1Q17 Results Presentation · 2017-05-09 · 1Q17 Results Presentation May 2017. Page 2 The...

1Q17 Results PresentationMay 2017

The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance.

These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that the our assumptions are correct. Actual results may differ materially from those projected.

Disclaimer

Key Highlights

Recent Developments

1Q17 Financial Results

2017 Business Outlook

Agenda

“Through organic growth, innovation

and M&A efforts, we are committed to

the USD 8.0bn revenue target by 2020.”

Thiraphong ChansiriPresident and Chief Executive Officer

1Q17: Weaker operation YoY offset by investments and FX

GP

NP

4,330

1,469

Sales(THB mn)

31,427 +0.7%

YoY Chg % of sales

-13.3% 13.8%

+19.3%

OP881 -45.0% 2.8%

4.7%

Stable quarterly sales. 1Q17 sales growth

marginally improved from the previous year due

mainly driven by a product repricing from

increased raw material prices

Rising raw material prices. Gross profit margin

remain under pressure at 13.8% resulted from

both a seasonality factor and a sharp year-over-

year increase in raw material prices and

European currencies depreciation

Prudent cost control. Due to the stringent cost

control, 1Q17 SG&A expenses were increased

by 1.6% YoY.

Net profits improved 19% YoY, supported by a

equity income contribution from Red Lobster

investment, FX gains from THB appreciation

devaluation against USD during 1Q17, lower

minority expenses due to minority stake buyout

since 3Q16 and lower effective tax rate.

Remark: Operating margin = (COGS – SG&A)/sales

+3.5% without currency impact

1,231

2,946

1,602

4,996

1,469

2,899

881

4,330

Financial Summary1

(THB million)

31,427

31,210

1Q17 Net Profit

up 19.3% YoY to

THB 1,469million

Strong cash flow support

solid financial strength

Share price movement

20162

(Jan- Dec 16 )

+24.3%

20172

(Jan- May 5,17 )

+4.3%

2016

1.37x

1Q17

1.34x

1Q17 Net profits up 19.3% YoY

Gross Profit

Total Sales

EBITDA

1Q17

1Q16*

-13.3%

-45.0%

+19.3%

Q1’12

Q1’11

Net Profit

-1.6%

+0.7%

Source: 1TU; 2SET (Jan 4’16: THB16.9/share and Dec 30’16: THB21.0/share, Jan 4’17: THB21.1/share and May 5’17: THB22.0/share)

*The 1Q16 figures were restated mainly due to reclassification of fishing fleet discontinued operations

Operating Profit

1Q17

1Q16*

1Q17

1Q16*

1Q17

1Q16*

1Q17

1Q16*

1Q17: Continued overall resilience to operational dynamic

28,606 30,642

32,602 33,333 31,210 34,441 35,128 33,597

31,427

13.8%

16.9%17.3%

14.2%16.0% 15.8%

14.1% 13.6% 13.8%

5.3%4.3%

5.0%

2.3%

3.9% 4.4% 4.5%

2.7%

4.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

1Q15 2Q15 3Q15 4Q15 1Q16* 2Q16 3Q16 4Q16* 1Q17

Total sales (THB mn) GPM NPM

% GrowthYoY

Sales 2.4 1.3 7.2 1.7 9.1 12.4 7.7 0.8 0.7

Grossprofit

-5.2 6.3 7.4 3.9 26.6 4.5 -12.4 -3.5 -13.3

Net profit 58.7 -7.2 -23.9 8.5 -19.0 16.9 -1.9 19.1 19.3


*The 1Q16 and 4Q16 figures were restated mainly due to reclassification of fishing fleet discontinued operations

Key Highlights

Recent Developments



Agenda

16 Jan 17: TU hosted a Thank You

party for broker analysts, investors

and bankers to thank them for their

support on financing activities and

being a potent intermediary to the

financial community

Recent developments Recognitions

24 March 17: TU won accolades in multiple categories at the annual

Finance Asia awards including #1 Best managed company in Thailand, #1

Best CEO in Thailand, #1 Best CFO in Thailand in a poll conducted. TU

received largely positive feedback from portfolio managers and buy side

analysts who had participated in the poll

Award

25 April 17: TU finance team has won awards for The Best Treasury

Team of the year from the Asset magazine and for best cash

management solutions along with our banker Kasikornbank. This comes

within a year of us setting up our global treasury in Bangkok

Award

7 April 17: TU launched its much

awaited e-commerce platform and

frozen food Brand Q-fresh in

Thailand.

https://www.qfreshshop.com

6 March 17: TU welcomed a

group of investors from CLSA

ASEAN forum to our Global

innovation incubator to educate

investors on GII’s background,

objectives and operations

IR Activity IR ActivityLaunch

April 17: TU launched Tuna

products in Germany under the

Rügen Fisch brand

Launch

Recent developments

Thai Union won 6 major awards at the 17th Annual Finance Asia poll. The poll, which includes portfolio managers and buy-

side analysts has awarded the company for its policies on corporate governance, senior executives and company

management. The awards which TU received are-

#1 Best Managed Company in Thailand

#1 Best CEO in Thailand: Thiraphong Chansiri, Thai Union

#1 Best CFO in Thailand: Joerg Ayrle, Thai Union

#1 Best at Investor Relations in Thailand

#1 Best at Corporate Social Responsibility in Thailand

#1 Most committed to corporate governance in Thailand

Recent developments

Caption: Mr. Rittirong Boonmechote(Centre), President of Global Frozen

and Related business during the launch of Qfresh brand in Bangkok

Thai Union launched its domestic frozen food brand “Qfresh” along with its much awaited e-commerce platform

www.qfreshshop.com. The brand enables Thai consumers and foodservice operators to order high quality seafood

including Atlantic Salmon, Shrimp, Chilean Seabass and Squid directly to their doorstep through the platform. This is the

first frozen seafood brand introduced by Thai Union into the Thai market

Proposed final dividend for the period: 1 Jul 16 to 31 Dec 16

DPS THB 0.31 (Full year DPS: THB 0.63)

