1Q19 Analyst Meeting - Thai Union Group...May 08, 2019 · • Share of profits improved mostly...
Transcript of 1Q19 Analyst Meeting - Thai Union Group...May 08, 2019 · • Share of profits improved mostly...
1Q19 Analyst MeetingThai Union Group PCL.
8 May, 2019
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 assumptions are correct. Actual results may differ materially from those projected.
1Q19 Key Highlights
Recent Developments
1Q19 Financial Results
Business Outlook
Sales improved YoY
1Q19 sales up 2.3% YoY exclude FX impact:• Continued organic sales volume growth• Sales growth driven by Frozen and PetCare businesses sales growth• Ambient business saw small sales decline from EUR depreciation
Operation improvement
Gross profit improved 29.3% YoY, driven by: • GPM improvement to
14.9% from 11.6% in 1Q18
• Stable raw material prices environment
• Ambient Seafood and PetCare businesses were main drivers for recovery
Solid recovery
Operating profit up 997% YoY, • Stringent cost control
prompted 2.0% SG&A expense increase YoY, inline with organic sales growth (+2.3% YoY)
• SG&A ratio still slightly highat 11.4% (from 11.2% in 1Q18)
Recovery partly offset by lower FX gainsNet profit up 46.5% YoY:• FX gains of THB 81mn,
from THB 580mn in 1Q18 from stable USD
• Share of profits improved mostly from Avanti Frozen operation improvement
Sales Operating Profit
Gross Profit Net Profit
29,369
(THB mn)
4,382 1,2731,020
YoY Chg. +0.1% +29.3% +997% +46.5%
QoQ Chg -18.4% -18.2% -32.0% +4.1%
% of sales 14.9% 3.5% 4.3%
869
2,226
93
3,388
29,329
1,273
2,818
1,020
4,382
29,369
Net profit EBITDA Operating profit Gross profit Total sales
Financial Summary1
(THB million)1Q18 1Q19
1Q19 Net Profitup 46.5% YoY to
THB 1,273 million
Strong cash flow and debt repayment improve debt ratio
2018 ND/E
1.39x**
1Q19 ND/E
1.36x
+0.1%
+29.3%
+997%
+26.6%
+46.5%
Share price movement
20192
(Jan - May 19)
+15.4%
20182
(Jan – Dec 18)
-21.7%
Source: 1TU; 2SET (Jan 3’18: THB20.7/share and Dec 28’18: THB16.2/share, Jan 2’19: THB16.2/share and May 2’19: THB18.7/share)**Net debt to equity of 1.35X, before adoption of TFRS 9 and 16
% GrowthYoY
Sales 1.1 -0.8 0.0 -0.6 3.0 -5.3 -1.8 -1.9 3.7 0.1
Gross profit -4.2 -8.3 -9.0 0.3 6.1 -26.1 -4.6 9.2 11.4 29.3
Net profit 18.9 16.3 -6.9 8.1 56.6 -39.3 -3.7 0.5 -13.4 46.5
33,71530,958
34,400 34,847 34,733 29,329
33,775 34,169 36,012
29,369
13.4%14.8% 14.5% 14.2% 13.8%
11.6%
14.0%
15.8%14.9% 14.9%
2.7%
4.6% 4.1%4.9%
4.1%3.0%
4.1%5.1%
3.4%4.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0
10,000
20,000
30,000
40,000
50,000
60,000
4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
Total sales (THB mn) GPM NPM
Remark: Excluding one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18)
1Q19 Key Highlights
Recent Developments
1Q19 Financial Results
Business Outlook
• Thai Union Feedmill (TFM) is one of Thailand’s leading aqua feed producers
• TFM consistently delivers profitable operation with top quality shrimp and fish feeds
• Investing into growing Indonesian aquaculture industry with leading Indian aqua feedmill, Avanti Feeds
• Unlock underlying value, raise proceeds from partial sales of TFM shares
Source: FAO
Thai Union to remain anchor investor with 51% stake
Strong aquaculture growth track record
Delivering consistent growth
66.90%
33.10%
Pre-IPO
TU holding Others
51%49%
Post-IPO
TU holding Others
0100020003000400050006000
Global shrimp production ('000 tons)
3500
3700
3900
4100
4300
4500
2016 2017 2018
TFM Revenue (THB mn)
5April
• Thai Union was shortlisted as a finalist in the StrategicRISK Asia-Pacific Risk Management Awards 2019 in the categories of:• Risk Programme of the Year• StrategicRISK Award
Winners will be announced on 30 May in Singapore.
