SCGP sets up B7.6bn budget for region

SCGP sets up B7.6bn budget for region

SCG Packaging (SCGP), the packaging and paper producer, has allocated 7.6 billion baht in its 2020 budget to expand manufacturing in the Philippines, Indonesia and Vietnam.

Of the total budget, 5.2 billion baht will go towards operations in the Philippines to expand production of container boards to 220,000 tonnes per year.

Indonesian operations have been given 1.8 billion baht to expand capacity of container boards to 400,000 tonnes per year.

The remaining 600 million baht is for the construction of a flexible polymer packaging plant with an area of 84 million square metres in Vietnam.

Wichan Jitpukdee, the newly appointed chief executive, said the three projects will be completed this year to provide sufficient production capacity for Southeast Asian markets.

SCGP is the largest packaging products and corrugated container company in this region, with total production capacity of 4 million tonnes and 1.1 million tonnes per year, respectively.

In 2019, the company spent roughly 25 billion baht to acquire many packaging companies, including a 55% stake of PT Fajar Surya Wisesa Tbk in Indonesia in a deal worth 21.2 billion and a takeover of Visy Packaging Thailand for 4.3 billion.

He said SCGP is focusing on Southeast Asia, where packaging demand is rapidly increasing in line with economic growth.

The company continues to seek new merger and acquisition deals with packaging and paper companies across the region.

"Southeast Asia has great opportunities in e-commerce and younger customers, while each emerging country has rapid GDP growth that is driving packaging demand," said Mr Wichan.

He projects the packaging market in Southeast Asia during 2018-24 will grow 6.1% annually and the total market value will reach US$72.7 billion by 2024.

SCGP submitted a filing in December for an IPO to list on the stock market, with a plan to raise funds to expand the business both domestically and abroad.

As a subsidiary of Siam Cement Group, SCGP has two revenue sources: integrated packaging and pulp and paper.

SCGP posted a revenue of 87.3 billion baht in 2018 and 66 billion in the first nine months of 2019. The packaging business represents 18% of the parent company's total revenue.

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