TUF to beat 2010 profit forecast

Thai Union Frozen Products (TUF), the world's largest canned tuna producer, expects a record net profit this year that will beat analysts' forecasts, helped by recovering demand and expanding margins.

The company expects earnings this year to exceed 2009 when the company posted its highest profit since going public in 1994, said TUF President Thiraphong Chansiri. As wealthy regions like the US and Europe rebound from the financial crisis, their appetite for Asian frozen seafood is recovering fast, he said.

Thiraphong added he was keen for acquisitions after setting up three joint ventures last year in Japan, India and Papua New Guinea. Sales at supermarkets have been great so far and hopes to be able to keep gross margins at around 15%, he said.

Despite flat sales and one-off, pre-tax expenses from a plant relocation to Georgia, TUF's 2009 net profit more than doubled to a record high thanks to a good catch of tuna that lowered raw material costs. Tuna accounted for 44% of TUF's sales last year.

This year, the company was likely to report a 4.6% rise in net income to THB3.5 billion (US$108 million), according to analysts. In Asia, TUF is the largest frozen seafood processor outside of Japan, competing with local peers including Charoen Pokphand, Seafresh and GFPT.

Meanwhile, TUF's shares are up 18% this year, more than double the 6.2% climb in the broader index. But analysts said TUF does not look expensive compared with its regional peers, partly a reflection of broad underperformance in Thailand's overall stock market.