In 2013, the chemicals business continued to see improving margins as the global economy showed signs of recovery, following difficult margins in 2012. The average prices of polyethylene and polypropylene resins were 1,488 and 1,519 USD per ton, an increase of 7% and 4%, respectively. Meanwhile, prices of Naphtha, main feedstock, was 922 USD per ton, a decrease of 3% from the previous year on the back of falling crude oil prices triggered by the growing supply in the U.S. This resulted in wider product to- feed margins compared to the year before.
Revenue from sales of SCG Chemicals increased slightly to 209,997 Million Baht from the previous year as a result of Map Ta Phut Olefins Co., Ltd's maintenance shutdown in the fourth quarter. Nevertheless, EBITDA was 20,342 Million Baht, and profit for the year was 11,292 Million Baht, an increase of 136% and 320% year-on-year, attributable to the wider product-to-feed margins.
- PT Chandra Asri Petrochemical Tbk. (CAP) initiated various projects to accommodate the growing demand for petrochemical products in Indonesia. Chief among them are the expansion of production capacity at its olefins plant and construction of a synthetic rubber plant, which is a high value added product (HVA) in cooperation with Michelin Co., Ltd. In addition, PT Petrokimia Butadiene Indonesia, a subsidiary of CAP, is the first in Indonesia to produce butadiene.
- For progress of the joint investment in the first fully integrated petrochemicals complex in Vietnam with Thai Plastic and Chemicals Public Company Limited as well as Vietnamese and Qatari partners, the project signed the long-term ethane feedstock supply agreement and Land Lease Advance Agreement for the lease of project's land site. In addition, the project has appointed Financial Advisor and is in the process of engineering, procurement and construction bidding as well as securing necessary financing.
- Entered into a joint venture deal with A. Schulman Inc. with SCG Chemicals holding an 87% stake to establish SCG ICO Polymers Co., Ltd. to manufacture and supply rotational molding compounds for the manufacture of large items such as water storages, furniture, and kayaks. The joint efforts allow the new start-up to expand into the markets in Asia, Africa, the Middle East, and the former Soviet Union.
- Acquired all the stake of NSL Chemicals (Thailand) Pte Ltd. of Singapore, the shareholder of Bangkok Synthetics Co., Ltd., resulting in its increased shareholding in Bangkok Synthetics from 26.01% to 48.84%.
- Expanded the special grade polyethylene compound business in Australia. The materials are used for the manufacture of pipes.
- Increased production capacity of polyethylene compound resins for the production of pipes by 16,000 tons per year, and the production capacities of polyethylene rotational molding compounds resins and polyethylene rotational molding powder by 8,400 and 7,600 tons per year, respectively in response to the rising demand.
- Continued to develop special grades of resins for various applications such as medical devices, pipes, electrical appliances, and food packaging, resulting in sales of high value added products (HVA) increasing from 45% to 50% of the total sales.
- Developed the technology business of Texplore Co., Ltd. Examples include offering a service solution for energy-saving furnace coating and licensing the rights to Advanced CX HDPE Process to large manufacturers, resulting in revenue of 113 Million Baht from the technology business.
Human Resources Development
- Leveraged the organizational development to stride toward becoming a sustainable business leader in ASEAN. To achieve these objectives, Enterprise Performance Management System (EPMS) was implemented to clearly link directions, strategies, and goals at the business, company, function, and personnel levels. The efforts have enabled the employees to understand the shared organization goals and supported cross-functional operations and chain of command to drive the organization toward the directions and established business goals effectively and efficiently.
- Established the Academy of Operation Excellence as a learning center for different areas such as production process, maintenance techniques, safe operations, and efficient business operations and management to promote the development of employees knowledge and skills on an ongoing basis to accommodate the growing business, both domestically and internationally.
- Established a chemical R&D excellence center in England in cooperation with Oxford University to develop and enhance the potential of personnel in the research and development of chemical and plastic innovations.
- Acquired 49 patents in a broad spectrum of technology areas associated with chemical, chemical engineering, mechanical engineering, and product design.
- Licensed the rights to Advanced CX HDPE Process in conjunction with Mitsui Chemicals of Japan to large manufacturers with a production capacity of over 350,000 tons per year.
- Joined forces with Prince Songkla University, Pacific Healthcare Co., Ltd., and The National Innovation Agency to develop and produce a device, using polypropylene for carpal tunnel syndrome surgery that cuts down the surgery time by one-third and reduces the wound to one-fourth. The device makes the surgery easier as well as more accessible and affordable for patients.
Sustainable Development in Business Operations
- Streamlined the manufacturing processes in line with World Class Operations and Green Manufacturing to reduce natural resource consumption and emission of greenhouse gases from the production processes. Examples include:
- Developed eco-friendly plant maintenance with concern for safety, occupational health, and the environment, for example, reduction of maintenance waste, control of emissions of volatile organic compounds to meet the standards, and control of water use in maintenance.
- Reduced energy consumption by 43,000 gigajoules per year, resulting in a saving of 20 Million Baht annually from the improvement of the sludge treatment system at Siam Mitsui PTA Co., Ltd.
- Reduced energy consumption by 130,000 gigajoules per year, resulting in a saving of 85 Million Baht annually from the improvement of the cooling tower, boiler, and flare tower at Map Ta Phut Olefins Co., Ltd.
- Achieved the ISO 50001 energy management system certifications by Rayong Olefins Co., Ltd., and Map Ta Phut Olefins Co., Ltd.
- Developed environmentally-friendly manufacturing processes and services, resulting in revenue from sales of SCG eco value increasing from 16% to 39% of SCG Chemicals' total revenue from sales. Examples include:
- Vinyl wall panels which prevent heat from entering the house and reduce energy consumption by 45%.
- Propylene products which reduce emissions of greenhouse gases from the production processes by 10%.
- A special type of acrylic sheets that reduces energy used in thermal forming by 8%.
- PET resins produced using at least 5% of raw materials from plants for the manufacture of special grade drinking bottles.
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.