The Bangkok-headquartered Thai Union Group on August 11 reported a net profit of THB 1,716 million in the second quarter of 2020, an increase of 1.44 percent compared to the like period last year. Q2 sales reflected a 2.6 percent increase year-on-year to THB 33,051 million.
Overall, the first six months of 2020 saw the highest revenue growth in three years, with total sales of THB 64,154 million, up 4.2 percent year-on-year. The value-added seafood company plans to pay out an interim dividend of THB 0.32 per share, an increase of 28 percent compared to the 2019 interim dividend of THB 0.25.
Profitability and cost control continued to improve across the business, with record high operating profit in the second quarter at THB 2,366 million, while the company’s SG&A ratio reached 11.1 percent, with a debt-equity ratio of 0.96. Thai Union posted a quarterly gross profit margin of 18.2 percent, the highest level in three years. Strong operation profitability, prudent inventory management and strong cash conversion contributed to the free cash flow for the quarter of THB 5,609 million.
“Covid-19 has presented enormous challenges to companies all around the world, both short-term and long-term. It has also led to increased demand for seafood products in many parts of the world, with a corresponding effect on our sales and global supply chain,” said CEO Thiraphong Chansiri (pictured above). “We continue to focus on stringent health and safety measures for all of our people and our business operations to respond to this global pandemic. Amidst continued increasing global demand for seafood, we will keep working hard to ensure business continuity and maintain production capacity in order to deliver quality products to our customers and consumers.”
Ambient Product Sales Drive Growth
Sales growth in the second quarter was driven by strong performance from the ambient product business, which recorded a 16.8 percent increase in revenues to THB 16,394 million and a 29.6 percent increase in sales volume to 101,136 tons, as consumers stocked up on food supplies in response to novel coronavirus (SARS-CoV-19) pandemic.
The frozen, chilled seafood and related business logged a sales decline 14 percent to THB 11,554 million, and a sales volume decrease 10.5 percent to 61,284 tons due to the impact of the Covid-19 lockdown on hospitality and foodservice sectors around the world.
PetCare, value-added and other business sales increased 7.5 percent to THB 5,103 million on the back of increasing volumes, attributable to a stronger focus on higher margin products.
By region, North America contributed 42 percent of total sales, followed by Europe at 30 percent, the Thai domestic market at 10 percent, and other markets at 18 percent.
Boost in Russian Joint Venture Stake
In other news on August 11, Thai Union announced an increase in its holdings in TUMD Luxembourg Sàrl through its Luxembourg subsidiary Thai Union EU Seafood 1 SA. TUMD acts as the joint venture vehicle for Thai Union investments in three Russian companies: Dalpromryba LLC, Maguro LLC and Torgovo-Promyshlenny Komplex Dalprombryba
Since 2018, Thai Union EU Seafood has held 45% of the share capital and voting rights of TUMD, with the remaining 55% held by MDF Investments Ltd (MDF). Following this transaction, Thai Union EU Seafood will hold a further 45%, bringing its total share and voting rights to 90% of the company. MDF will remain a 10% shareholder.
Thai Union Europe President Paul Reenan commented: “We have focused on growth and fully unlocking our potential, and this transaction is a key part of our roadmap of continued expansion. We’re pleased to be further consolidating our business in Russia and continuing our work in the country.”
Alexander Panin, director MDF Investments Ltd., added: “This transaction will help TUMD reach the next level of growth and we look forward to continuing to work with Thai Union as we enter the next phase for the company.”