15April
• Thai Union, Alibaba Group’s Shanghai Win-Chain Supply Chain Management Co., Ltd., signed MOU
• To supply Thai Union’s seafood products in Chinese market
• Retail, food service channels, Tmall online platform
12March
19April
• Thai Union signed MOU with Thai Marine Fish Farmers Association
• Provide world-class standard seabass to Thai Airways Catering's inflight meals
• Thai Union hosted 2019 Annual General Meeting (AGM) of Shareholders on 5 April, 2019 at Royal Thai Army Radio and Television Station.
26April
• Thai Union was shortlisted for two sustainability awards.
• The Global Good Awards 2019, under the categories of:• Community Partnership – Coastal
East Africa Project• Individual Leader of the Year –
Dr. Darian McBain, Group Director, Corporate Affairs and Sustainability
• Dr. Darian McBain is a finalist for Leader of the Year by BusinessGreenLeaders Awards 2019.
• Winners announced in London on 19 June and 26 June, respectively.
1May
• Chicken of the Sea®, in line with SeaChange® Ignite, announced Responsible Aquaculture Commitment
• Plans for 100% of COS branded aquaculture products to meet standards by Monterey Bay Aquarium Seafood Watch, Global Seafood Sustainability Initiative (GSSI), Social Supply Chain Initiative (SSCI)
2May
• Thai Union published 2018 Sustainability Report, detailing positive progress made in 2018 and Thai Union’s performance against KPI’s and targets outlined in
SeaChange®.
14March
• Fisho brand introduced two new flavors under the product line Fisho Max 3
• “Extreme barbeque” and “super spicy” flavors
• Available at supermarkets and convenience stores nationwide
• Monori brand launched a new product line
• Crispy salmon skin in salty egg flavor and original flavor
• Available at supermarkets and convenience stores throughout Thailand
29March
1Q19 Key Highlights
Recent Developments
1Q19 Financial Results
• Consolidated Results
• Results by Business Unit
Business Outlook
Growing topline
Strong GPM
Positive OP recovery
Less favorable non-operating items than last year
Early adoption of TFRS 9 and 16
• GPM recovering at 14.9%, compared to 11.6% achieved in 1Q18 and 14.9% in 4Q18
• Ambient OEM and PetCare are the main drivers for such margin recovery
• High SG&A with 2.0% growth YoY in absolute amount, prompting 11.4% SG&A to sales ratio, from 11.2% during 1Q18
• OP at THB 1,020mn (vs THB 93mn during 1Q18)
• FX gains normalized at THB 81mn, from THB 580 in 1Q18• 1Q19 Tax expenses of THB 27mn, from a tax credit during 1Q18, due to
improved operation
• TFRS 9 (Financial instruments):• Adjusted net debt to equity increasing from 1.35 to 1.39 as at January 1, 2019• Limited impact on Q119 P/L: +0.2bn sales/GP/OP
• TFRS 16 (Leases): main impacts are new account “right of use” for 1.8bn and lease liabilities increase by 1.4bn
• Delivering organic sales growth, mainly from frozen seafood and pet care, whereas European sales weaken from EU currencies depreciation (6-7% YoY)
• Reported growth at 0.1%, or adjusted growth at constant FX rates at 2.3%
Remark:1Q17-4Q18 figures were restated mainly due to reclassification of COGS, ESCo’s financial to discontinued operation TMAC investment impairment.2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
As per existing rule (TAS 17):• Classification was based on complex rules and tests• Some lessees avoid recognizing finance lease items• Similar lease transactions classified differently
despite substances being the same
Operating Lease
FinanceLease
TFRS 16
No more separation between operating and finance lease.
Using common methodology, asset
and liability will always be booked,
except for low-value and short-term
leases.
