovations such as designing of temporary emergency shelters, which demonstrated plastic's ability to build strong and durable shelters or even products from recycled materials such as furniture made from recycled plastic resins.
Sustainable Development in Business Operations
- Defined strategies for sustainable environmental conservation, striding towards becoming a role model in eco industry by looking after the environment in all areas including air, waste, energy, and water resources. Examples include:
- Developed environmentally-friendly manufacturing processes, that contributed to having more products and services receiving the SCG eco value certification; for example, PTA powder from the manufacturing process that reduced greenhouse gases by 11% in the past five years.
- Researched and converted spent caustic soda to chemical substance for use in kraft pulping process instead of sending it for wastewater treatment or disposal, thereby reducing water consumption and the amount of wastewater discharge by 252,000 cubic meters per year.
- Collaborated with the governmental agency and the community to develop an eco-community under the "Prototype Environmental Conservation Community". The initiative consists of four major projects, namely, waste management, dust and particulate reduction, production of effective microorganisms (EM) and bio-gas from organic waste, and community waste water management.
- Applied Emisspro? ceramic coating in furnaces at the olefins, vinyl chloride monomer, and ceramic tile plants to conserve energy, resulting in reduction of gas consumption by 2-5%.
- Used bacteria to break down chemical substances to eliminate odors and reduce waste from the maintenance of the chemical tanks at Map Ta Phut Tank Terminal Co.,Ltd. It also reduced maintenance cost and increased level of safety for operators.
SCG Chemicals Consolidated Financial Information
|Information from Statements of Financial Position
|Current assets *
|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.