SCGP eyes revenue surge amid packaging recovery

SCG Packaging Plc (SCGP) has set a revenue target of 160 billion baht for this year as China's reopening and the tourism recovery are expected to boost packaging consumption.

"The outlook for the packaging industry in the first quarter of 2023 is a continued recovery, with Asean gaining from a tourism revival, higher imports and exports, as well as the normalisation of manufacturing supply chains," said Wichan Jitpukdee, chief executive of SCGP.

However, he said the company still faces ongoing challenges, including a volatile global economy, high inflationary pressures, interest rate hikes, and a fall in consumers' purchasing power in regions like the EU and North America.

These regions are major customer bases for export businesses in Asean.

SCGP plans to allocate an investment budget of 18 billion baht in 2023, with around 50% of the money going to merger and partnership (M&P) projects.

The rest of the budget will support new investments, business expansion and maintenance projects.

"The company expects to see at least 1-2 M&P deals in the first half of 2023," said Mr Wichan.

SCGP earlier announced it would spend a total investment budget of 100 billion baht for five years from 2021 to 2025, with the goal of racking up 200 billion baht in revenue in 2025.

From 2021 to 2022, the company spent approximately 37 billion baht through M&P and production capacity expansion in growing businesses with high growth potential.

In 2022, SCGP saw its revenue increase by 18% year-on-year to 146 billion baht as a result of higher capacity and full-year financial consolidation of completed M&P, including the acquisition of Deltalab SL, a manufacturer and distributor of medical supplies and labware in Spain.

The rise in revenue also resulted from the adjustment of product prices in line with rising costs.

The company's profit in 2022 plunged by 30% year-on-year to 5.8 billion baht due to high energy costs and lower sales, amid softer global and regional demand for packaging paper as a result of stringent lockdowns in China.

In the fourth quarter of last year, its revenue dropped by 5% year-on-year to 33.5 billion baht, with profit diving by 79% year-on-year to 450 million baht.

"This was a result of the slowdown in packaging paper demand and price, particularly in Indonesia and Vietnam," said Mr Wichan.