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Business Overview

       
SCG Packaging
 

 

SCG Packaging underwent a name change from SCG Paper to SCG Packaging in 2015 to reflect the corporate strategy that greatly focuses on packaging and in alignment with the goal to further expand its business in ASEAN as evidenced by step into flexible packaging business over the past two years. Moreover, having positioned itself as a Total Packaging Solutions Provider, SCG Packaging is committed to developing and providing a full range of excellent quality packaging products and services to customers in an ongoing and sustainable manner.

Operating Results

In 2016, revenue from sales of SCG Packaging amounted to 74,542 Million Baht, increase of 5% compared to 2015 on the back of growing sales volume. EBITDA was 10,745 Million Baht, a decrease of 1% from the year earlier, and profit for the year was 3,565 Million Baht, rising by 3% year-on-year.

Packaging chain: Total sales volume rose 7% compared to 2015 due to the increasing demand for packaging paper and corrugated containers especially in ASEAN which recorded a 4% growth from the previous year.

Fibrous chain: Total sales volume of printing & writing paper grew 1% compared to 2015, attributable to a rise in export revenue amidst of steady decline in domestic demand.

Market and Competition

  • In 2016, domestic demand for corrugated containers witnessed a modest growth as a result of subdued consumption. However, demand in ASEAN grew continuously, particularly in Vietnam, prompting corrugated containers manufacturers in the region to increase their production capacities, leading to an intense price competition. This posed a challenge for manufacturers to streamline their operational efficiency to better address customer needs and maintain sustainable business growth.
  • Domestic demand for packaging paper remained stable whereas demand in ASEAN increased steadily, in conjunction with the economy and export-oriented manufacturing.
  • Domestic demand for printing & writing paper relapsed steadily from the substitution of digital media. Meanwhile, imports in 2016 dropped year-on-year whilst the copy paper industry faced strong price competition from manufacturers in China and Indonesia.

Organizational Development

Business Development

  • Expanded the domestic production capacity of flexible packaging for consumer products including diapers and flexible refill pouch packaging. Prepack Thailand Co., Ltd. expanded capacity in Samut Sakhon province for an additional 70 million square meters per year. The expansion project was completed and began operations in the first quarter of 2016.
  • Expanded the manufacturing base for packaging paper through investment in capacity expansion at Vina Kraft Paper Co., Ltd. in Vietnam, increasing additional output capacity by 243,000 tons annually. The investment was in response to the fast-growing demand for packaging paper in Vietnam. The expansion project was commenced operations in the first quarter of 2017, three months earlier than previously planned.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to reasonableness and knowledge]

Human Resources Development

  • Applied Workforce Planning model, along with an analysis of the workforce as well as employees' knowledge and skills to support recruitment and development of a sufficient number of employees that would accommodate both current business demands and future business plans.
  • Enhanced Learning and Talent Transformation Program to ensure employees will be well-prepared for challenges in fast-changing industry.
  • Implemented the Performance Management System to ensure mutual understanding of objectives and fairness in performance appraisal through communication between supervisors and employees. This is another way for supervisors to understand their employees better and offer them with proper support
    [Operating business in accordance with the principles of Sufficiency Economy with regard to prudence knowledge and virtues]

Innovation Development

  • OptiBreath¬©, a packaging solution for exported fruits and vegetables that extends the shelf life of fresh fruits and vegetables by 50% compared to conventional packaging. With the special inorganic filler technology, OptiBreath¬© allows the right exchange of gases and vapour through the package that dramatically extends the shelf life of product.
  • Flat Bottom flexible packaging that stands well on the shelf. In spite of the content's weight, the packaging holds its shape firmly, making it ideal for display and adding value to the product.
  • PopTech : Point of Purchase Technology displays, using corrugated paper as the main material to accommodate customer demands for various shelf designs that can be reused. PopTech displays are easy to assemble, use and save space, thereby reducing transportation costs and being friendly to the environment.
  • Fest, a food safe packaging, has been further promoted by aggressively tapping into retail stores and providing additional packaging design service to address the application needs of customers for various occasions.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to prudence]

Sustainable Development Business Operations

  • Conducted business with the concern of the importance of enhancing energy efficiency through various means. Examples included using alternative energy, investing in energy-saving projects, and raising awareness on energy conservation among employees. The projects are as follows:
    • A project designed to reduce energy consumption in the manufacturing process by recapturing waste heat for reuse
    • A project dedicated to improving the efficiency of steam traps
    • A project designed to replace fluorescent tubes with LEDs
    • A project designed to generate biomass gases from eucalyptus chips, waste from the pulp production process, for use in lieu of fuel oil in lime kilns.
  • Streamlined the manufacturing process to minimize waste materials and water consumption. In addition, water from manufacturing process was recycled and waste water such as cooling water and water for cleaning felts and wire were treated for reuse.
  • Reduced and reused waste materials by installing a lime kiln to reduce lime mud, waste material from pulp production, resulting in calcium carbonate which can be used as raw material in pulp production.
  • Took care of communities surrounding the plants and all stakeholders to ensure sustainable coexistence through numerous socially responsible projects. For instance, SCG Packaging has joined forces with the communities to construct over 70,000 check dams across Thailand according to the H.M.King Bhumibol Adulyadej's Initiatives. The Green Mart project provided channels for communities nearby the plants to promote their community products. SCG Packaging Happy Community project was dedicated to promoting careers and supporting community enterprises to earn supplementary income in which the value of these products were uplifted due to a renovated packaging designs, as they were produced and re-packaged as gifts for the New Year Festival. SCG Packaging 9th Green Academy was designed to instill a sense of environmental concern among the youths in the communities surrounding the plants. On top of this was SCG Packaging x Wallpaper* The Challenge 2016 under the theme of "Creating Value for Society". The contest provided opportunities for a new generation of young people to showcase their creativity and talent in packaging design. The packaging from the contest will be adopted for practical use to increase the value of community products.
    [Operating business in accordance with the principles of Sufficiency Economy with regard to moderation, prudence, knowledge and virtues]


SCG Packaging Consolidated Financial Information (Million Baht)

  2016 2015 2014 2013 2012
Information from Statements of Financial Position
Current assets 24,558 24,295 22,969 21,782 19,927
Assets 85,369 83,218 73,987 65,169 58,439
Liabilities 32,617 34,892 29,150 26,133 22,656
Shareholders' equity 52,752 48,326 44,837 39,036 35,782
Information from Income Statements
Revenue from sales 74,542 70,907 64,614 59,135 57,430
Cost and expenses 70,330 66,838 60,368 54,731 53,127
Profit for the year * 3,565 3,463 3,448 3,587 3,560
EBITDA ** 10,745 10,831 9,718 9,473 8,844

* 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.