SCG Decor Co., Ltd. (Public) or SCGD, a leader in surface decoration and sanitary ware in the ASEAN region, is confident that if the ASEAN market gradually recovers as targeted, it will lead to a doubling of sales to approximately 60 billion baht by 2030. The company reported its Q1 2024 performance with a slight decrease in sales but a 44% increase in profit compared to the previous quarter and a 28% increase compared to the same period last year. In the first quarter, the company approved investments in three projects totaling 290 million baht to enhance efficiency and reduce production costs, while awaiting benefits from investment projects that are expected to be completed by mid-year.

Mr. Namphol Malichai, CEO and Managing Director of SCG Decor Co., Ltd. (Public) or SCGD, revealed the Q1 2024 performance of SCGD, stating that although the company had sales revenue of 6,784 million baht, a 6% decrease compared to the same period last year and stable compared to the previous quarter, the company achieved a profit of 258 million baht, an increase of 44% compared to the previous quarter and up 28% year-on-year (excluding the impact of restructuring and other non-recurring items from the previous year). This was due to the company maintaining the selling prices of ceramic tiles and sanitary ware close to the previous quarter, selling a higher proportion of high-margin products, as well as cost reduction projects and various efficiency improvements that the company has implemented, along with continuously decreasing energy costs.

Therefore, in the past Q1, SCGD received approval for an additional investment of 290 million baht in three projects aimed at reducing costs and increasing production efficiency, including a solar cell installation project of 5.5 megawatts with an investment of 140 million baht to increase the proportion of renewable energy use and reduce energy costs, expected to be completed by early 2025. The project to enhance warehouse management efficiency has an investment of 70 million baht through the installation of warehouse management systems and automated lifting vehicles, and the large tile production line project in Nong Kha has an investment of 80 million baht, expected to start production by the end of 2027.

Additionally, there are energy cost reduction projects that have already been invested in and are expected to be completed by mid-year, including the installation of Hot Air Generators to reduce energy costs at two factories in Thailand, expected to be completed in May, and the improvement of the SPC vinyl tile production line, which will start producing SPC vinyl tiles for the Thai market by the end of Q2 with a production capacity of 1.8 million square meters per year. Importantly, SCGD also has investment projects in Vietnam that are expected to be completed and operational according to plan within 2027, including the production of porcelain tiles and large tiles with an additional capacity of 2.2 million square meters per year in central Vietnam, and a porcelain tile production project with a capacity of 9.1 million square meters per year in northern Vietnam, expected to start production by late 2027. All investment projects aim to enhance efficiency and reduce production costs in line with ESG principles, as well as improve production technologies to meet consumer demand and prepare the business for growth as the market recovers in the future.

The CEO and Managing Director of SCGD stated that the market situation for surface decoration materials, ceramic tiles, and sanitary ware in Thailand during the past quarter was as expected, with over 60% of sales coming from the surface decoration and sanitary ware businesses in Thailand, while overall sales abroad are still awaiting recovery.

For Q2, it is expected that Thailand will have positive factors resulting from the passage of the annual budget, leading to increased liquidity in the system, along with significant government economic stimulus measures that will build confidence and encourage consumers to spend more.

Regarding the market situation for surface decoration materials, ceramic tiles, and sanitary ware in the ASEAN region, in Vietnam, progress on the new land law to reform land management processes and establish a national land database is expected to create a more vibrant real estate market starting this year, despite its enforcement beginning in early 2025. Meanwhile, the Philippines and Indonesia are expected to recover from improving economic conditions.

SCGD is confident that the ASEAN market will recover as projected at 4-5%, thus setting a target for overall revenue to double to approximately 60 billion baht by 2030 through four strategies:

  1. Drive growth in the surface decoration business for floor and wall tiles through various key operational plans, including expanding factory investments in southern Vietnam, increasing sales of high-value-added (HVA) products, enhancing product management efficiency, creating a collaborative sourcing base, expanding distribution networks, and increasing sales of high-growth products such as SPC vinyl surface materials and glazed porcelain tiles.
  2. Expand the sanitary ware business in ASEAN by leveraging the distribution channels of the surface decoration business and investing in new sanitary ware factories in ASEAN, targeting a doubling of sanitary ware sales to over 10 billion baht. In the past quarter, SCGD accelerated its strategy to expand the sanitary ware business in ASEAN, which is another core business of SCGD accounting for approximately 20% of revenue, by rapidly expanding distribution channels and increasing sanitary ware distributors abroad, from 17 to 39 in Vietnam, from 78 to 85 in the Philippines, and from 28 to 37 in Indonesia, resulting in a total network of 161 sanitary ware distributors in these three countries.
  3. Expand into related products and services to reinforce its position as a comprehensive service provider and increase opportunities for selling related products such as adhesives, sealants, doors, windows, and kitchen furniture, leveraging a strong distribution network.
  4. M&P (Merger & Partnership) to invest in mergers and collaborations with existing business owners in surface decoration, sanitary ware, and related products and services both domestically and internationally.