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Business Overview

       
SCG Packaging
 

Overview

In 2015, revenue from sales of SCG Packaging totaled 70,907 Million Baht, up 10% compared to 2014 due to an increase in sales volume. EBITDA was 10,831 Million Baht, rising of 11% from the preceding year, and profit for the year was 3,463 Million Baht, similar to the last year.

Packaging business chain: Total sales volume rose 11% compared to 2014, due to rising demand for packaging and packaging paper, especially in the ASEAN region, which grew by 4%.

Fibrous business chain: Total sales volume similar to the last year from a demand of printing & writing paper in Thailand.

Market and Competition

  • In 2015, domestic demand for corrugated containers witnessed a modest growth in the wake of the economic weakens. However, demand in ASEAN grew continuously, especially in Vietnam, prompting corrugated container manufacturers in the region to continue expanding their production capacities, resulting in an intense price competition. Consequently, it reminded a challenge for manufacturers to streamline their operations to better address customer needs and maintain sustainable business growth.
  • Domestic demand for packaging paper remained stable compared to the previous year whereas demand in ASEAN increased steadily with continued capacity expansion of manufacturers in the region.
  • Domestic demand for printing & writing paper dropped mainly from substitution of digital media, especially in promotional materials and magazine segment. In addition, imports of printing & writing paper in 2015 increased from the previous year as a result of the anti-dumping measures of the U.S. that prompted Chinese and Indonesian manufacturers to adjust their marketing strategies, aggressively tapping into the ASEAN markets.

Organizational Development

Business Development

  • Rebranded from SCG Paper to SCG Packaging on June 2, 2015 to reflect the company's strategic focus toward the constantly-growing packaging business in tandem with the corporate goal to expand the packaging business in ASEAN. Emphasis was placed on providing sustainable total packaging solutions to customers through the ongoing development of wide-ranging high quality packaging products and services including flexible packaging.
  • Expanded flexible packaging business in ASEAN to address the growing demand in food and consumer products segments. This is achieved by acquiring an 80% stake in Tin Thanh Packing Joint Stock Company (BATICO), a major flexible packaging manufacturer in Vietnam with an annual Production capacity of 230 million sq.meter. SCG Packaging also increased its stake in Prepack Thailand Co., Ltd. from 22% to 72% to reaffirm its strong presence as a total packaging solutions provider.
  • Expanded the manufacturing base for packaging paper through capacity upgrade and expansion project at Vina Kraft Paper Co., Ltd. The move increased the company's production capacity by 243,000 tons per year, enable it to meet the fast-growing demand for packaging paper in Vietnam. The production is scheduled to start in the second quarter of 2017.
  • Upgraded production capacity of semi-chemical pulp and unbleached shortfiber pulp in Thailand to accommodate the growing demand in the packaging paper business. The production capacities for semi-chemical pulp and unbleached short-fiber pulp stand at 70,000 tons and 25,000 tons per annum, respectively. Production is slated to begin in early 2016.

Human Resources Development

  • SCG Packaging employed the 70 : 20 : 10 Model for Learning Transformation in developing its employees. The model holds that individuals obtain 70% of their knowledge from work-related experiences, 20% from interaction with others through various activities such as exchange of knowledge and getting advices from supervisors and colleagues, and 10% from formal education to enhance their learning effectiveness and to instill a sense of inquisitiveness to align with the corporate goal of becoming a Learning Organization.
  • Managed human resources systematically by building effective succession planning in overseas to enhance the working performance and potential of employees. Developing talented and moral individual s in the communities where the company operates in line with one of SCG's core values of Concern for Social Responsibility, the efforts also help boost morale and encouragement among overseas employees as well as fostering strong long-term ties between the company and its staff members.
  • Promoted leadership development of employees with focus on coaching skills to build a generation of leaders who have good understanding about themselves and others as well as being a role model equipped with a positive attitude and excellent skills in building trust. The objectives also extended to encouraging the leaders to integrate their coaching skills into conversation as a means to set goals and drive improvement along with the team, allowing everyone in the team to work side by side effectively in a sustainable manner.

Innovation Development

  • Developed "Fest", food safety packaging which is clean and safe for containing food. Fest is certified with GMP (Good Manufacturing Practice) on par with EU standards, USFDA standards, and EU Regulations. It addresses consumer needs and promotes better health for consumers.
  • Developed self-venting packaging for containing ready-to-go meals. Produced using the EazySteam technology, the packaging features a steam release mechanism that allows consumers to microwave the package's contents without first having to cut, punch or remove them from the package, thereby ensuring no food contamination, safety, and ease of use for consumers.
  • Developed Peel & Clear Lid Film, the anti fog cling film that allows consumers to see the packaged food clearly through the lid before making a buying decision. The film also allows for easy opening while preventing spills and contamination of scrap plastic with the food.
  • Established an industrial bag business to serve the needs of consumers for a variety of industrial bag styles. With pasted valve opening, the industrial bag facilitates stacking, allowing for more shipping space. Moreover, the special properties of the paper plies ensure moisture and heat protection, which help keep the products in good conditions for longer periods of time. On top of this, the micro perforation technique enhances ventilation efficiency, thereby keeping the work areas clean and dust-free.

Sustainable Development Business Operations

  • Employed advanced environmentally-friendly production technology and machinery along with reducing energy consumption and maximizing energy efficiency. The efforts also extended to recovering energy from manufacturing waste.
  • Employed advanced environmentally-friendly production technology and machinery along with reducing energy consumption and maximizing energy efficiency. The efforts also extended to recovering energy from manufacturing waste. Healthy Living project that provided financial support for the purchase of medical tools and equipment to facilitate a healthy living and a better quality of life for people in the communities. The SCG Packaging Happy Community project supported and added value to products of the communities surrounding the plants. The Green Mart project was dedicated to supporting the communities nearby the plants to contribute to society, providing opportunities for eco-conscious vendors to promote their local products to the communities nearby. Aside from the Business Partnership project that engaged other plants in the neighborhood to contribute to the communities and the Supplier Development for Sustainability project, the One Manager One Community project was designed to hear opinions and suggestions from the communities, allowing the company to devise a working plan that matches their needs. All these projects were committed to developing the knowledge and capabilities of suppliers and other involved parties throughout the supply chain to achieve sustainability.


SCG Paper Consolidated Financial Information (Million Baht)

  2015 2014 2013 2012 2011
Information from Statements of Financial Position
Current assets 24,295 22,969 21,782 19,927 16,963
Assets * 83,218 73,987 65,169 58,439 52,534
Liabilities * 34892 29,150 26,133 22,656 20,007
Shareholders' equity 48,326 44,837 39,036 35,782 32,527
Information from Income Statements
Revenue from sales 70,907 64,614 59,135 57,430 54,839
Cost and expenses 66,838 60,368 54,731 53,127 50,461
Profit for the year ** 3,463 3,448 3,587 3,560 3,331
EBITDA *** 10,831 9,718 9,473 8,844 8,811

* The figures for year 2011 are reclassified.
** Profit for the year attributable to owners of the parent.
*** Profit before finance costs, income tax expense, depreciation and amortization and includes dividends from associates.