SCGP

Editorial Staff

SCGP's Q1 profit rose to 1.22 billion baht amid market recovery

SCGP announced its Q1/2023 operating results, demonstrating growth from the previous quarter with revenues of 33.72 billion, an increase of 1%. Net profit reached 1.22 billion, up by 171%.

This improvement was attributed to the gradual recovery of packaging’s sales volume with rising demand in ASEAN market, surging tourism and service sectors, China's reopening, cost reduction, and strategic business expansions through M&P (Merger & Partnership), which bolstered overall operations.

Furthermore, SCGP announced the interest to acquire 70% in Starprint, a premium-quality packaging provider in Vietnam, along with the collaboration with Origin Materials for joint research and development of cutting-edge global innovation, "bio-based plastic from eucalyptus woodchip" into Bio-PTA and further to Bio-PET production to meet the demand for eco-friendly products.

Wichan Jitpukdee, chief executive officer of SCG Packaging Public Company Limited or SCGP, disclosed the Q1/2023 results, which showed significant improvement compared to the previous quarter, reflecting the recovery of the packaging market especially on packaging paper operation.

SCGP generated revenue from sales of 33.72 billion baht, an increase of 1% from the previous quarter, with EBITDA of 4.41 billion baht, up by 26% from the previous quarter, and net profit for the period of 1.22 billion baht, an increase of 171% from the past quarter.

The growth was attributed to the increased demand of consumer packaging products in ASEAN and China.

In addition, the growth was also fueled by surging tourism & recreation sector and the positive impact from recovery in China's manufacturing sector after country reopened which resulted into higher packaging paper export volumes from ASEAN to China.

Furthermore, continuous decline in costs including energy, raw materials, and freight costs, contributed to profit margin uplift. Meanwhile, global economy remains volatile amid inflationary pressures, rising interest rates, and the decreasing consumer’s spending power which affectedexports of durable and non-essential goods. Nonetheless, positive indicators of a gradual recovery are beginning to emerge.

Wichan stated that the overall packaging market in Q2/2023 is expected to continue its recovery, particularly in domestic demand, due to the continuous improvement of the economy and services sector. Additionally, raw material prices are beginning to adjust back to normal level and are expected to stabilize. Energy and freight costs are trending downward, which will be a positive factor in cost management.

SCGP is committed to quality growth by moving forward with its strategic expansion in consumer packaging. On25 April 2023, SCGP notified the Stock Exchange of Thailand that the board of directors approved an investment project to acquire 70% stake in ordinary shares of Starprint Vietnam JSC (“SPV”), an eminent offset folding carton packaging manufacturer in Vietnam, for a total enterprise value of not exceeding Vietnam Dong 1.05 billion or approximately 1.53 billion baht.

This merger & partnership (M&P) will be carried out through strategic partnership with Starflex Public Company Limited (“Starflex”), a leading flexible packaging manufacturer based in Thailand, which plans to hold a 25% stake in SPV.

This transaction is proceeding under the standard M&P procedures and expected to be completed in Q3/2023. Total size of the transaction including the shareholding structure will be further disclosed as per the rule and regulation for the acquisition and disposition of assets of the SET.

SPV is one of Vietnam’s leading producer of offset folding cartons, rigid boxes and luxury packaging with distinctive printing capability and quality.