Last updated on August 21st, 2024 at 07:19 am
โข Why It Matters: DODโs decision to close its hemp-cannabis extraction plant marks a significant pivot in the companyโs strategy, reflecting broader challenges within the cannabis industry in Thailand.
โข Driving The News: The company aims to cut losses and refocus on core businesses, including investments in new machinery for supplementary products.
โข What To Watch: Future developments in DODโs restructuring efforts and how it impacts the broader cannabis market in Thailand.
CHIANG MAI, THAILANDโDOD Biotech Public Company Limited (DOD) has announced the closure of its subsidiary, Siam Herbal Tech (SHT), which operated a hemp-cannabis extraction plant. The decision comes as DOD seeks to mitigate losses that averaged 13 million baht per quarter. Acting CEO TORLAP CHAICHAOEN confirmed that the company will now focus on its core business, including investments in innovative machinery to support the production of supplementary products.
DODโs restructuring led to a one-time expense of 49.25 million baht in the second quarter, reflecting inventory impairments that reduced the gross profit margin. However, the normalized gross margin showed an increase, indicating potential profitability despite the plant closure.
Additionally, the suspension of SHT operations incurred a one-time cost of 142.63 million baht. If adjusted, DODโs financials shift from a reported loss to a modest profit, suggesting the companyโs strategy might be effective in stabilizing its future performance.
DODโs restructuring strategy involves terminating operations of consistently loss-making subsidiaries, leaving only those with growth potential. The company has also invested in new machinery, such as a high-capacity gummy production machine, which is expected to generate significant revenue in late 2024.
The second half of 2024 looks promising for DOD as the company targets 250-300 million baht in sales from its core business and an additional 150 million baht from its retail arm, Auswelllife. DOD expects its performance to normalize by the end of the year.
Contributing Sources: Money & Banking
