2018 performance highlights
Mr. Supattanapong Punmeechaow, President and Chief Executive of PTT Global Chemical Public Company Limited, or GC, said the company’s 2018 performance is better than the previous year. Thanks to an increased average product price and sales that were up 18% to 515,449 million baht, profit from the company’s overall operations increased 13% to 42,608 million baht, which excludes non-recurring item.
For GC’s olefins business, polyolefins prices remained at a high level during the first nine months of 2018 due to the recovery of the phenol business, the increase in profit-sharing plans from the full-year Asset Injection project of shares that GC recently purchased, the recovery of the Acrylonitrile (AN) business, and the Project Max, which is improving GC’s operational efficiency organization-wide. Project MAX is aimed to improve performance and organizational health in sustainable way. However, other factors including a decrease in inventory value due to a drop in oil prices during late 2018, as well as profits from a business acquisition of 1,355 million baht that were lower than the fair value, resulted in GC’s net profit for 2018 amounting to 40,069 million baht (8.89 baht/share), an increase of 2% over 2017.
For the 4th quarter of 2018, GC’s total sales revenue reached 128,874 million baht, an increase of 9% compared to the 4th quarter of 2017. However, lower crude oil prices resulted in a 6% decrease in profit compared to the 3rd quarter of 2018. Lower crude oil prices also led to a corresponding reduction in product prices, resulting in a Q4 profit of 9,076 million baht exclude non-recurring item, a 23% decrease from the 3rd quarter of 2018, and a 13% decrease compared to the 4th quarter of 2017. For the 4th quarter of 2018, GC had a net profit of 4,060 million baht, a decrease of 58% compared to the same quarter in 2017 and down 68% from the 3rd quarter of 2018. This decrease was largely due to an inventory loss of 6,524 million baht caused by a lower Dubai crude oil price, which declined from USD 74.28 per barrel in the 3rd quarter of 2018 to USD 67.42 per barrel in the 4th quarter of the year.
Summary of 2018 performance
- The petroleum market was highly volatile in 2018. At the beginning of the year, the price of petroleum increased over the previous year for producers both inside and outside of OPEC’s production control since 2017. However, the average Dubai crude oil price significantly decreased to USD 57 per barrel by December 2018.
- For 2019, the price of oil is expected to reach USD 64-69 per barrel.
- In 2018, the capacity utilization ratio for GC’s refineries was 102%.
- The company’s aromatics business had a capacity utilization ratio of 93%.
- In 2018, GC’s olefin and derivative products business had an olefins capacity utilization ratio of 101%, and a polyethylene capacity utilization ratio of 100%. With average price for HDPE resins increased 14% compared to 2017, to USD 1,330 per ton.
Key strategies contributing to GC’s 2019 performance
- Strengthening the company’s Home Base:
- Efficiency Enhancement: Project Max is a GC’s business efficiency initiative met its goal of 10,800 million baht, and will now continue. In addition, Digitalization Project is an AI system to support and improve workflows within the company.
- Market Strategy & Intelligence: GC’s Customer Solution Center, or CSC, supported the company’s marketing strategy and drove continual growth by working more closely with customers.
- Expanding into markets in high-growth regions: In 2018, GC and its partners invested in regional growth, setting up sales offices in Myanmar and Vietnam. This resulted in polyethylene resin sales in CLMV countries (Cambodia, Laos, Myanmar, Vietnam) increasing by 250,000 tons per year.
- Continuing with GC’s long-term strategic execution:During 2018, GC continued driving investment projects in various businesses to create more value for the company’s products, including investing in performance chemicals. Several important company projects that have been approved are now in the construction process:
1) The Olefins Reconfiguration project will expand production capacity by investing in a naptha cracker, with an aim to add more value to GC’s existing raw materials. The company considers this as bolstering its downstream business for the future with an ethylene production capacity of 500,000 tons and a propylene production capacity of 250,000 tons. Both production facilities are currently under construction and are expected to be in commercial operation by 2020.
2) The Propylene Oxide (PO) project, or Polyols project, will expand propylene products into downstream products in the polyurethane chain. This project is currently in construction process, with commercial operations expected to begin in 2020.
3) The PA9T and HSBC Advanced Engineered Products project was made possible with the collaboration of Japanese investors to establish Kuraray GC Advanced Materials Co., Ltd., a specialized chemical business. This project will produce advanced engineered products that will play a crucial role in driving GC’s future business growth. Currently under construction, the plant is expected to begin commercial operations by 2022.
4) GC became share holder of Siam Mitsui PTA Co.,Ltd. (SMPC, which has been renamed to GCM-PTA) and Thai PET Resin Co., Ltd. (TPRC) with the capacity of 970,000 tons of PTA per year and 147,000 tons of PET per year, but will also add more value to paraxylene (PX) and monoethylene glycol (MEG) to meet the needs of customers in the packaging business. Also, an upturn in the PTA business resulted in GC being able to better manage its bottom line.
- Operating under the Circular Living conceptIn 2018, GC gave priority to embracing the principles of the Circular Economy and adapting them for internal and external use. By operating under these principles, GC aims to not only raise awareness of the need to change people’s behavior for the more efficient use of resources, but to also introduce initiatives that will make GC a role model for a truly sustainable organization.
- Waste Management: GC is taking measures to ensure the responsible and efficient use of raw materials in line with the 5Rs: Reduce, Reuse, Recycle, Renewable, and Refuse.
- Recycling Plant: GC is in the process of studying an investment in a recycling plant in the Rayong industrial estate that meets international standards. The recycling plant has a planned production capacity of 30,000 tons of rPet per year and 15,000 tons of rHDPE per year. GC is currently evaluating suitable technology, looking for investment partners, and establishing a system to collect waste for the recycling plant. The company aims to finalize the plan by this year.
- Zero-waste to Landfill Project: This project aims to significantly lower the amount of waste and ensure that any company waste is handled using alternative methods rather than being disposed of in landfills.
- Reducing the Amount of Single-use Plastic: GC will work with its customers and plastic producers to achieve a goal to reduce the amount of single-use plastic such as shopping bags in Thailand from 150,000 tons per year to 0 tons per year within the next five years.
- Entering the Bioplastics Market: To expand the reach of the Circular Living concept, GC plans to produce various types of bioplastic packaging in the near future.
- BioPlastic operational plansGC plans to produce PBS bioplastic products as part of its drive to replace single-use plastics and urges to use on biodegradable packaging such as coffee cups. The company is currently negotiating potential projects with some of the world’s leading food and beverage companies for its eco-friendly packaging. GC believes that BioPBS production can grow to 20,000 tons per year as market demand increases with the wider use of BioPBS, due to its trends such as more consumers avoiding conventional plastic bags.
SOURCE PTT Global Chemical Public Company Limited (GC)