XD 6 March 2017

Book closing date 9 March 2017

Payment date 20 April 2017

Stable dividend payment despite operational headwinds

Remark:

* The company changed the par value from THB 1 to THB 0.25 and registered with the Ministry of Commerce on 25 Dec 2014.

Hence, dividend per share has been revised retroactively to reflect the par change of THB 0.25.

0.30 0.28 0.28 0.32 0.48 0.40 0.39 0.53 0.38 0.54 0.63 0.32

0.31

50.1% 50.4%53.5%

50.6% 50.7% 50.0%

29.4%

51.3%

59.9%

50.5% 51.3%57.2%

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 2016

THB/Share

DPS (LHS) Payout Ratio (RHS)

Key Highlights

Recent Developments

1Q17 Financial Results TU’s Consolidated Results Results by Business Unit


Agenda

“Despite challenging operating

environment, we remain committed to

deliver solid growth and enhance

our shareholders’ value.”

Joerg AyrleGroup Chief Financial Officer

High tuna prices(+30.0% YoY, +8.3% QoQ)

• Difficulty to pass on price increases to consumer

• Competitive pressure in the private label business

High shrimp prices(+13.8% YoY, +16.9% QoQ)

• Rapid increase in shrimp price put pressure on profit margin

High salmon prices(+14.7% YoY, -1.1% QoQ)

• Salmon re-pricing enable second consecutive quarter of

positive gross margin

• Due to significant re-pricing, the volume sales was affected

Exchange rate volatility• Baht appreciation hurt competitiveness of Thai exports

• Euro and GBP depreciation induce consumer price inflation

• Exchange volatility affect the accounting translation

Political dynamics• New government in the United States

• Continued challenge after the Brexit

The headwinds during 1Q17

1Q17: Continued overall resilience to operational dynamic

28,606 30,642

32,602 33,333 31,210 34,441 35,128 33,597

31,427

13.8%

16.9%17.3%

14.2%16.0% 15.8%

14.1% 13.6% 13.8%

5.3%4.3%

5.0%

2.3%

3.9% 4.4% 4.5%

2.7%

4.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

1Q15 2Q15 3Q15 4Q15 1Q16* 2Q16 3Q16 4Q16* 1Q17

Total sales (THB mn) GPM NPM

% GrowthYoY

Sales 2.4 1.3 7.2 1.7 9.1 12.4 7.7 0.8 0.7

Grossprofit

-5.2 6.3 7.4 3.9 26.6 4.5 -12.4 -3.5 -13.3

Net profit 58.7 -7.2 -23.9 8.5 -19.0 16.9 -1.9 19.1 19.3


*The 1Q16 and 4Q16 figures were restated mainly due to reclassification of fishing fleet discontinued operations

Resilient sales growth • Sales +0.7% YoY, due to soft demand and weak currency

• At constant exchange rates, sales would have increased by

3.5%

A weaker GPM from high raw

material prices

• High tuna and shrimp prices putt pressure on profit margin

• European salmon business product re-pricing prompt two

consecutive quarter of positive GP

Prudent cost control • SG&A expenses rose only 1.6% YoY

Well-managed non-operating

items

• Prudent foreign exchange policy allow TU to record FX gains

THB 590m and benefited from Baht appreciation

• Fishing fleet operational improvement thanks to fish price

increase and operation improvement

Strong contribution from Red

Lobster• RL contributed THB 224mn during Q117, from both share of

profits and interest income

The key take away for 1Q17 results

Red Lobster operational seasonality

1Q17 4Q16

Share of profit

Other Income

Finance Costs

Income Tax

Net Income

EPS (Bt/sh)

THB mn

203

261

-118

-127

-113

224

240

-102

39

59

0.047 0.012

• Red Lobster is very dependent on guest footfall

development, and seasonality play crucial parts

in driving guest counts, such as:

• Lent period provide strong traffic

• Fall traffic is generally weaker due to “back

to school” season

• Promotion help Red Lobster take advantage of

the peak traffic and smooth out the impact of the

low season, as there is a substantial seasonality

in the business

Q1 Q2 Q3 Q4

Seasonality

Average Fluctuation

Lent Period Christmas & NYE

4. Labor Waste Reduction

Red Lobster has initiated Cross

training, cross scheduling, reducing

shift change overlap amongst others

with an aim to reduce labor waste by

10-15%

Strong initiatives at Red Lobster

1. Kitchen of the Future

Positive results from kitchen of the

future initiative. Adopted to

streamline product offerings/ process

resulting in fresher, faster, better food

with lower labor costs and waste

2. RL’s Signature Events

Growing sales and positive feedback

from customers on RL specialty events

like LobsterFest, Endless Shrimp,

CrabFest & SummerFest

3. Smart PR Activity

PR has generated > 2.7 Billion media

impressions. Largely positive PR

reported with the likes of Beyonce,

Tyrese Gibson endorsing RedLobster. RL

Rewards programme a hit amongst

regular customers

5. International Expansion

Actively developing entry strategy to

key overseas markets including Asia to

drive growth

USD mn 948

31,21034,441 35,128 33,597

31,427

1Q16* 2Q16 3Q16 4Q16* 1Q17

SalesTHB mn

1Q17 A stable sales trend

1Q17 sales grew by 0.7% YoY to THB 31,427mn

(up 2.8% YoY in dollar term to USD895mn), driven

by:

