October 28, 2008


TUF likely to post strong Q3 results

Thai Union Frozen Products (TUF) is forecast to perform strongly in the third quarter, with earnings surging 77 percent on-year to THB 736 million (US$21 million).


Continued sales growth, a weaker baht, and more efficient cost controls are expected to prompt a higher gross margin increase of between 13.4-14.3 percent from last year's third quarter.


Sales have soared 28 percent on-year to THB 17,621 million, with tuna, shrimp and pet food enjoying a combined sales growth of over 80 percent. This is attributed to the expansion into new markets, new products and price adjustments along with rising raw tuna prices. A peak average tuna price in the third quarter reached US$1,905 per tonne, up 31 percent on-year.


TUF is expected to receive little impact from the global economic slowdown, as the company sells necessity food products, and the tuna is a prime inexpensive food in the US. In a worst case scenario, TUF expects sales of branded products to fall 10 percent, but OEM sales are projected to continue stimulating growth.


Falling oil prices have pushed down tuna prices from a peak of US$1,950 per tonne in June to the current US$1,700 per tonne. Prices are likely to fall further in accordance to the lower oil prices. TUF expects higher sales volume in OEM products following lower sales prices after the tuna price decline.


TUF's normalised profit this year is expected to reach THB 1,745 million or 6-percent growth, and a 14-percent increase to THB 1,983 million for 2009.


US$1 =  THB 34.7850 (October 28, 2008)