SCGD posts THB247m profit despite volatile global markets

SCG Decor (SCGD) reported a solid first-quarter performance for 2026, with profit attributable to shareholders rising 14% year on year to 247 million baht despite pressure from volatile global markets. 

The ASEAN surface decoration and sanitaryware business said earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at 780 million baht, while EBITDA on sales reached 14.1%, improving from the previous year and remaining close to the previous quarter.

SCGD said the performance reflected disciplined cost management and more efficient operations, even as market conditions remained challenging.

Sales revenue stood at 5.55 billion baht, down 7% from a year earlier, mainly due to economic conditions, particularly in Thailand, which remains the group’s key sales market, as well as the stronger baht. Excluding those factors, sales revenue fell by only 4%, supported by higher revenue from Vietnam.

 

Middle East conflict raises cost risks

Numpol Malichai, chief executive officer and president of SCGD, said the company expected the Middle East conflict to affect business in the second quarter through higher energy and transport costs.

On raw materials, he said Thailand and Vietnam were likely to see a slight increase due to higher transport costs, while the Philippines would face a heavier impact because of high diesel costs.

Indonesia, however, was expected to see a limited impact because domestic energy prices are controlled by the government.

On energy, Thailand is expected to begin seeing the impact of natural gas costs in the second quarter. Vietnam is less exposed because SCGD uses domestically sourced coal there, while the Philippines, which uses LNG, is likely to face rising costs in line with global market prices.

Numpol said the key concern was how far inflation would rise as costs increased, and how much that would weigh on demand. “The only factor we are concerned about is how high inflation will go when costs increase, and how much it will suppress demand,” he said.

He added that SCGD would adjust production capacity in line with demand and continue to monitor conditions closely, especially during a period of energy price volatility.

Numpol said the current situation might not be the most severe crisis the company has faced, compared with the early stage of Covid-19 when demand came to a sudden halt. However, he described it as a serious and highly volatile crisis, particularly because energy costs are a major and unpredictable expense.

SCGD’s priority was to maximise efficiency and reduce the impact of volatile energy costs as much as possible, which would help the company remain resilient compared with other players in the same industry, he said.

Regional optimisation drives long-term plan

Although SCGD’s direct exposure to the Middle East is limited, with exports to the region accounting for less than 1% of total volume, the company said it is taking proactive measures to manage energy cost risks and minimise the impact on business.

SCGD is moving ahead with its regional optimisation strategy to strengthen cost competitiveness, improve production efficiency in Thailand and overseas, and protect its long-term market position. The strategy is built around four main approaches.

• PRIME Vietnam positioned as key growth engine

The first is to elevate PRIME Vietnam as a key growth pillar and main production and export base. In the first quarter of 2026, PRIME recorded ceramic tile and glazed porcelain tile sales of 11.8 million square metres. 

Sales of glazed porcelain tiles in Vietnam and export markets reached more than 3.9 million square metres, up 44% from a year earlier.

SCGD is also investing around 660 million baht to expand glazed porcelain tile production capacity by 6.6 million square metres at the PRIME Pho Yen plant in Vietnam. The project is scheduled for completion in the second quarter of 2027.

Once completed, PRIME’s glazed porcelain production capacity will rise to 33.4 million square metres, equal to 40% of its total production capacity, supporting both domestic growth in Vietnam and exports to other regions.

• Thai production base to be consolidated

The second approach is to consolidate production lines in Thailand to reduce costs and improve profitability. 

SCGD plans to relocate ceramic tile and glazed porcelain tile production lines into the same area, allowing production capacity to be used more efficiently. The move is expected to improve productivity, reduce production costs per unit, and lower manufacturing and administrative expenses.

The company will also install a new glazed porcelain tile production line to support demand for large-format tiles and a wider range of designs, while strengthening its ability to compete with imported tiles.

The project is expected to be completed by the third quarter of 2027, with total production capacity of 44.5 million square metres per year, which SCGD said would be sufficient to meet market demand.

The company expects to recognise related expenses of around 679 million baht, most of which will be non-cash items. However, after assessing the project return following those expenses, SCGD said the payback period and internal rate of return remain in line with its investment criteria based on current estimates.

SCGD said the Vietnam expansion and Thai production consolidation both reflected its regional optimisation strategy, which focuses on managing the production base as an integrated network to support long-term growth.

• Innovation and value products support demand

The third approach is to serve all customer segments by combining deep customer insight with product innovation and modern production intelligence.

SCGD said high-value-added products, or HVA, accounted for 36% of total sales revenue, while Smart Value Products, or SVP, which are standard-quality products at accessible prices, accounted for 18% of sales revenue.

The company said this product mix would help it respond to different consumer needs across all segments, especially during a market slowdown.

• Alternative energy use to rise

The fourth approach is to increase the use of alternative energy, particularly biomass and solar power, to reduce energy costs over the long term.

SCGD currently uses biomass fuel for more than 25% of its energy needs and plans to raise the share to 46% by 2030. The increase is supported by the installation of a Hot Air Generator at Nong Khae Industrial Estate in Saraburi, which was completed in February 2026.

The company also uses solar energy for more than 13.6% of its energy needs and plans to increase the share to 15% by 2030.

Sanitaryware and complementary products expand

Sitichai Sukkitprasert, chief financial officer of SCGD, said the company continued to see growth in the sanitaryware business in the first quarter of 2026, particularly in ASEAN.

The growth was driven by higher sales and an expanded overseas dealer network. Overseas sanitaryware sales exceeded 141 million baht, while the number of dealers increased to 212 from 201 a year earlier.

SCGD is also continuing to expand its surface decoration materials business by joining global trade fairs and events to meet customers and partners, while presenting new innovations and solutions.

In Vietnam, PRIME has developed tiles using surface technology that can absorb light during the day and release it in low-light conditions, adding new functions and design possibilities to its products.

The company’s complementary products business also continued to grow, with sales of more than 114 million baht, up 6% from a year earlier. Key products include tile adhesive, grout, kitchen countertop sheets, and door and window panels.

Financial position remains strong

Numpol said SCGD’s performance demonstrated its ability to adapt proactively, using its strengths as an ASEAN player to sustain growth amid global market challenges.

He said the company would continue to manage costs with discipline, improve profitability and sharpen competitiveness through production-base management and product innovation.

SCGD’s financial position remained strong, with cash and cash equivalents of more than 9 billion baht. Its debt structure also remained manageable, with net debt to EBITDA at 1.1 times, he said.

“The company places importance on prioritising capital expenditure while focusing on investments that support long-term business growth,” Numpol said.