SET-listed furniture manufacturer Modernform Group Plc (MODERN) is seeking to tap into the lower-end segment and increase its focus on healthcare furniture as purchase orders turn tepid, particularly from government agencies.
Chief executive Thaksa Busayapoka said the company's furniture sales in the first four months remained sluggish due to the economic slowdown. Some property project owners, for example, have frozen their furniture orders as they struggle financially.
"The government sector should lead in spending," he said. "But purchase orders from government agencies have mostly been put on hold as those authorised to sign the contracts are hesitating to do so as they are concerned about corruption."
Despite the property tax incentives which ran from October last year to late April this year, overall furniture sales in residential projects have not grown in line with the number of housing units transferred during the period.
"The incentives boosted only sales of completed, ready-to-transfer units where furniture was already fitted. These were past orders, not new ones," said Mr Thaksa. Another reason furniture orders have been weak in the first four months is because of financial institutions' stricter mortgage criteria for homebuyers.
Modernform is aiming for 4.3 billion baht in sales by the end of the year, unchanged from its 2015 sales. The company posted net profits of 662 million baht in 2015 on total revenue of 4.33 billion baht, down from 784 million baht and 4.34 billion baht in 2014, respectively.
To maintain annual sales, Modernform will focus more on healthcare furniture and related products. Last year, their sales rose 30-40% and this year are expected to register similar growth to 400 million baht.
Healthcare product sales, however, only accounted for 8% of total sales last year. Modernform is aiming to boost that figure to 10% in 2016.
The company also plans to open outlets in Greater Bangkok, with the first ones in PathumThani, near Navanakorn Industrial Estate.
Office furniture is another area where Modernform plans to boost sales. Its share of the 5 billion baht office furniture market has stood at 30% in recent years, while growth has been stagnant.
MODERN closed on the SET on Friday at 8.10 baht, up 5 satang in trade worth 3.46 million baht.