Objective: To align accounting standards for Thai Union Group
Hedge Accounting
Minimize volatility and appropriately represent risk management activities in financial statements
Enter intoforward contract
Sales incur Cash receipt from customer and F/W
is settled
Gearing Ratio
Previous 1.35
Restated 1.39
✓ Restated 2018 reported numbers: limited impact as expected
Main impacts on balance sheet include:✓ TFRS 16: Right of use
appearance and lease liabilities increase
✓ TFRS 9: decrease of the derivatives assets/ liabilities & investment in debt instrument
Impact on Net Debt/equity ratio is detailed below:
1,257
1,503 1,433
1,508 1,633
1,763
2,010 2,033
1,577
1,667
1,467 1,408 1,453
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
Tuna raw material price (USD/ton)
Quarterly average Monthly average
%ChangeQoQ
20.1%
19.6% -4.7% 5.2% 8.3% 8.0% 14.0% 1.2% -22.5% 5.7% -12% -4% +3.2
%ChangeYoY
13.9%
36.5% 0.2% 44.1% 30.0% 17.3% 40.2% 34.8% -3.5% -5.4% -27% -31% -7.8
1Q16
1Q172Q17
3Q174Q17
1Q18
2Q18
3Q184Q163Q16
2Q164Q18 1Q19
29,329
33,775 34,16936,012
29,369
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1Q18 2Q18 3Q18 4Q18 1Q19
SalesTHB mn
-18.4% QoQ
+0.1% YoY
USD mn 929930 1,059 1,036 1,098
125,183 134,375 134,937 133,285
29,329 29,369
2015 2016 2017 1Q18 1Q19
3.1% 7.3% 0.4% -1.2%YoY Growth
• 1Q19 sale improved 2.3% YoY, excluding FX impact, driven by:
✓ Frozen and Chilled Seafood and PetCare businesses saw strong sales volume growth YoY
✓ Ambient OEM business see strong growth from Thailand export sales
✓ Branded ambient business sales saw marginal decline mainly from EUR and GBP currency depreciation of 7% and 6% YoY, respectively, against THB
✓ On reported basis, 1Q19 sales were at THB 29bn, stable YoY, despite weak EU currencies depreciation.
+0.1% YoY
+2.3% YoYBefore currency
impacts
1Q18 1Q19
Revenue growth componentTHB mn
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
+0.1% YoY
+2.3% YoYBefore currency
impacts
29,36929,329 -22
Tuna Shrimp &
related business1
Sardine&
Mackerel
Salmon-Ambient
Pet Care Value added
& other products2
USDeffect
EUReffect
LobsterOther seafood -Ambient
Salmon-Frozen
Other seafood -
Frozen
90 -135-55
624 18 -63 -115233
107 22-664
0% +4% -17%-19% +9%
+2% -4%-6% +10%
+6%0%
-7%
Brand35%
**FS -Brand
6%**FS -Private Label
5%
Private Label54%
Remark: *Others represent Asia, Australia, Middle East, Canada, Africa and South America**FS stands for Food Service
42% 39% 39% 38% 40%
29% 33% 31% 31% 28%
8% 8% 9% 11% 13%6% 6% 6% 6% 5%
14% 13% 15% 15% 14%
0%
20%
40%
60%
80%
100%
2015 2016 2017 2018 1Q19
Sales Breakdown by Geographic
Brand36%
**FS -Brand
6%**FS -Private Label
6%
Private Label52%
Sales Breakdown by Business
THB 29.4bnTHB 133.2bn
2018 1Q19
• 1Q19 Sales contribution in key markets shifted in favor of domestic and US markets.✓ TU focused on selling product in
domestic market, resulted in 12% sales growth YoY.
✓ US sales improved driven by Frozen Seafood sales growth
✓ Europe sales contribution shrunk from 2018 mix mainly due to EUR and GBP depreciating against THB in 1Q19.
