MESSAGE FROM THE BOARD OF DIRECTORS

In 2024, the demand for packaging in ASEAN, particularly for domestic consumer goods, has recovered alongside the recovery of the service and tourism sectors. Efforts to stimulate the economy to boost consumer spending in each country have also increased packaging demand. Additionally, exports in ASEAN countries are gradually improving, supported by expanding global trade and declining inflations. However, challenging issues continue to persist, especially the appreciation of the Thai Baht and other ASEAN currencies in the second half of the year, which led to a slowdown in exports. Meanwhile, the packaging paper industry continues to face headwinds due to China’s slower-than-expected economic recovery resulting in decreased export volumes and lower prices.

SCGP continues to address theses challenging circumstances and strengthened its business through Transformative Transformation in four key areas to continuously adapt to significant global changes and achieve sustainable quality growth. One of the key areas is Business Model Transformation, which focuses on business expansion strategies to enhance competitiveness through Merger and Partnership. SCGP is also driving growth by leveraging its expertise through innovation and packaging solutions, particularly in downstream businesses such as fiber packaging, consumer and performance packaging, foodservice packaging, and medical supplies and labware new business areas with high growth potential. Key initiatives this year included the acquisition of a 90% stake in VEM (Thailand) Co., Ltd. (VEM-TH), a manufacturer of high performance polymer injection molding parts. Additionally, SCGP increased its shareholding in PT Fajar Surya Wisesa Tbk. (Fajar) in Indonesia to 99.71% of total shares to support market growth in Indonesia and establish a foundation for enhancing SCGP’s long-term competitiveness in integrated packaging business. SCGP also expanded its corrugated containers production capacity in Thailand to meet the growing demand for packaging in the food and beverage segment. Furthermore, SCGP has focused on strengthening business synergies through customer base expansion, delivering comprehensive products and services, developing channels to expand into new high growth regions, exchanging technologies, and raw material sourcing with an increased focus on establishing a closer proximity to raw material sources, enabling SCGP to operate efficiently and adapt to market volatility.

SCGP has continuously focused on developing packaging innovations and solutions, exemplified by its collaboration with Once Medical Co., Ltd. to develop high-quality syringes and medical supplies and labware. The Company has also advanced research and development efforts with the introduction of the “Novel Eucalyptus hybrid clones”, which boasts up to a 40% increase in growth and yield, creating sustainable value across the entire value chain. This innovation contributes to the advancement of the industry as a whole and has earned SCGP the “Best Innovative Company Award” at the SET Awards 2024, organized by the Stock Exchange of Thailand in collaboration with Money & Banking Magazine. This marks the third consecutive year that SCGP has received this prestigious award. These accomplishments are driven by SCGP’s commitment to People Transformation, aimed at enhancing employees’ skills and potential to align with business growth and adapt to evolving challenges. This includes skills, competencies, and expertise in applying technology, as well as fostering an organizational culture that embraces Diversity, Equity, and Inclusion (DE&I). Additionally, SCGP promotes a growth mindset, encouraging employees to continuously pursue self-improvement and proactively initiate new endeavors among employees. In the area of Digital Transformation, SCGP has implemented data management and integrated technology across all aspects of its business to enhance operational efficiency and improve sales and service models to deliver value and experiences that meet customer expectations with speed and quality in both products and services. For instance, automation systems have been adopted to analyze, forecast, and optimize production efficiency. Additionally, Data Analytics has been leveraged to enable End-to-End data management, covering areas such as contact system, ordering process, and product delivery process. This allows for fast and accurate product data verification, enabling customers to efficiently manage raw materials and inventory while optimizing costs. Furthermore, SCGP has applied Artificial Intelligence (AI) and Machine Learning (ML) to more than 95 supply chain processes, such as automated raw material quality inspection, real-time paper production control to assure quality and reduce energy consumption.

SCGP continues to operate its business based on the principles of sustainable development under the Environmental, Social and Governance (ESG) framework, and drives Sustainability Transformation to reduce greenhouse gas emissions. The Company has set a target for Net Zero greenhouse gas emissions by 2050 and has established a plan to reduce greenhouse gases across processes. This encompasses an attempt to expand the proportion of renewable energy usage (particularly biomass energy), develop production processes to increase energy efficiency, and plant forests to absorb greenhouse gases. In 2024, SCGP was able to curb greenhouse gas emissions by 17.5% compared to the base year (2020).

In addition, SCGP supports partners and customers in reducing greenhouse gas emissions throughout the value chain by dedicating efforts to obtain Carbon Footprint of Product (CFP) certifications from the Thailand Greenhouse Gas Management Organization (Public Organization) for 161 items, including certification for 16 processes related to printing and paper packaging production. These efforts help customers align their operations with increasingly stringent environmental regulations in various countries and enhance the competitiveness of Thailand’s packaging industry by achieving environmental standards. This not only increases sales opportunities and market expansion for exporters but also fosters the development and selection of packaging solutions that contribute to further greenhouse gas reductions. In 2024, SCGP was awarded as a Climate Action Leading Organization (CALO) – Excellence Level by the Thailand Carbon Neutral Network (TCNN) and its sustainability rating was upgraded to A by MSCI (Morgan Stanley Capital International). SCGP also successfully passed the assessment criteria for the Dow Jones Sustainability Index (DJSI) for the Containers & Packaging Industry, achieving an overall score of 87 points, and received an AAA rating in the SET ESG Rating.

Amidst ongoing challenges, SCGP has committed to prudently and efficiently conducting business. In line with this commitment, the Company recorded a total sales revenue of Baht 132,784 million, or an increase of 3% year-on-year. Profit for the year was Baht 3,699 million, a decrease of 30% year-on-year. The Board of Directors has, therefore, resolved to propose the approval of the payment of dividends for the year 2024 to the 2025 Annual General Meeting of Shareholders at the rate of 0.55 baht per share, totaling approximately Baht 2,361 million, or 63.8% of the profit for the year according to the consolidated financial statements, which is in line with the dividend payment policy. This is divided into an interim dividend of 0.25 baht per share and the remaining annual dividend of 0.30 baht per share.

In 2025, SCGP continues to drive quality growth through an array of transformations, focusing on enhancing business profitability by fostering collaboration across the organization to ensure operational alignment and maximum efficiency. This includes capital restructuring, elevating customer service to deliver integrated packaging solutions, accelerating performance improvements through digital technology, and seeking opportunities to increase strategic business partnerships to strengthen competitive capabilities and long-term strategic advantages. Moreover, SCGP endlessly focuses on investing in consumer-driven businesses in the ASEAN region, which is a key market for the Company. The goal is to bolster supply chain integration and strengthen packaging solutions, including medical supplies and labware, to meet customer needs amid an ever-evolving market. Alongside this, the company is investing in employee development by promoting engagement and fostering a culture that supports transformation, as well as conducting business within the ESG framework. All of this reflects SCGP’s vision of creating sustainability in all aspects of its business.

On this occasion, the Board of Directors would like to express our gratitude to the shareholders, debenture holders, joint venture partners, business partners, customers, employees, domestic and international financial institutes, and other relevant parties for your trust and support. SCGP would like to assure that the Company will effectively and efficiently conduct our businesses under the distinguished Corporate Governance. Adhering to the principles of ESG, the Company will strive to become the leading international organization dedicated to driving its own businesses, and to offering value to society and contributing to a better and sustainable world.

Bangkok, January 28, 2025