JWD, a leading fully integrated in-land logistics service provider, reported a faster-than-expected recovery of cold-storage business as the demand for seafood (and poultry) warehousing space was restored, which led to a 200% jump in occupancy ratio for seafood cold-storage warehousing space. Its management forecasted the full-year cold-storage occupancy ratio would rise to 63% and the gross profit margin ratio would reach 45%, compared with 37% in the previous year.
Mr Charvanin Bunditkitsada, Chairman of the Executive Committee and Chief Executive Officer (CEO) of JWD InfoLogistics Public Company Limited (JWD), a leading fully integrated in-land logistics service provider, revealed that JWD’s cold- and frozen-storage warehousing business, one of the company’s highest grossing businesses, recovered faster than expected during the past three months, and is likely to generate a decent level of profit in 2017, with the average occupancy ratio of all the three cold-storage warehouses at Mahachai, Suwinthawong Road and Bangna Road (KM. 19) rising to 57% of the aggregate space of 50,000sq m, compared to 51.9% in 2016.
During mid-2016, the cold-storage business was affected by the IUU (illegal, unreported and unregulated) fishing and human trafficking issues that effectively reduced Thailand’s seafood export to European markets and the volumes of seafood products at JWD’s cold-storage warehouse in Mahachai, Samut Sakhon, which lies close to Thailand’s major harbours of fishing boats.
The demand for seafood warehousing space recovered from the above unusual situation faster than expected, with signs of recovery detected by the company between December 2016 and February 2017, including a constantly growing level of warehousing demand from major business firms and the resulting 200% growth in average volume of seafood products at the company’s cold-storage warehouses, a dramatic jump from the lowest level at 16,000 tonnes in 2016 to 30,000 tonnes in Q1/17.
JWD’s success in securing poultry firms as new customers of its warehousing business also increased the volume of stored products (e.g. poultry, butter, wine, etc.) at the cold-storage warehouse on Suwinthawong Road, and allowed the company to post an impressive gross profit margin result. The company has completed in last August the construction of additional frozen-storage units to satisfy the growing demand for storage of products at -40◦C. It also sees great potential for its cold-storage warehouse on Bangna-Trat Road (KM 19), which still has to reach the break-even point but is benefiting from the position as Thailand’s first free-zone cold-storage warehouse. It seeks to expand its customer base as several major firms have shown interest in securing its warehouse space for use as an international hub for regional stocking and distribution.
“We believe that the decisive factor that contributed to the earlier-than-expected comeback in the warehousing demand for seafood products was the rising prices of seafood that drove firms to build stocks to tap selling opportunities. Moreover, the restriction on seafood export to European markets due to the IUU fishing issues is expected to become less aggressive, as Thailand is likely to have an improved ranking for handling of the issues,” said he.
The CEO expressed confidence that the cold-storage business will perform better than last year, and forecasted that the average occupancy ratio of all the three cold-storage warehouses would leap to 63% in 2017. He added that the installation of solar rooftop systems at those warehouses, which can reduce electricity bills by more than THB 3 million per year, has led to JWD’s decision to revise up the 2017’s gross profit margin target for cold-storage business to 45%, compared with the 37% level achieved in 2016, and it will help enhance the company’s overall performances considerably.