Net profit of THB 1,016 million during the first quarter of 2020 was down 20.2% for Thai Union (TU) compared with Q1 2019 results, though year-on-year (YoY) sales grew by 5.9% to THB 31,103 million, the Bangkok-headquartered seafood company reported on May 5. The profit reduction was attributed to a foreign exchange loss of THB 262 million and lower equity income.
“While the baht depreciation against key currencies is usually good for export operations in the coming quarters, the currency depreciation normally causes foreign exchange losses in the immediate quarter,” stated Thai Union in its performance analysis.
The frozen sector (mainly shrimp) declined by 5.1%, while ambient seafood sales (primarily canned tuna and other fish) jumped 16.2%. Overall volume advanced 6.7% YoY, driven largely by the purchases of ambient seafood as consumers dialed up home cooking and dining due to restaurant closures and lockdowns around the world imposed by governments seeking to contain the coronavirus (SARS-CoV-2) pandemic.
While the spread of the deadly Covid-19 respiratory disease caused by the virus did not present raw material issues for the company’s supply chain efficiency during Q1, the contagion did impact frozen and chilled seafood sales – particularly in the United States and Thailand. This was partially offset by positive sales results in Japan and other Asian countries.
Red Lobster Restaurants Hit Hard
Thai Union’s performance in North America was hit hard by the closure of Red Lobster restaurants, which the company took a significant financial stake in during 2016. Dining rooms in all of the seafood chain’s 700-plus units continue to be closed due to social distancing dictates. However, 60% of the outlets are providing takeout service, with customers able to order limited offerings from a scaled down menu.
The USA remained Thai Union’s main market in the first quarter, accounting for 41.5% of business. Europe ranked second at 30.3%, following by the Thai domestic market at 11.1% and Japan at 5.2%. All other countries combined made up the remaining 11.9% share.
Brand vs. Private Label
Branded sales outgrew the private label business in Q1, with the mix at 45% and 55%, respectively. Total branded sales increased 12.4%, as European and US ambient business improved YoY.
Private label sales in the first quarter nonetheless posted marginal growth of 1.2%. While many foodservice customers reduced purchases, the segment sales decline was more than offset by private label activity.