SCG Packaging outlines THB100-bn investment plan for 5 years to step up growth
SCG Packaging (SCGP), Thailand's leading multinational consumer packaging solutions provider, is focusing on investing in high-potential segments, accelerating innovation, and providing total packaging solutions in the midst of an economic recovery.
The plan is part of a five-year investment plan worth 100 billion baht (2021-2025), with a revenue target of 200 billion baht in 2025. This year, the company plans to ramp up operations in order to maintain business growth, with a revenue target of 160 billion baht.
Wichan Jitpukdee, SCGP’s chief executive officer, told a press conference on Tuesday that the packaging industry's overall outlook in the first quarter of 2023 would see steady recovery as China begins to reopen the country.
Meanwhile, the Asean region would benefit from the recovery of tourism, import and export, and normalisation of the manufacturing supply chain.
"These factors have a positive effect on the overall economy and product consumption while increasing demand for packaging," he said.
However, he noted that demand for packaging consumption is quite fragile due to ongoing challenges, such as prolonged volatility in the global economy, high inflationary pressures, interest rate hikes, and a fall in consumer purchasing power in many regions, particularly in major economies such as the United States and the European Union.
He said that SCGP was already well-prepared with a strategic cost management plan for the entire year. However, in order to sustain growth, the company would focus on merger and partnership (M&P) in packaging and other areas with high growth potential, particularly consumer goods, healthcare-related products, medical supplies, and labware.
"The investment budget for this year has been set at 18 billion baht," he disclosed.
Meanwhile, SCGP will work with customers to develop innovations and value-added packaging solutions to meet the changing lifestyles of consumers. The budget for research, development, and innovation is set at 800 million baht, he said.
Other growth strategies include improving supply chain integration, proactive management and effective planning to deal with uncertainties, and implementing the Environment-Social-Governance concept.
"In 2025, we hope to increase the proportion of environmentally friendly packaging while increasing the recyclability rate of all products to 100%. Meanwhile, efforts to reduce greenhouse gas emissions are proceeding as planned in order to achieve net zero by 2050," Wichan stated.
SCGP’s chief financial officer, Danaidej Ketsuwan, revealed that the company had revenue of more than 146 billion baht in 2022, an increase of 18% over the same period last year.
The surge in revenue mainly came from increased production capacity and M&P.
In the meantime, earnings before interest, taxes, depreciation, and amortisation were 19.402 billion baht, down 8% year on year. Profit at 5.801 billion baht also was down 30% over the previous year.
Danaidej explained the drop to higher energy costs and lower sales volume, as well as softening demand for packaging paper globally and regionally as a result of China's strict lockdown.
He said SCGP needed new business ideas while strengthening its core product and it should expand into related businesses to maintain its position as the region's leading consumer packaging provider.