Ambient seafood business was facing difficult

business environment from sluggish demand

in Europe and European currencies

depreciation against Thai Baht, resulting in

lower revenue during the quarter

Chilled and frozen product re-pricing

significantly to reflect an increase in shrimp

and salmon raw material prices

PetCare business continued to show strong

growth in light of new product launches and an

improved market penetration

Weak sales growth in Thai Baht term was partly

due to YoY Baht appreciation against US Dollar

during 1Q17.

112,813 121,402 125,183

134,375

31,210 31,427

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2013 2014 2015 1Q16* 1Q17YoYGrowth 5.7% 7.6% 3.1%

895871 976

+0.7% YoY

-6.5% QoQ

1,009

7.3%

3,8033,716USD mn

Remark: *The 1Q16 and 4Q16 figures were restated mainly due to reclassification of fishing fleet discontinued operations

+0.7% YoY

1Q17 resilient sales growth, hindered by the FX impactRevenue growth component(THB million)

Remark: 1Shrimp & related business comprises of frozen shrimp and shrimp feed. 2Value-added & other products includes ready-to-eat products, frozen cephalopod, canned seafood, local products, bakery products, and

sales of scraps

1Q16 1Q17

USD mn

895870

+0.7% YoY

+2.9% YoY

Before currency impacts

31,42731,210

-320

+538

+7%

+909-722

-23

-457

-6% +14%

+15%-5%

-1%

Tuna Shrimp

& related

business1

Sardine

&

Mackerel

Salmon Pet

Care

Value

added

& other

products2

-22%

-2%

-237

USD

effect

EUR

effect

+208

Lobster

+14%

+320

Brand, 36%

**FS - Brand, 6%

**FS - Private Label, 6%

Private Label, 52%

Stable branded sales mix amid foreign currency volatility

Sales Breakdown by Business

Sales Breakdown by Geographic

Lower sales contribution from the European

markets to 31% (from 33% during 2016) was

driven by significant Thai Baht appreciation

against European currencies during 1Q17.

US sales contribution improved to 40% (from 39%

in 2016) from improved sales and strengthening

relationship with Red Lobster.

1Q17 branded and private label sales mix

remained largely stable compared to 2016 with

the branded sales contributing 42% of 1Q17 sales

and the balance from the private label sales mix.

1Q17 total branded sales marginally declined by

1.7% YoY, mainly due to the European currencies

depreciation against Thai Baht putting pressure

on European branded sales.

On the other hand, private label sales reported

strong growth of 2.5% YoY, mainly driven by

selling price adjustment.

Remark: *Others represent Asia, Australia, Middle East, Canada, Africa and South America

**FS stands for Food Service

40% 44% 42% 39% 40%

30% 29% 29% 33% 31%

7% 7% 8% 8% 8%8% 7% 6% 6% 6%

14% 13% 14% 13% 14%

0%

20%

40%

60%

80%

100%

2013 2014 2015 2016 1Q17

Others*

Japan

Domestic

Europe

USA

THB 31,427mn

1Q17

Brand, 37%

**FS - Brand, 4%

**FS - Private Label, 8%

Private Label, 50%

THB 134,375mn

2016

GPM 12.6% 15.7% 15.6% 14.8%

YTD 16.0% 13.8%

14,222

19,020 19,501 19,927

4,996 4,330

-

5,000

10,000

15,000

20,000

25,000

2013 2014 2015 1Q16* 1Q17

-13.3% YoY

4,996 5,4284,937

4,565 4,330

16.0% 15.8%

14.1%13.6% 13.8%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

1Q16* 2Q16 3Q16 4Q16* 1Q17

Gross margin under pressure from high raw material pricesGross ProfitTHB mn

1Q17 Gross profit of THB 4,330mn, down 13.3%

YoY, driven mostly by raw material prices

volatility and currency appreciation YoY

1Q17 margin was at 13.8%, down 223bps YoY.

The margin remain under pressure due to:

Rising raw material prices (1Q17 tuna raw

material price +30.0% YoY and shrimp price

+13.8% YoY) affect gross margin of key

businesses, particularly in European market

THB currency appreciate against European

currencies and USD, YoY

But the negative impact was partly offset by:

1Q17 European chilled smoke salmon business

gross profits has turned positive from negative

in 1Q16.

PetCare business still report both strong sales

growth and margin improvement YoY

-13.3% YoY

-5.2% QoQ

GPM


Operating profit: Prudent cost controlOperating ProfitTHB mn

1Q17 Operating profit of THB 881mn, up down

45.0% YoY, driven mostly by a weak gross margin

during the quarter

Due to stringent cost control, 1Q17 SG&A

expenses was up by 1.6% YoY to THB 3.4bn.

