April 26, 2011

Thai Union Frozen on track to meet growth target

Thai Union Frozen Products PCL (TUF.TH) is set to achieve its sales growth target of 30% this year after a good first-quarter performance, President Thiraphong Chansiri said on Monday (Apr 25).

The company's full-year sales should reach its target of THB80 billion (US$2.66 billion) to THB90 billion (US$3 billion), said Thiraphong.

Thai Union, which also owns shrimp farms, suffered from a sharp rise in the cost of shrimp feed during the last quarter of 2010 and has reduced its forward positions in fixing the price of shrimp feed in a move to manage costs.

Thai Union's net profit fell 14% to THB2.87 billion (US$95.5 million) in 2010 as it was hit by high raw-material costs, the strong baht and expenses related to its takeover of MW Brands. In baht terms, sales rose only 3.6% to THB69 billion (US$2.3 billion).

The Thai firm will issue its first-quarter earnings for this year in May.

Thiraphong said the firm expects to make a decision by the middle of the year on whether to invest in bio-mass production in the Seychelles and Ghana. Value-added products that could be produced from bio-mass production include canned goods, powdered fish and fish oil, he said.

The firm aims to reduce the debt to equity ratio to an equal proportion from 1.6 times currently after its debt ballooned following the EUR680 million (US$988 million) takeover of French canned seafood company MW Brands, he said, adding that the firm will not be making any large investments over the next three years.

Thiraphong said the firm may issue bonds this year after its shareholders approved its plan to issue THB15 billion (US$500 million) worth of bonds. A final decision will depend on market conditions.

The company has THB3.2 billion (US$106.6 million) of bonds that will mature in June this year and THB9 billion (US$300 billion) in loans from local financial institutions, he said, adding its existing credit facilities will cover all the costs of repaying the maturing bonds even if it decides against issuing new bonds. Thai Union Frozen Products has an effective interest rate cost of around 5%.