Published: January 2, 2013
Siam Canadian Foods missed its $300 million turnover target in 2012 because of shrimp raw material availability, said founder and group managing director Jim Gulkin.
The Bangkok, Thailand-based frozen shrimp and fish supplier — which sources from across Asia for customers worldwide – is set to report sales of just over $272m, Gulkin told Undercurrent News just before the year end.
The dollar value is down 5% on 2011, but the quantity in containers is up 3% to 2,850, he said.
“Shrimp raw material was the big issue of 2012, with the global economy second. It is likely to be the same for 2013.”
At the start of 2011, Gulkin was hoping to hit $300m but the result of over $270m, with profit up on 2011, is respectable, he said.
“Many other businesses were down 35%. Thai shrimp exports to the US were down 25%,” Gulkin told Undercurrent. “We beat the average by far. We should not be too unhappy with that. But we are ambitious and we are aggressive and we always like to see growth.”
For 2013, the weak stake of economies in Europe and the US will play a part in Siam Canadian’s performance, but Gulkin is most focused on raw material supply.
Availability of shrimp in Thailand, China and Vietnam was hit by the continuance of the early mortality syndrome (EMS) disease, for which no cause or cure has been found.
“If there is major disease problems in Thailand, Vietnam and China, then we are going to struggle to recover to get our sales to $300m. We will see,” said Gulkin.
“If raw material availability is better, it should not be to much of a problem. If raw material is an issue, we could be around the same level as 2012.”
Even if the economies stay weak, Siam Canadian should increase sales, he said. “If the raw material situation improves, we will see that growth, in spite of the economic situation.”
Disease situation ‘can improve’
Although EMS and other disease problems in shrimp are not going away, the “situation can improve pretty quickly, if the farmers put their mind to it”, he said. “These things don’t go away, but they can improve.”
“A bit of luck with the weather” and farmers holding back on production and taking measures such as cutting stocking density can go a long way, he said.
For 2013, Indonesia looks “set to continue along in good shape,” he said. “I think Vietnam still has problems on production and I expect China will as well.”
Although Gulkin expects an increase in volumes from India in vannamei shrimp, Indian processing capacity is “not expanding at the same rate” as the farming. “This means there are limitations there.”
Overall, Gulkin is bullish on the Asian countries’ role in global shrimp production, despite increasing volumes being produced in Latin America by the likes of Ecuador.
“The processing capacity is there [in Asia], everything is in place. In the end, the Asian countries are geared up for many kinds of value-added products that the market wants,” he said. “The customers are used to the product and want the Asian product and expertise.”
By region, Siam Canadian’s sales were flat from Thailand, with mixed results from China, Vietnam, India and Indonesia.
“China was where we ended up not having a very good year. For China, we were down 17% on volume and on value we were down 50%,” said Gulkin. “We made up the volume on fish, but the high-value shrimp items were very hard to come by, because of the disease problems,” he said, referring to the spread of EMS.
On the other hand, Indonesian volume was up 34% and value up 30%.
Indonesia really “picked up the slack and was competitive, with the high prices from Thailand and problems with raw material in Thailand, Vietnam and China.”
This is likely to continue in 2013, he said.
In Vietnam, the company’s sales volume was up volume up 10%, with the value down 10%.
Siam Canadian “should have done better” in India, said Gulkin. “We didn’t get the raw material boost that we expected, we will get that this year”, he said of India, where production of vannamei shrimp is ramping up.
“We were doing a lot of high value freshwater shrimp from India and we had a problem with the producer on that, so the value dropped.”
For India, the sales value was down 20%, but the volume was down by 3%.
The US market remained “dull” over 2012, with Europe also troubled, said Gulkin.
“In Europe, Spain and Italy were really weak and also Greece. The knock on effect on the rest of Europe also hit our business,” he said. “The US market was dull all year and the US is not out of the doldrums yet.”