Ratio-wise, the SG&A to sales ratio was 11.0%

(stable from 10.9% during 1Q16), driven by both

THB appreciation and weak sales growth

compared to the same quarter last year

SG&A to sales ratio is above our full year target

of 10%, which is mostly attributed to seasonality

factor that normally put pressure on the first

quarter of every year

1,602

2,0621,872

1,270

8815.1%

6.0% 5.3%

3.8%

2.8%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

1Q16* 2Q16 3Q16 4Q16* 1Q17

-45.0% YoY

-29.7% QoQ

3,988

6,990 6,785 6,805

1,602 881

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2013 2014 2015 1Q16 1Q17

OP Margin

-45.0% YoY

OPM 3.5% 5.8% 5.4% 5.1%

YTD 5.1% 2.8%


EBITDA

Margin9.2% 7.0% 9.1% 9.2%

YTD 9.4% 9.2%

Stable EBITDA supported by investments and FX gainsEBITDATHB mn

2,9463,181

2,917

2,094

2,899

9.4% 9.2% 8.3%

6.2%

9.2%

3.0%

8.0%

13.0%

18.0%

23.0%

28.0%

1Q16* 2Q16 3Q16 4Q16* 1Q17

-1.6% YoY

+38.5% QoQ

9,823

7,867

10,999 11,526

2,946 2,899

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2013 2014 1Q16* 1Q17

-1.6% YoY

Despite a weak operating profits, TU reported

1Q17 EBITDA of THB 2,899mn, down 1.6% YoY.

The stable EBITDA YoY was supported by interest

income and equity profits contribution from an

investment in Red Lobster and an FX gains of

THB590mn from strong Baht appreciation against

key currencies during 1Q17.

EBITDAMargin


Net profit: Strong growth supported by investments and FX impact

Net ProfitTHB mn

1,231

1,527 1,594

902

1,469

3.9%4.4%

4.5%

2.7%

4.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1Q16 2Q16 3Q16 4Q16 1Q17

+19.3% YoY

+62.8% QoQ

2,853

5,092 5,302 5,254

1,231 1,469

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2013 2014 2015 1Q16 1Q17

+19.3% YoY

NPM

1Q17 net profit of THB 1,469mn, up 19.3% YoY,

The increased net profit was driven by:

Positive income contribution from a strategic

investment in Red Lobster, both from interest

income and positive equity income,

Baht appreciation against US Dollar boosted FX

gains during the quarter,

Lower minority interest expenses from minority

stake buyout of US business in 3Q16,

Lower tax expenses from a weak business

performance in European market,

Soon-to-be discontinued fishing fleet operation

has improved due to high tuna prices YoY.

However, the aforementioned gains were partly

offset by higher interest expenses as a result

from higher interest-bearing debt as a result of a

multiple investments made during 2016

NPM 2.5% 4.2% 4.2% 3.9%

YTD 3.9% 4.7%

Normalized net profit of THB 1,052mnNormalized Net ProfitTHB mn

Norm NP

Margin

Excluding the one-off quarter-end items, 1Q17

normalized net profit was at THB 1,052mn, stable

YoY.

One-off positive items during 1Q17 of THB 417mn

comprised of:

Profits from soon-to-bed disposed fishing fleet

operation (THB 36mn)

Accounting adjustment (-THB 75mn),

Unrealized FX gains (THB 476mn),

Tax adjustment (-THB 20mn)

We have signed an MoU to dispose the loss-

making fishing fleet business, the transaction of

which is expected to be completed within 1H17.

Remark: The normalized net profit still include the realized FX gains/losses from normal business operation

1,083

1,446 1,384 1,423

1,052

3.5% 4.2% 3.9% 4.2% 3.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

1Q16 2Q16 3Q16 4Q16 1Q17

-2.9% YoY

-26.1% QoQ

1,469 +75-79

1,052

Fishing fleets DO

Accounting adjustment1Q17

Reported NP1Q17

Normalized NP

Unrealized FX gain

Tax adjustment

-476

+20

-36

0.98

0.60

1.07 1.11

0.26 0.31

2012 2013 2014 1Q16 1Q17

EPS: Keeps momentum despite operational headwinds

EPS*THB

0.26

0.32 0.33

0.19

0.31

1Q16 2Q16 3Q16 4Q16 1Q17

+19.3% YoY

+62.8% QoQ 1Q17 EPS was at THB 0.31, up 19.3% YoY and

62.8% QoQ, in line with the net profit

improvement

Remark: *EPS in this slide represents fully diluted EPS based on current number of shares of 4,771,815,496

+19.3% YoY

9,162

11,664

3,837

786

2014 2015 2016 1Q17

1Q17 strong free cash flow amid high raw material prices

Annual Free Cash FlowTHB mn

4,483

-29 -192 -425 786

1Q16 2Q16 3Q16 4Q16 1Q17

Quarterly Free Cash FlowTHB mn

Remark: 1Cash Conversion Rate = FCF / EBIT; FCF= EBITDA-Changes in net working capital - CAPEX

