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GC announces its 2023 performance results, achieving a rebound in profits, and unveils its 2024 strategy to leverage on low-carbon business opportunities, inviting everyone to join “GEN S: Generation Sustainability”.
February 16, 2024, Bangkok: Dr. Kongkrapan Intarajang, CEO and President of PTT Global Chemical Public Company Limited (GC), announced the 2023 performance results, revealing a net profit turnaround of 999 million baht. The operational direction for 2024 focuses on intensively continuing the strategy, building a strong foundation while the global economy continues to slow down. It aims to expand into low-carbon business, creating differentiation and business returns towards the Net Zero goal. GC is also inviting everyone to become part of "GEN S..Generation Sustainability" fostering a Net Zero Lifestyle movement to drive our world towards a better and sustainable future together.
Performance Results for 2023
In the past year, the overall petrochemical industry continued to experience a downturn, pressured by factors including the economic recession, which affected the demand for petrochemical products and the commencement of new production capacities in the market, especially from China. This resulted in GC's operations in 2023 generating total sales revenue of 616,635 million baht, a 9% decrease due to the reduction in prices across all petrochemical and petroleum product groups, reflecting an economy that has not yet recovered from the global economic downturn. However, the company still managed to achieve a net profit of 999 million baht (0.22 baht/share), by focusing on controllable factors, implementing stringent and ongoing internal measures to strengthen our business through the following operations:
- Continuously improving operational efficiency and reducing costs through projects such as MAX, dEX, MTPi, and FiT, along with additional operational cost reductions controlled within the budget plan (OPEX Saving), which contributed to an increase in profits estimated at around 6,900 million baht.
- Partnership with WHA Corporation Public Company Limited (WHA) to elevate GC Logistics Solutions Limited (GCL) into a full-service logistics company, enhancing the competitive capability of the business. This involved selling a 50% stake in GCL to WHA, valued at approximately 2,640 million baht, resulting in an extraordinary profit related to this transaction (including the gain from fair value reassessment of the remaining investment in GCL) of 4,017 million baht.
- Reducing financial debt burden by repurchasing US dollar-denominated bonds, resulting in a profit from the bond repurchase of 1,422 million baht.
GC as a Global Leader in Sustainability
In 2023, GC was recognized both nationally and internationally through various awards, reinforcing its dedication and commitment to sustainability in accordance with international standards. The company conducts its business with consideration for the balance of environmental, social, and corporate governance and economic (ESG) factors. This approach has led to tangible successes, as demonstrated by the following examples:
- GC is the only company in the world to be ranked No. 1 in the Chemicals sector by the Dow Jones Sustainability Indices (DJSI) in the World Index for five consecutive years, as assessed by S&P Global. This underscores the company's commitment to being a global model for sustainability.
- GC is the only company in Thailand to be ranked as the leader in Climate Change Management and Water Security Management at the A Level (Leadership) by the CDP for 2023, marking the second consecutive year of such recognition.
- The company has been awarded an A rating in the Morgan Stanley Capital International (MSCI) ESG Ratings within the Chemicals industry.
- GC received the highest Platinum award, ranking in the Top 1% of the basic chemicals manufacturing industry from EcoVadis.
- GC has been assessed with an AAA SET ESG Rating for sustainable stocks and has been continuously listed in the sustainable stock list for 9 years, along with winning the SET Awards 2023 in the Sustainability Excellence category, receiving the Sustainability Awards of Honor for the sixth consecutive year from the Stock Exchange of Thailand.
Operational Strategies in 2023
GC is advancing to strengthen its position through intensive implementation of the "3 Steps Plus" strategy, which includes Step Change, Step Out, and Step Up, as follows:
Step Change: Elevating Business Competitiveness
- Implemented the Olefins 2 Modification Project, which commenced commercial operations in July 2023. This enabled the company to increase its use of propane as a raw material, aligning with its strategic plan to enhance raw material flexibility and boost long-term competitiveness. As a result, the installed production capacity for ethylene and propylene products collectively increased from 3,680,000 tons per year to 3,729,000 tons per year.
Step Out: Seeking Strategic New Growth Opportunities Abroad and Address Low Carbon Business Needs
- GC and allnex have continuously created synergy and exchanged expertise in operations and innovation. The collaboration will be expanded to include other areas, such as sustainability or digitalization, in the future. GC and allnex have established the Thailand Innovation Hub as an innovation center for joint research and product development. They are in the process of extending this collaboration to other companies within the group (VencoreX, Emery, NatureWorks, Kuraray).
- In 2023, allnex initiated the construction of a production line at the Dushan Port manufacturing hub in Zhejiang Province, People's Republic of China. This production line is designed to support the manufacture of environmentally friendly, high-performance plastic resin, promote green innovation, and meet the demand for industrial coatings and additives in the People's Republic of China and the global market. The production will strictly adhere to international environmental standards. This new manufacturing hub will enhance allnex's role in the People's Republic of China. Additionally, GC is exploring various regions to expand production capabilities in the High-Value Business sector related to allnex in Southeast Asia, aiming to accommodate market growth.
- The commercial operation of the Kuraray GC Advanced Materials factory to produce high-engineering plastics (with a production capacity of 13,000 tons/year of PA9T and 16,000 tons/year of HSBC) enhances competitive capabilities in the Eastern Economic Corridor (EEC) supporting the development of industries which are crucial for the economic development of Thailand, including the automotive and electrical and electronics (E&E) industries.