• 1Q19 branded sales mix at 42% (compared to 41% during 2018), private label sales contributing remaining 58% of 1Q19 sales✓ 1Q19 total branded sales increased 0.7%
YoY, partly due to the increased in branded aqua feed sales
✓ Private label sales was stable YoY due to increased sales volume was offseted by the decline in tuna raw material price YoY
OthersJapanDomestic
Europe
USA
3,388
4,7415,406 5,356
4,382
11.6%
14.0%
15.8%14.9% 14.9%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
1Q18 2Q18 3Q18 4Q18 1Q19
Gross ProfitTHB mn
19,501 19,927 19,310 18,892
3,388 4,382
-
5,000
10,000
15,000
20,000
25,000
2015 2016 2017 1Q18 1Q19
+29.3% YoY
-18.2% QoQ
GPM
• 1Q19 Gross profit was up 29.3% YoY, ✓ With tuna raw material prices
become more stable in recent quarters, product price discussion prompted ambient seafood margin recovery,
✓ PetCare volume improvement resulted in better economies of scale and gross margin
✓ Shrimp business benefited from price recovery and strategy to pursue more value-added products
✓ Lobster business gross profit continue to improve YoY
GPM 15.6% 14.8% 14.3% 14.2%
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
+29.3% YoY
93
1,212
1,866
1,499
1,020
0.3%
3.6%
5.5%4.2%
3.5%0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1Q18 2Q18 3Q18 4Q18 1Q19
Operating ProfitTHB mn
+997% YoY
-32.0% QoQ
6,817 6,805
4,921 4,669
93 1,020
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2015 2016 2017 1Q18 1Q19
OP Margin
OPM 5.4% 5.1% 3.6% 3.5%
SG&A% 11.2% 10.4% 10.4% 10.7% 11.4%
• 1Q19 Operating profit was at THB 1,020mn, up 997% YoY: ✓ Strong gross margin recovery YoY✓ SG&A cost remain under control
from various cost control initiatives• SG&A-to-sales ratio was at 11.4%
(from 11.2% in 4Q17), due to: ✓ THB sales was flat YoY as European
sales declined from weak currency, ✓ On absolute basis, SG&A expenses
increased by only 2.0% YoY.
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
+997% YoY
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
• 1Q19 EBITDA up 26.6% YoY, ✓ Sales growth, gross margin
improvement and continued cost control all contributed to the EBITDA improvement
✓ Business profitability improved from a more stable raw material price environment and stringent cost control
EBITDAMargin
9.2% 8.4% 8.6% 8.3%
2,226
2,8343,254
2,7032,818
7.6% 8.4%9.5%
7.5%9.6%
3.0%
8.0%
13.0%
18.0%
23.0%
28.0%
1Q18 2Q18 3Q18 4Q18 1Q19
EBITDATHB mn
+26.6% YoY
+4.3% QoQ
11,526 11,269 11,579 11,016
2,226 2,818
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2015 2016 2017 1Q18 1Q19
+26.6% YoY
EBITDA Margin
869
1,368
1,731
1,223 1,273
3.0%
4.1%
5.1%
3.4%4.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
1Q18 2Q18 3Q18 4Q18 1Q19
Net ProfitTHB mn
+46.5% YoY
+4.1% QoQ
5,302 5,254 5,989
5,191
869 1,273
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2015 2016 2017 1Q18 1Q19
NPM
NPM 3.0% 4.1% 5.1% 3.4%
• With strong recovery in operating performance, TU’s 1Q19 net profit was at THB 1,273mn, up 46.5% YoY, despite the key non-operating items lowered: ✓ FX gains of THB 81mn (from THB
580mn in 1Q18), ✓ Tax expense of THB 27mn from
improved profitability, vs tax credit of THB 13mn recorded in 1Q18
• However, equity income mainly improved from Avanti Frozen operation growth YoY.
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
+46.5% YoY
Adjusted NP Margin
690
1,018
1,731
1,223 1,111
2.4%3.0%
5.1%
3.4% 3.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1Q18 2Q18 3Q18 4Q18 1Q19
Adjusted Net ProfitTHB mn
+61.0% YoY
-9.2% QoQ
• Excluding the one-off quarter-end items, 1Q19 adjusted net profit was at THB 1,111mn, representing 61.0% increase YoY
• One-off positive items during 1Q19 of THB 162mn comprised of: • Capital gain on sales of assets (+THB
100mn)• Tax credit from Thailand ambient
business (+THB 62mn)
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
-79
1,111
1Q19 Reported NP
1Q19Adjusted NP
-62
TUMTax release
-100
Capital gain on sales of asset
1,273
1.11 1.101.26
1.09
0.18 0.27
2015 2016 2017 1Q18 1Q19
0.18
0.29
0.36
0.26 0.27
1Q18 2Q18 3Q18 4Q18 1Q19
Earning per Share (EPS)*THB
+46.5% YoY
+4.1% QoQ
+46.5% YoY
• 1Q19 EPS was at THB 0.27, up 46.5% YoY and 4.1% QoQ, along with the net profit trajectory.