Cash

Conversion

Rate12.2 -0.01 -0.09 -0.3 0.4

Cash

Conversion

Rate11.1 1.2 0.5 0.4

Despite high raw material prices, 1Q17 Free cash

flow (FCF) was solid at THB 785mn, due mainly to

positive contribution from recent investments

and FX gains

Debt refinancing secured long-term funding for investments

Interest-bearing debts of THB 64,854mn

42%

2%

Long-term loan by maturityTHB 51,209mn

By Maturity

2021 onwards

2020

2019

2018

Long-term

Debt

1Q17

Current

Portion

of Long-

term Debt

& finance

lease

Short-term

Loan

79%

1%

2016

20%

39%

5%

56%

1Q17: Strong operating cashflow allowed debt repayment

+178+264

+852

+909 +108

Operating Activities

THB 1,695mnInvesting & Financing Activities

Free Cash Flow THB 786 mn

Unit: THB mn

ND/E 1.37x

Kd = 2.74%

ND/E 1.34x

Kd = 3.04%

64,384+300

-89

-2,89964,942

Other

Investing/

Financing

activities*

Other

non-cash

expenses

Net interests

paid

Change in

other assets

and liabilities

Change in

net working

capital

Net Debt

as of

26 Dec 2016

Net Debt

as of

8 May 2017

Tax

paymentEBITDA CAPEX

+182

Cash paid for

NCI in

subsidiaries

Remark: * Included 1) change in loans to associates & other companies 2) change in investments in associates and other long-term investments 3) proceeds from sale of assets 4) dividend received and 5) change in non-controlling interest

Remark: 1ROE = Annualized quarterly net profit/ Average total shareholders’ equity2ROCE = Annualized EBIT / Average capital employed; where as Capital Employed = total assets - total current liabilities

(incl. current portion of long-term debt)

and EBIT = Total revenue – COGS – SG&A + share of profit in associates and joint ventures3Net WC day = INV day + A/R day – A/P day 4ND/E ratio = Net interest-bearing debt/ Total equity,

Net interest-beating debt = Total interest-bearing debt - Cash & Cash equivalents including ST investment

Improving financial strength

Net WC3

9.3%

6.4%

10.7%13.0%12.1%

1Q174Q163Q162Q161Q16*

1.34x1.37x

0.92x0.74x0.69x

1Q174Q163Q162Q161Q16

ROCE2

ROE1 Debt to EBITDA

ND/E4

13.5%

8.4%

14.8%13.8%

10.9%

1Q174Q163Q162Q161Q16*

INV Days

131119

108106117

1Q174Q163Q162Q161Q16*

5.59

7.87

3.803.022.97

1Q174Q163Q162Q161Q16*

38,448 41,131 42,371 42,926 41,923

114

104107

114

121

1Q16 2Q16 3Q16 4Q16 1Q17

WC (THB mn) WC Day

*The 1Q16 figures were restated mainly due to fishing fleets reclassification

Agenda

Key Highlights

Recent Developments

1Q17 Financial Results TU’s Consolidated Results Results by Business Unit


500

1,000

1,500

2,000

2,500

Jan-14 Jan-15 Jan-16 Jan-17

Key operating impact: Raw material price increased YoY during 1Q17

White shrimp raw material prices (THB/kg. of 60 pcs./kg)

170 (Apr’17)

Skipjack tuna raw material prices (USD/ton)

1,690

(Apr’17)

In April, tuna price closed at USD 1,690/ton. In 1Q17, average price

was at USD 1,633/ton (+30.0% YoY, +8.3% QoQ).

In April, shrimp price closed at THB 170/kg. In 1Q17, average price

was at THB 212/kg (+13.8% YoY, +16.9% QoQ).

Source: Thai Union Group and http://fishpool.eu/price-information/spot-prices/history/

Raw material prices

Salmon raw material prices (NOK/kg)

In April, salmon price closed at NOK 64/kg. In 1Q17, average price

was at NOK 67/kg (+14.7% YoY, -1.1% QoQ).

20

40

60

80


64(Apr’17)

50

100

150

200

250

300


x2

28

30

32

34

36

38


USD/THB

In April, USD/THB closed at 34.63. In 1Q17, average USD/THB was

at 35.12 (-1.5% YoY, -0.8% QoQ).

34.63

(Apr’17)

Exchange rate

30

35

40

45

50


EUR/THB

37.62

(Apr’17)

In April, EUR/THB closed at 37.62. In 1Q17, average EUR/THB was

at 37.41 (-4.9% YoY, -2.0% QoQ).

30

40

50

60


GBP/THB

In April, GBP/THB closed at 44.68. In 1Q17, average GBP/THB was

at 43.52 (-14.8% YoY, -1.0% QoQ).

44.68

(Apr’17)

Key operating impact:

Thai Union’s global footprint

41%

45%

3 strategic business segments

Ambient seafoodSales: THB 14,069 mn

PetCare, value added and

othersSales: THB 4,444 mn

Frozen, chilled seafood

and relatedSales: THB 12,914 mn

Frozen, chilled &

smoked salmon

Tuna business

Other seafood2Sardine & MackerelAmbient & Pouch

Salmon

Shrimp & related

business1 PetCare

Value-added

business3

Total 1Q17 sales: THB 31,427mn

Other products4

56%44%

Sales Split:

39%61%

7%

93%

14%Brand

Private label

Brand

Private label

Brand

Private label

Remark: 1.Shrimp & related business includes frozen shrimp, lobster, shrimp feed and value-added shrimp

2.Other seafood includes frozen cephalopod, crab, scallop, shellfish and other fish

3.Value-added business includes ready-to-eat products, maguro & cephalopod sashimi, local products, bakery products and snack

4.Other products include scrap, fishery and others

Ambient Seafood

Ambient Seafood1Q17 soft starts for European market

Sales (THB million) Quantity (Tons)

Gross Profit Margin (Percent) 1Q17 ambient seafood business sales was THB 14.1bn, down 7.4% YoY. Sales decline was mainly attributable to the lower tuna business sales volume in European market

1Q17 Gross profit margin was at 16.2%, down 226bps YoY, due to high raw material prices during 1Q17.

