August 10, 2011


TUF expects net profit to rise 30%



Thai Union Frozen Products Pcl (TUF) expects its net profit to rise almost 30% in 2011 due to cost controls and higher sales on the back of strong demand.


TUF, owner of the "Chicken of the Sea" tuna brand, expected second-half sales to be slightly higher than the first half's US$1.56 billion, which should enable it to exceed its 2011 target of US$3 billion, Thiraphong Chansiri told Reuters in an interview.


"Our first-half net profit rose 17% because the first quarter was not that good, but we had a very strong second quarter. We should see growth of almost 30% for the whole year," Thiraphong said.


Second-half sales would account for about 55% of total sales, he said, adding he did not expect any negative impact from its shrimp business, which was hit by higher raw material costs last year.


"Now we have no costs from the acquisition of MW Brands and it's our policy to control costs, while raw material prices are not too volatile," he said, adding 2011 sales in both dollar and baht terms should rise at least 40%.


TUF became the world's biggest seafood firm after acquiring MW Brands Holdings SAS, a French-based firm with brands such as John West and Petit Navire, for US$884 million in 2010.


Last week TUF reported a 42% rise in second-quarter earnings as the consolidation of MW Brands boosted sales and profitability.


"Third-quarter sales in dollar terms will be close to the second quarter because tuna material prices should be stable and it is entering the high season," Thiraphong said.


According to Thomson Reuters I/B/E/S, TUF is expected to report a 39% rise in 2011 net profit to THB4 billion (US$1,341,831). Its first-half net profit rose 17% to THB1.99 billion (US$637370).


Thiraphong said TUF aimed for net profit to reach THB5 billion (US$167 million) in 2015, when revenue should reach US$4 billion with average sales growth of at least 10% a year.


Demand for tuna products remains good, unaffected by economic problems in Europe and the United States because its products are affordable for consumers, he said.


The US market accounts for 36% of TUF's sales, 34% goes to Europe and 9% each to Japan and Thailand.


Tuna prices are expected to average US$1,700 a tonne this year, up from US$1,300 last year, and sale prices will be adjusted to reflect higher costs, he said.


The company expected a 2011 net margin of 4.5-5%, up from 3.9% last year, and it aimed for an average of 5% or higher in the next two years when its interest costs would be reduced, Thiraphong said.

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