Thai Union's 3Q16 sales rise 7.7% to record US$1 billion quarter
Thai Union Group PCL reported a 7.7% on-year rise in 2016's third quarter consolidated sales to a record THB35,128 million (US$1 billion).
It is the second consecutive quarter of record sales.
Gross profit declined by 12.4%, while the gross profit margin was 14.1%, compared to 17.3% as reported in 3Q15. Continued high salmon raw material prices and higher than expected tuna prices contributed to the weaker margin, while moderate foreign exchange "losses of THB30 million (US$858,400) were recorded. This was partly offset by stringent cost controls with 3Q16 Selling, General and administration to sales ratio coming in at 8.7%, the lowest level in four years as well as some positive one-time effects. As a result, net income remained stable with only 1.9% year-on-year reduction to THB1,594 million (US$46 million).
During the first nine months of 2016, sales in the US continued to play an important role in the company's revenue, accounting for 39% of total sales year-to-date. Thailand's domestic market accounted for 8% of total sales, while Europe contributed 33% of sales, widening from 29.4% in full-year 2015. Japan sales contributed 6% of total sales.
Thiraphong Chansiri, CEO of Thai Union Group noted: "This quarter clearly shows that demand for our products is strong despite a challenging market for raw materials and continued difficult economic conditions in various markets around the world. We were able to deliver a very solid bottom line despite tighter market conditions."
In the first nine months, the sales contribution from Thai Union's brands remained stable at 43% year-to-date, with the balance coming from the company's private label sales. 3Q16 sales for the frozen and chilled seafood business rose to THB 15.1 billion (US$432.1 million), up 14.7% over the same period last year. The increase in sales volume was due to the Chez Nous acquisition during the third quarter, improved domestic shrimp exports, and the consolidation of Rügen Fisch in Germany. PetCare and Value-Added sales surged to THB5,257 million (US$150.4 million), an increase of 28.3% year-over-year.
In October, Thai Union made a US$575 million strategic investment in Red Lobster, the world's largest seafood restaurant chain, for a 25% equity stake and 10-year convertible preferred units of another 24%. The investment was well received by Red Lobster management and employees, in addition to positive response from industry analysts. Additionally, Thai Union acquired a minority interest of 18% from its subsidiary Chicken of the Sea Frozen Foods. Thai Union now holds 100% of the company.
Recently, Thai Union was short-listed for the Thomson Reuters Foundation's inaugural Stop Slavery Award, in addition to being named to the Dow Jones Sustainability Indices for the third consecutive year.