Weak European market put pressure on branded ambient business gross margin. However, TU managed to pass on the raw material price increase in the private label business, which saw a significant average selling price improvement YoY

Remark: 2016 branded/private label sales was reclassified due to Rugen Fisch sales reclassification

:*Including effect of Steam Pot sales reclassification in 3Q16 onwards (only QoQ effect), from Ambient seafood to Value-added products

44% 43% 42% 51%

56%57%

58% 49%

15,198 17,261

14,733 13,852 14,069

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00

10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00

1Q16 2Q16 3Q16* 4Q16 1Q17

54% 52% 50% 58%

46% 48%50% 42%

94,086 103,387 90,028 88,415 87,643

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00 21,000.00 22,000.00 23,000.00 24,000.00 25,000.00 26,000.00 27,000.00 28,000.00 29,000.00 30,000.00 31,000.00 32,000.00 33,000.00 34,000.00 35,000.00 36,000.00 37,000.00 38,000.00 39,000.00 40,000.00 41,000.00 42,000.00 43,000.00 44,000.00 45,000.00 46,000.00 47,000.00 48,000.00 49,000.00 50,000.00 51,000.00 52,000.00 53,000.00 54,000.00 55,000.00 56,000.00 57,000.00 58,000.00 59,000.00 60,000.00 61,000.00 62,000.00 63,000.00 64,000.00 65,000.00 66,000.00 67,000.00 68,000.00 69,000.00 70,000.00 71,000.00 72,000.00 73,000.00 74,000.00 75,000.00 76,000.00 77,000.00 78,000.00 79,000.00 80,000.00 81,000.00 82,000.00 83,000.00 84,000.00 85,000.00 86,000.00 87,000.00 88,000.00 89,000.00 90,000.00 91,000.00 92,000.00 93,000.00 94,000.00 95,000.00 96,000.00 97,000.00 98,000.00 99,000.00 100,000.00 101,000.00 102,000.00 103,000.00 104,000.00 105,000.00 106,000.00 107,000.00 108,000.00 109,000.00 110,000.00 111,000.00 112,000.00 113,000.00 114,000.00 115,000.00 116,000.00 117,000.00 118,000.00 119,000.00 120,000.00

1Q16 2Q16 3Q16* 4Q16 1Q17

-7.4% YoY

1.6% QoQ

-6.8% YoY

-0.9% QoQ

49%

51%

56%

44%

Brand

Private label

Brand

Private label

24%26%

20%19%

18%

12% 12%

8%9%

14%

18%20%

15% 14% 16%

1Q16 2Q16 3Q16* 4Q16 1Q17

Total

Brand

Private label

Frozen, chilled seafood and related

33% 34% 32% 33%

67% 66% 68% 67%

52,524 57,635 64,147 64,837

54,015

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00 21,000.00 22,000.00 23,000.00 24,000.00 25,000.00 26,000.00 27,000.00 28,000.00 29,000.00 30,000.00 31,000.00 32,000.00 33,000.00 34,000.00 35,000.00 36,000.00 37,000.00 38,000.00 39,000.00 40,000.00 41,000.00 42,000.00 43,000.00 44,000.00 45,000.00 46,000.00 47,000.00 48,000.00 49,000.00 50,000.00 51,000.00 52,000.00 53,000.00 54,000.00 55,000.00 56,000.00 57,000.00 58,000.00 59,000.00 60,000.00 61,000.00 62,000.00 63,000.00 64,000.00 65,000.00 66,000.00 67,000.00 68,000.00 69,000.00 70,000.00 71,000.00 72,000.00 73,000.00 74,000.00 75,000.00 76,000.00 77,000.00 78,000.00 79,000.00 80,000.00 81,000.00 82,000.00 83,000.00 84,000.00 85,000.00 86,000.00 87,000.00 88,000.00 89,000.00 90,000.00

1Q16 2Q16 3Q16 4Q16 1Q17

-16.7% QoQ

66% 68% 64% 68%

34% 32%36% 32%

12,225 13,152 15,138 15,317

12,914

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00

10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00

1Q16 2Q16 3Q16 4Q16 1Q17

Frozen, chilled seafood and relatedSolid sales growth

14%13%

11% 11%

10%

7%

6%8%

9%7%

10%8%

9%10%

8%

1Q16 2Q16 3Q16 4Q16 1Q17

Total

Brand

Private label

Sales (THB million) Quantity (Tons)

Gross Profit Margin (Percent)

+5.6% YoY

-15.7% QoQ

+2.8% YoY

Brand

Private label

Brand

Private label

1Q17 frozen and chilled seafood business sales were at THB 12.9bn, up 5.6% YoY. The improvement was driven mainly by:

Product repricing to reflect higher raw material prices. Chilled salmon business, while sales volume decline, reported an average selling price (ASP) up 39% YoY

Shrimp business see sales improvement driven by both growing volumes sales and higher ASP

