SCG Decor Faces Profit Pressures but Bets Big on Vietnam and Cost Innovation

Bangkok Business News: Weaker Thai Demand Forces Shift in Strategy

SCG Decor Plc (SCGD), Thailand’s leading décor surfaces and bathroom solutions provider, is bracing for a 5% revenue dip in 2025 as weak domestic demand and sluggish consumer spending cloud the country’s construction and home improvement sectors. In 2024, the company reported a solid 26.1 billion baht in revenue and a net profit of over 809 million baht. However, in the first half of this year, sales have struggled due to the prolonged economic slump, a slowing real estate sector, and the strengthening baht, which has undermined export competitiveness.

SCG Decor Plc is bracing for a 5% revenue dip in 2025
Image Credit: SCG Decor

Despite these headwinds, this Bangkok Business News report finds that SCGD remains cautiously optimistic. CEO Numpol Malichai emphasized that the second half of 2025 could witness improvements, particularly from regional markets like Vietnam, where real estate stimulus efforts are reviving demand. Vietnam currently contributes around 20% of SCGD’s total sales and is fast becoming a cornerstone in the company’s expansion and export strategy.

Vietnam Becomes the New Growth Engine

SCGD is positioning Vietnam not only as a key consumer market but also as its main production and export base. The company is currently negotiating a potential merger and partnership (M&P) with a local Vietnamese firm to enhance ceramic tile manufacturing capabilities. This strategic move is expected to increase the supply of glazed porcelain tiles for both domestic and global markets and allow SCGD to capitalize on the 20% reciprocal tariffs imposed on Vietnamese products exported to the US.

Meanwhile, SCGD remains in the dark about whether the US will revise its steep 36% tariff on Thai imports. Nonetheless, Thailand is hopeful that trade conditions will improve after August 1. The company is also eyeing new growth territories like Mexico and the Czech Republic as part of its international expansion roadmap.

Cost Control and Innovation to Cushion Margins

In Q2 2025, SCGD recorded total sales of 31.7 million square metres, driven by Vietnam’s property rebound. While revenue is forecast to shrink by 10% year-on-year, quarterly profits are expected to inch up 2%, thanks to a modest improvement in gross profit margins (GPM), now at 26.7%. The uptick is attributed to stringent cost-saving measures, including reduced energy expenditures, ongoing restructuring, and investments in solar energy and biomass technologies.

The company remains shielded from direct exposure to the Trump-era tariffs, with US exports making up less than 1% of overall sales. However, increased competition across ASEAN markets is anticipated. SCGD’s defense lies in aggressive innovation and cost leadership—cutting labor through automation and boosting high-value-added (HVA) product lines.

Mergers and Market Risks Ahead

Looking forward, SCGD plans to retain its five-year investment budget of over 27 billion baht through 2030, including 7 billion earmarked for M&Ps. Analysts forecast core profit growth of 5.2% CAGR through 2027, supported by Vietnam’s growing role as an export hub. Still, looming risks persist—a possible THB3 billion legal claim against its Indonesian unit KIA remains unresolved and could weigh on finances.

While the Thai market continues to pose challenges due to political and economic uncertainties, SCGD’s evolving regional footprint and firm cost discipline suggest it could still meet a moderate 3% sales growth estimate for the year. Investors are advised to hold for now as the company awaits a rebound and finalization of its Vietnam M&P deal.

For the latest on SCG and its subsidiaries, keep on logging to Bangkok Business News.