Thai Union Sales Rise, Net Profit Falls in Second Quarter
The Thai Union Group has posted a 1.2 percent year-on-year sales increase for the second quarter of 2017 to THB 34,818 million, despite significant currency exchange fluctuations and variable market conditions. The Bangkok-headquartered company reported consolidated net profit of THB 1,411 million, down 7.6 percent from the same period last year.
The second quarter gross profit declined 14.5 percent from a year earlier to THB 4,669 million, while the gross profit margin was 13.4 percent compared to 15.9 percent in 2Q16.
Higher raw material prices, particularly for tuna, along with multiple European currency depreciations, contributed to the weaker margin.
Among Thai Union’s three major businesses, the frozen and chilled seafood sector expanded 6 percent year-on-year, with sales contribution at THB 13,944 million. In 2016, sales of this category amounted to THB 55.8 billion, representing 42 percent of the group’s total. Shrimp is the most important product in this category, followed by lobster and crab.
PetCare and Value-Added product sales in 2Q17 grew the most at 12.9 percent year-on-year to THB 4,502 million, due to new product launches and improved market penetration.
Ambient business sales, however, fell 2.8 percent from the same period last year to THB 16,371 million. This was due mainly to sluggish demand and currency depreciations in Europe, coupled with rising tuna prices.
First Half Sales, Profit Up
For the first half of 2017, Thai Union posted a net profit of THB 2,880 million, improving 4.4 percent year-on-year, with sales totaling of THB 66,244 million, up 1 percent from the year before.
The sales contributions from Thai Union’s own brands remained stable at 43 percent in the first half, with the balance coming from the company’s private label and foodservices sales. The United States remained the largest market with 38 percent of total sales in the first six months, followed by Europe at 33 percent, the Thai domestic market at 8 percent, Japan at 6 percent and other markets at 15 percent.
Red Lobster Results Solid
Despite operational seasonality, its stake in the Red Lobster restaurant business in the United States remained strong and contributed THB 235 million to the net profit in the second quarter of this year, mainly from tax savings and interest yields.
With stringent cost control, the second quarter expenses on selling and administration fell 9.6 percent year-on-year to THB 3 billion. The net debt to equity ratio improved to 1.33 from 1.37 at the beginning of the year, following improved cash management efforts.
“We’re satisfied with our operational resilience despite facing persistent challenges in higher raw material costs and variable economic conditions in many markets,” said Thai Union Group CEO Thiraphong Chansiri. “Our strategic investment in Red Lobster and effort in cost control continue to deliver positive results.”
Meanwhile, in June Thai Union launched its annual Sustainability Report, publicly detailing the company’s performance from January through December 2016 against key performance indicators and targets outlined in SeaChange, the company’s sustainability strategy. The report, which can be downloaded here, details how Thai Union’s strategic approach to sustainability is transforming the way the seafood industry operates worldwide.
“Thai Union has fully embraced its role as a leader for positive change as one of the largest seafood companies in the world,” said Chansiri. “Looking forward, we will continue to make progress and maintain an unceasing focus on leveraging its leadership position and collective strengths to face down and resolve the sustainability challenges that confront the industry.”