Gilimex invests heavily in Industrial Parks
On February 15th, 2024, Gilimex Industrial Park Corporation held a groundbreaking ceremony for its centralized wastewater treatment plant in Gilimex Industrial Park in Thuy Phu commune, Huong Thuy town, Thua Thien Hue province.
The wastewater treatment plant project in Gilimex Industrial Park has a capacity of 7,600 m3/day and a total investment of 130 billion VND, expected to be completed and put into operation from December 2024.
The centralized wastewater treatment plant project in Gilimex Industrial Park is part of the overall plan to develop synchronized infrastructure of Gilimex Industrial Park, aiming to create a modern, green, clean, and sustainable industrial park. This is also a premise to put Gilimex Industrial Park into operation synchronously.
The wastewater treatment plant in Gilimex Industrial Park is designed and equipped with modern and safe technology. When completed, it will ensure the treatment of all wastewater issues of secondary investors in the industrial park according to the highest standards of industrial wastewater.
Attendees at the groundbreaking ceremony. Source: Gilimex
Prior to this, one of Gilimex’s strategies is to expand investment in industrial real estate in provinces, cities, and hotel chains serving industrial parks.
Specifically, Gilimex is currently investing in the establishment of industrial parks in the provinces of Thua Thien Hue, Vinh Long, Dong Thap, Quang Ngai, and Quang Nam. Among them, the Phu Bai 4 Industrial Park in Thua Thien Hue Province and Gilimex Vinh Long Industrial Park in Vinh Long Province have been approved by the Prime Minister and are being implemented.
Phu Bai 4 Industrial Park in Huong Thuy town (Thua Thien Hue Province) has a scale of about 460.85 ha and a total investment of over 2,614 billion VND. It is planned to become an industrial park for “Green Industry – Clean Industry – Advanced Technology” to produce high-quality and high-value products.
Gilimex Vinh Long Industrial Park (Vinh Long Province) covers an area of about 400 ha in Binh Tan Industrial Park, Thanh Loi Commune, Binh Tan District. It is expected to attract the development of supporting industries, renewable energy, high-tech industries, production of components, machinery and equipment for agricultural production, preservation and processing of agricultural products, green technology, environmental friendliness, and processing industries.
Attendees at the groundbreaking ceremony. Source: Gilimex
The unexpected blow from Amazon has paralyzed Gilimex’s core business activities, so the company is pushing forward and strengthening its investment in Industrial Real Estate.
Established since 1982, Gilimex is known as a textile company that produces storage boxes, harvesting baskets, backpacks, bags, etc., made of fabric. It was a shining star during the Covid period with continuously increasing business results. However, Gilimex has been declining since Q3/2022 when its revenue dropped by over 80% due to the largest customer – e-commerce giant Amazon – cutting orders.
During the whole year of 2023, Gilimex’s net profit decreased by 92% and the operating cash flow recorded a record negative level (-319 billion VND).
According to the consolidated financial report for Q4/2023, Gilimex recorded revenue of over 230 billion VND, a 12% decrease compared to the same period last year. For the entire year of 2023, Gilimex recorded revenue of 936 billion VND and a net profit of 28 billion VND, a decrease of 70% and 92% respectively compared to 2022. The company only fulfilled 47% of its annual profit target.
Notably, after 3 consecutive quarters of losses, the company made a profit of 105 billion VND before tax in the fourth quarter mainly due to other income (nearly 101 billion VND) but not explained.
Gilimex
As of December 31st, 2023, Gilimex’s total assets reached 3,359 billion VND, a 16% decrease compared to the beginning of the year. Over 40% of the total assets are the company’s inventory, with a value of 1,364 billion VND. It is worth noting that the company has not set aside provisions for inventory depreciation despite a large amount of inventory for production serving canceled orders from Amazon.
Previously, at the company’s Annual Shareholders’ Meeting in 2023, Mr. Nguyen Viet Cuong – a member of the Board of Directors of Gilimex, said that there is about 800 billion VND of inventory related to Amazon after the company suddenly stopped orders. This inventory mainly consists of specialized products used only for Amazon.
Also at the Annual Shareholders’ Meeting, Mr. Nguyen Viet Cuong said that the company has not set aside provisions because it is waiting for the court’s conclusion on the lawsuit against Amazon and aims to completely resolve this inventory item, expected to be completed by the end of 2023.
In December 2022, Gilimex accused the US e-commerce giant Amazon of suddenly reducing orders after online spending growth cooled, causing the manufacturer to face excess production capacity and raw materials.
Gilimex claimed to be Amazon’s main partner from 2014 to 2022 and has invested millions of USD in manufacturing facilities to build storage warehouses for Amazon’s goods. These warehouses are transported by robots, speeding up the fulfillment of online orders.
The company, headquartered in Ho Chi Minh City, said it has recruited more than 7,000 employees at various plants to produce more than one million storage units per year. Production for Amazon has increased 20 times over the past 8 years.
Gilimex said it had a long-term agreement with Amazon regarding transparency about the expected demands to be able to purchase materials, adjust factory capacity, and arrange employees to meet Amazon’s increasingly strong growth during the pandemic. However, in April-May last year, Amazon “unexpectedly changed and reduced its expected demand” for the remaining period of 2022-2023.
According to Gilimex’s lawsuit, Amazon is its largest customer, with orders worth 146.6 million USD in 2021. Gilimex has declined orders from other large customers such as IKEA and Columbia Sportswear to meet Amazon’s demands.
“Therefore, while Amazon has achieved record revenue growth during the pandemic primarily due to the surge in consumer online ordering, Gilimex’s leaders and workers have risked daily to achieve that record in the literal sense,” the lawsuit wrote.
The lawsuit, valued at 280 million USD, between Gilimex and Amazon has not reached a conclusion yet.