While European salmon business gross margin was turning into positive during 1Q17, overall gross margin for the business still show a declined by 126bps YoY to 8.3%, mainly driven by high shrimp prices (+12.4% YoY)

39%

61%29%

71%

PetCare, value-added and others

PetCare, value-added and othersPetCare delivering strong operational performance

Total

Sales (THB Million) Quantity (Tons)

Normalized gross Profit Margin (Percent) 1Q17 PetCare and valued added segment sales were at THB 4,444mn, up 17.4% YoY, mainly thanks to solid growth in PetCare business

PetCare business continue to deliver strong growth through market expansion and product innovation, both of which has contributed to a marginal margin improvement YoY

Remark:*Including effect of Steam Pot sales reclassification in 3Q16 onwards (only QoQ effect), from Ambient seafood to Value-added products

**From 1Q17 onward, sales of scrap no longer apply “No-COGS” policy. With new cost allocation, the segment gross margin has shown a decline YoY

-2.3% QoQ

92% 95% 86%85%

8%5%

14%

15%

31,545 34,654 42,493

30,961 35,900

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00 21,000.00 22,000.00 23,000.00 24,000.00 25,000.00 26,000.00 27,000.00 28,000.00 29,000.00 30,000.00 31,000.00 32,000.00 33,000.00 34,000.00 35,000.00 36,000.00 37,000.00 38,000.00 39,000.00 40,000.00 41,000.00 42,000.00 43,000.00 44,000.00 45,000.00 46,000.00 47,000.00 48,000.00 49,000.00 50,000.00

1Q16 2Q16 3Q16* 4Q16 1Q17

92% 98% 84% 90%

8% 2%16%

10%3,786 3,989 5,177 4,549 4,444

-

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

1Q16 2Q16 3Q16* 4Q16 1Q17

+17.4% YoY +13.8% YoY

+16.0% QoQ

Brand

Private label

Brand

Private label

7%

93% 93%

7%

27%24%

26% 25%22%

1Q16 2Q16 3Q16* 4Q16 1Q17**

Remark: 1Shrimp & related business includes frozen shrimp, shrimp feed and value-added shrimp2Other seafood includes frozen cephalopod, crab, scallop, shellfish and other fish3Value-added business includes ready-to-eat products, maguro & cephalopod sashimi, local products, bakery products and snack4Other products include scrap, fishery and others

2017 Segment Profitability

THB 4,330 million

Gross Profit

Frozen, chilled

seafood and

related

PetCare, value

added and others

Ambient seafood

New segment

Total

Sales

(THB million)

Margin

(%)

Gross Profit

(THB million)

2,282

1,066

982

14,069

12,914

4,444

16.2%

8.3%

22.1%

31,427 13.8%

*Tuna business

*Sardine & Mackerel

*Ambient & Pouch Salmon

*Shrimp & related business1

*Frozen, chilled &

smoked salmon

*PetCare

*Value-added & others3

*Other seafood2

*Other products4

*Lobster

Agenda

Key Highlights

Recent Developments



2017 Guidance

FY 2017

Sales THB 145-150bn

GPM Lower end of 15-16%

SG&A 10%

Effective interest rate No material change from 2016

Effective tax rate 15%

CAPEX Approx. THB 4.8bn

Dividend policy At least 50% dividend payout

Rationale: Strong headwind from high raw material prices and extreme competitive pressure

High currency volatility for Thai Baht, US Dollar and British Pound

Category Highlight

Continue to profitably grow market share in European ambient marketsImproved profitability of the tuna business (COSI and Private Label business)European salmon business improvement

Operation improvement

New BusinessesDevelop King Oscar as a global brand and grow related businessLaunch Tuna Oil business (Marine Ingredients)Accelerate Global Foodservice and Emerging Markets initiatives

Successfully drive growth from investment in Red LobsterImproved business integration and collaboration globally Divest the loss-making fishing fleet business by 1H17

M&A / Post Merger

Integration

1

2

Accelerate Gii commercialization, both on new products and processes initiativesInnovation

Sustainability ‘Sea Change’ and Tuna Commitment sustainability programsDemonstrate leading capabilities in responsible sourcing and fair labor

3

4

5

Five key focus areas into 2017

After the challenging 2016, we are focusing on operational excellence into 2017

Appendix

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

5

10

15

20

25

TU SET

Share Capital Information

Stock Information

2012 2013 2014 2015 2016 2017

Dividend Policy

At least 50% of net profit

Major Shareholders

THB

Bloomberg/ Reuters TU TB/ TU.BK

Share price (5 May 2017) : THB 22.00

Historical price :

