April 4, 2012

 

Thai Union Frozen Products (TUF) expects a hefty revenue of US$5 billion for 2015, due to strong growth and merger and acquisition strategies, particularly in the US and European markets.

 

However, Wai Yat Paco Lee, the company's financial controller, yesterday said the company would maintain Thailand as its major production base and distribution centre for other countries, because of the Kingdom's good infrastructure, according to reports.

 

The company may consider expanding its business to other Asean member states, such as Burma and Cambodia, if those countries develop infrastructure to serve investment in the future, he said.

 

TUF expects sales of almost US$4 billion this year, which would be 15% above last year US$3.2 billion. An annual 15% increase is also targeted in the following two years.

 

Mr Lee said the company should grow strongly thanks to rising global demand for tuna and shrimp, which are its major products.

 

In spite of an economic slowdown in European markets, demand for canned and frozen seafood has not fallen as tuna and shrimp are considered to be cheap sources of protein, he added.

 

TUF expects significant growth of seafood-product sales in both price and volume terms. To achieve its growth target by 2015, the firm will strengthen its local corporate brand as well as expand to new markets benefiting from the Asean Economic Community's implementation, Mr Lee said.

 

The company has already invested in Indonesia and Vietnam.

 

However, under its current merger and acquisition plan, TUF will focus mainly on the European and US markets, as they have good infrastructure and strong demand for the company's products.

 

At present, more than 90% of TUF's production is for export. Major destinations are the US, which accounts for 36% of income, followed by the European market with 32%, Japan with 10% and Africa with 3%. Other overseas markets are Canada and countries in Oceania, Asia, the Middle East and South America.

 

Last year, 52% of TUF's overseas sales were from its own brands, up from 45% in 2010. By major product, 48% of sales were from tuna, up from 30% in 2010, and 24% from frozen shrimp.

 

Mr Lee said the government policy to raise the daily minimum wage would not affect the company, as it had already adjusted operations and increased production capacity two years ago.

 

As a large firm, TUF has achieved an economy of scale and relies more on machinery and technology. An increase in labour costs should not affect a business of TUF's size, but will affect small and medium-sized enterprises, he said.

 

Meanwhile, the company reported a net profit rise of 77% last year to THB5.075 billion (US$164 million).

 

TUF's share price increased by 12.5% in 2011, and has risen by 22.2% this year. The company expects to see a continued positive trend in its stock price, Lee said. Its shares closed at THB69.50 (US$2.24) yesterday.