March 14, 2014

Thai Union targets US$4 billion sales in 2014

 

 

 

Thai Union Frozen Products, the world's largest canned tuna producer, aimed for sales of US$4 billion in 2014, up 9% from 2013, with an estimated gross profit margin of at least 14%.

 

Thai Union, which owns the Chicken of the Sea, John West and Petit Navire brands, plans to invest THB3.5 billion (US$108 million) this year, mostly to improve production, Wai Yat Paco Lee, head of investor relations, told reporters.

 

In its recent annual results for 2013, Thai Union re-iterated its description of 2013 as the "year of the perfect storm" for the company, as it unveiled strong drops in its profit for the year, despite record annual sales.

 

The company's earnings before interests, taxes, depreciation and amortisation (EBITDA) dropped by a fifth (19.9%) on-year to THB7.886 billion (US$242 million).

 

The decline was due to rising shrimp raw material prices, the early mortality syndrome (EMS) wiping out crops in Asia, and volatile tuna prices. The company also suffered losses in its US pet food division.

 

Net sales were slightly up thanks to higher shrimp prices. They rose 5.7% on-year to THB112.8 billion (US$3.663 billion), a new record for the company, said Thai Union. In US dollar terms, sales grew 6.4% on-year, it said.

 

In the last quarter of 2013, Thai Union saw its shrimp business return to profitability, as the company reported a 62.9% on-year increase in fourth quarter earnings before interest and taxes (EBIT).

 

The company reported fourth quarter EBIT of THB1.66 billion (US$51.02 million), compared to THB1.02 billion for fourth quarter of 2012. Thai Union's turnover for the quarter was THB30.78 billion (US$952 million), up 17% on-year.

 

The company's shrimp business, which generated THB24.77 billion (US$766 million) in 2012, 23% of its annual sales of THB112.81 billion (US$3.66 billion) - has found measures to be profitable, despite losing money in the first half as EMS hit Thai farmed production.

 

Thai Union said it was losing money in shrimp in the first half, but the gross profit margin is back in the black since third quarter, because of price adjustments up, increased imports of raw materials to fill capacity, cost cutting and a productivity-boosting programme.