52-week high THB 22.80

52-week low THB 19.50

No. of paid up shares : 4,771.82mn

Par value : THB 0.25

Market Capitalization : THB 111.3bn

Chansiri Family20.5%

Niruttinanon Family 6.9%

Mitsubishi Corporation

7.3%

Thai NVDR10.5%

Social Security

Office 5.9%

Others49.0%

Source: SET and TU

As of 31 Mar 2017

Free float : 64.8%

Foreign ownership/ Foreign limit 33.5%/ 45.00%

1Q17 Income Statement

Remark: *Including share of income from investment in associates

**The 1Q16 and 4Q16 figures were restated mainly due to reclassification of fishing fleet discontinued operations

***Normalized net profit exclude ALL one-off adjustments and items throughout the period

1Q17/ 1Q17/

1Q16 4Q16

Change Change

Sales 31,427 100% 31,210 100% 33,597 100% 0.7% -6.5%

Cost of sales (27,097) -86.2% (26,213) -84.0% (29,032) -86.4% 3.4% -6.7%

Gross profit 4,330 13.8% 4,996 16.0% 4,565 13.6% -13.3% -5.2%

SG&A expenses (3,448) -11.0% (3,394) -10.9% (3,295) -9.8% 1.6% 4.6%

FX gain (loss) 590 1.9% 264 0.8% (181) -0.5% 123.2% -424.9%

Other income* 750 2.4% 378 1.2% 229 0.7% 98.2% 227.6%

EBIT 2,221 7.1% 2,244 7.2% 1,317 3.9% -1.0% 68.6%

Finance cost (498) -1.6% (372) -1.2% (445) -1.3% 33.8% 11.9%

EBT 1,723 5.5% 1,872 6.0% 872 2.6% -8.0% 97.5%

Tax (199) -0.6% (350) -1.1% 278 0.8% -43.1% -171.5%

Profit (Loss) from discontinued operarion 36 0.1% (149) 0.0% (122) 0.0% 0 0.0%

Net income 1,560 5.0% 1,373 4.4% 1,151 3.4% 13.6% 35.6%

Net income (loss) attributable to:

Equity holders of the Company 1,469 4.7% 1,231 3.9% 902 2.7% 19.3% 62.8%

Non-controlling interests of the subsidiaries 91 0.3% 142 0.5% 249 0.7% -36.0% -63.4%

Earnings per share

Basic earnings per share 0.31 0.26 0.19 20.2% 61.4%

Diluted earnings per share 0.31 0.26 0.19 20.2% 61.4%

Exchange rate

THB/USD 35.11 35.90 35.39 -2.2% -0.8%

Normalized net profit 1,052 3.3% 1,082 3.5% 1,423 4.2% -2.8% -26.1%

Consolidated

(Unit: THB mn) 1Q17%

to sales1Q16**

%

to sales4Q16**

%

to sales

Cash and cash equivalents* 470 0.3% 976 0.7% -51.8%

Trade and other receivables 16,161 11.5% 16,412 11.5% -1.5%

Inventories - net 39,130 27.8% 39,626 27.8% -1.3%

Other current assets 3,317 2.4% 3,064 2.2% 8.3%

Total current assets 59,079 42.0% 60,079 42.2% -1.7%

Fixed assets 23,337 16.6% 23,281 16.4% 0.2%

Goodwill and other intangible assets 28,956 20.6% 29,583 20.8% -2.1%

Other non-current assets 29,241 20.8% 29,424 20.7% -0.6%

Total Assets 140,613 100% 142,365 100% -1.2%

Bank overdrafts and short-term loans 12,627 9.0% 36,983 26.0% -65.9%

Trade and other payables 17,645 12.5% 17,429 12.2% 1.2%

Current portion of long-term loans 751 0.5% 765 0.5% -1.7%

Current portion of debentures - 0.0% 2,500 1.8% -100.0%

Current portion of finance lease liabilities 79 0.1% 82 0.1% -4.2%

Other current liabilities 881 0.6% 1,483 1.0% -40.6%

Total current liabilities 31,983 22.7% 59,242 41.6% -46.0%

Long-term loans from financial institutions 14,915 10.6% 963 0.7% 1448.3%

Debentures 36,293 25.8% 24,417 17.2% 48.6%

Finance lease liabilities - net of current portion 188 0.1% 208 0.1% -9.6%

Other non-current liabilities 9,333 6.6% 10,099 7.1% -7.6%

Total Liabilities 92,713 65.9% 94,930 66.7% -2.3%

Non-controlling interests of the subsidiaries 4,206 3.0% 4,193 2.9% 0.3%

Total Shareholders’ Equity 47,900 34.1% 47,436 33.3% 1.0%

Total liabilities and shareholders’ equity 140,613 100% 142,365 100% -1.2%

Change(Unit: THB mn) 1Q17% to total

assets2016

% to total

assets

Statement of Financial Position as of 31 March 2017

Remark: *Including short-term investments

(Unit: THB mn) 1Q17 1Q16 Change

Profit before income tax 1,759 1,725 034

Adjustments for depreciation & amortisation expenses 679 702 (23)

Other adjustments (384) 447 (830)

Changes in operating assets and liabilities (95) 2,491 (2,586)

Cash flows receipts from operating activities 1,959 5,364 (3,406)

Net cash receipts (payments) from operating activities 1,695 5,168 (3,473)

Net cash payments for investing activities (892) (2,150) 1,258

Net cash receipts (payments) for financing activities (1,531) (5,354) 3,823

Net increase (decrease) in cash and cash equivalent (728) (2,337) 1,608

Cash and cash equivalents - opening balance 731 2,590 (1,859)

Exchange gain (loss) on cash and cash equivalents (16) 6 (22)

Cash and cash equivalents - closing balance (14) 259 (273)

CAPEX (1,005) (2,063) 1,059

Management Est. Free Cash Flows 786 4,483 (3,697)

Consolidated

1Q17 Statement of Cash Flow

Corporate website: http://www.thaiuniongroup.com

IR website: http://www.thaiuniongroup.com/en/investor.ashx

E-mail: [email protected] Tel: +66 2298 0024

Thank you

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