- The construction of the new fully integrated Ingeo PLA biopolymer plant in Nakhon Sawan by NatureWorks, a joint venture of GC and a global leader in the production of Polylactic Acid (PLA) biopolymer resin made from renewable resources, is expected to be completed in 2025. The plant will have a production capacity of 75,000 tons of Ingeo biopolymer per year, using local sugarcane as the raw material, addressing the increasing demand for biobased materials in the Asia Pacific region. This facility will expand access to low-carbon biobased materials for customers committed to global sustainable business practices. Biopolymers reduce greenhouse gas emissions by more than 73% compared to petrochemical-based materials and can be used in various industries, including packaging, textiles, and non-woven fabrics.
Step Up: Maintaining Leadership in Global Sustainability
GC has achieved notable and evident success globally under its sustainability strategy and Decarbonization operations aimed at reaching a Net Zero target by 2050, focusing on transitioning to a low-carbon business. This includes:
- Efficiency-driven: Enhancing operational efficiency to reduce greenhouse gas emissions from production processes by adopting energy-saving technologies and shifting towards renewable or low-carbon energy sources. This has been achieved through over 190 energy conservation and clean energy projects initiated since 2022, reducing over 138,000 tons of CO2 equivalent in greenhouse gas emissions.
- Portfolio-driven: Restructuring the long-term business portfolio towards low-carbon business, exemplified by GC's investments in allnex's Performance Material business and ENVICCO's high-quality recycled plastic resins, which result in lower greenhouse gas emissions compared to conventional business operations (GHG Avoidance), totaling over 630,000 tons of CO2 equivalent per year. In 2023, ENVICCO recycled over 22,000 tons of used plastics through the GC YOUTURN platform (End-to-End Waste Management). Moreover, GC has been revising its strategy and managing a sustainable product portfolio to align with the plan to reduce greenhouse gas emissions and meet the demands of current consumers.
- Compensation-driven: Operations aimed at carbon capture and offset include (1) the application of various technologies (Technology-based Solutions) with GC participating in a feasibility study project for the application of Carbon Capture and Storage (CCS) technology, or the CCS Hub Model of the PTT Group, as well as exploring the use of Carbon Capture Utilization and Storage (CCUS) technology through collaborations with various organizations and investments in Corporate Venture Capital (CVC) form, and (2) compensating for the remaining carbon emissions through natural carbon absorption (Nature-based Solutions) from projects involving planting, restoring, and conserving forests both in GC-owned areas and in collaboration with government agencies, private sector, and communities across several ongoing projects since 2023, covering over 8,600 acres. These include the GC Estate's Rayong Biodiversity Conservation Project, the forest planting project in the Rayong office area, the mangrove reforestation project for carbon credits in collaboration with the Department of Marine and Coastal Resources (DMCR), the “The More You Plant, The Better” tree planting project with BMA, and the carbon credit management project in forests for sustainable development in partnership with the Mae Fah Luang Foundation under Royal Patronage. These projects are expected to absorb approximately 27,000 tons of CO2 equivalent.
Operational Focus for 2024
Due to various external factors including megatrends, new industry landscape, and geopolitical situations impacting the industry and business operations, the challenges persist in operating in 2024. Therefore, GC has established and reviewed the 3 Steps Plus strategy: Step Change, Step Out, Step Up, which has been implemented intensively to align with the evolving industry landscape and enhance operations even further.
Step Change: Strengthening a foundation through efficiency enhancements, cost control, and multidimensional collaboration, while emphasizing Market-Focused usiness growth. This involves increasing the proportion of high-value products (HVP), particularly plastic pellets and chemical products, with a target of 56% by 2028, along with innovative product development.
Step Out: Seeking new opportunities for growth and managing allnex's cost structure. Additionally, expanding the market for bio-based plastic products and sustainable products (Bio & Circularity), focusing on producing recyclable products, including Bio-Refinery. These products can be used to manufacture various downstream products, including those in the personal care, pharmaceutical, food, biopharmaceutical, and bio-plastic industries, etc.
Step Up: Strengthening business sustainability by actively pursuing decarbonization efforts to achieve the Net Zero target by 2050, while maintaining leadership in sustainable practices.
Furthermore, GC is also planning to restructure its business by seeking strategic partnerships. GC is currently exploring new ventures in hydrogen and carbon, leveraging its strengths and expertise in the hydrocarbon sector to create differentiation and future business returns, aiming toward its Net Zero goal. A notable initiative includes signing a Memorandum of Understanding (MOU) with Mitsubishi Heavy Industries Asia Pacific Pte. Ltd. (MHI-AP) to study petrochemical plant development technologies. This collaboration has two main objectives: to study and compare the feasibility of using hydrogen and ammonia as fuel for gas turbines and to explore carbon capture and storage (CCS) technology in processes aimed at reducing carbon dioxide emissions from power generation. Additionally, the partnership seeks to improve and enhance the efficiency of the carbon capture and storage system, making it suitable for hydrogen production processes or Steam Methane Reforming (SMR).
GEN S..Generation Sustainability
As being a global leader in the sustainability of the chemical industry, this year, GC continues to evolve the concept "Better for You, Better for our World," inviting everyone to become "GEN S..Generation Sustainability” This initiative aims to create a ripple effect towards adopting Net Zero Lifestyles to combat global warming, with various sustainable living ideas such as completing meals to reduce Food Waste, turning off water and unplugging when not in use, using eco-friendly products, reusing, maximizing utility, or properly separating waste.
Sustainability transcends age and individual boundaries; Let's join hands to create a better world together. Exploring a breadth of sustainable living practices at www.gcgens.com.
#GenS#GenSStandforSustainability#GenSGenerateNetZeroLifestyles#TheNewGenerationWithASustainableSpirit#GCChemistryforBetterLiving
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