Remark: *EPS in this slide represents fully diluted EPS based on current number of shares of 4,771,815,496**2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
THB mn
• 1Q19 continued to be a seasonally strong quarter with net profit improving from the same period last year, resulting in an improved equity income contribution. ✓ Interest income remained stable
and well-above funding cost ✓ Tax expense increased due to the
improved operation.
Share of profit
Other income
Finance costs
Income tax
Net income
EPS (THB/share)
Red Lobster has contributed THB 284mn to net profit in 1Q19
1Q19 4Q18 3Q18 2Q18 1Q18
144 -201 64 -128 137
249 258 256 259 235
-142 -138 -137 -129 -128
34 -113 104 93 22
284 -193 287 96 266
0.06 -0.04 0.06 0.02 0.06
5,544
2,938
8,401
1,259
2016 2017 2018 1Q19
Annual Free Cash FlowTHB mn
1,369
3,794
2,186
1,052 1,259
1Q18 2Q18 3Q18 4Q18 1Q19
Quarterly Free Cash FlowTHB mn
Remark: Change definition of Free Cash Flow; 1Cash Conversion Rate = FCF / EBIT; FCF= EBITDA-Changes in net working capital – Change in other assets& Liabilities + non-cash expenses - CAPEX
Cash Conversion Rate1 0.90 1.18 0.91 0.77 0.68
Cash Conversion Rate1 0.67 0.33 0.95 0.68
• 1Q19 free cash flow of THB 1.3bn was due largely to an improved profitability and EBITDA,
• However, despite efficient inventory control, the 1Q19-end tuna raw material price (USD1,600/ton) was higher than 2018-end tuna price (USD1,300/ton), resulting in stable free cash flow profile compared to the 1Q19.
+272
+590
+965
-333
-88
Free Cash Flow THB 1,259 mn
Unit: THB mn
ND/E 1.39xKd = 3.07%
ND/E 1.36xKd = 3.24%
63,415+641
-268-2,818
64,374
Net Debt as of
31 Dec 2018
Net Debt as of
31 Mar 2019
+81
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
Other Investing & Financing activities*
CAPEXOther non-cash
expenses
Tax payments
Net interest paid
Dividend received
Change in other assets
and liabilities
EBITDA Change in net working capital
Income tax paid and other investing & financing activities
1.35x before adoption of
TFRS 9 and 16
2018 1Q19
98.3% 98.3%
0.0%
1.7% 1.7%
2018 1Q19
Interest-bearing debts of THB 64,218mn
Long-term loan by maturityTHB 37,952mn
By Maturity
2023 onwards
2022
2021
Long-term debt
Current portionof long-term debt & finance lease
Short-term loan 21%
65%
14%
EUR
By Currency
USD
THB
THB 64.5bn THB 64.2bn
23%
61%
16%
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-bearing debt = Total interest-bearing debt - Cash & Cash equivalents including ST investment
*Net debt to equity of 1.35X, before adoption of TFRS 9 and 16
Net WC3
8.0%7.7%9.9%
8.0%5.6%
1Q194Q183Q182Q181Q18
ROCE2
ROE1 Net Debt to EBITDA
11.8%11.5%
16.2%
12.5%
7.8%
1Q194Q183Q182Q181Q18
INV Days
5.635.954.92
5.73
7.32
1Q194Q183Q182Q181Q18
41,665 41,652 41,229 39,085 38,212
131
111 109 100
118
1Q18 2Q18 3Q18 4Q18 1Q19
WC (THB mn) WC Day
40,691 39,708 39,996 38,371 36,859
145
128125
115
135
1Q18 2Q18 3Q18 4Q18 1Q19
INV (THB mn) INV Day
1.36x1.39x1.40x1.41x1.35x
1Q19*4Q183Q182Q181Q18
ND/E4
Target4.0-4.5
Target1.0-1.1
1Q19 Key Highlights
Recent Developments
1Q19 Financial Results
• Consolidated Results
• Results by Business Unit
Business Outlook
212
169 176 175 183141 158 167
35
85
135
185
235Shrimp raw material price
(60pcs/kg) (THB/kg)
Quarterly average Monthly average
1Q172Q17 3Q17 4Q17 1Q18
2Q18 3Q18 4Q18
Source: Thai Union Group and Bloomberg
In April 2019, raw material prices closed at:• Tuna - USD 1,450/ton • Shrimp - THB 138/kg • Salmon - NOK 69/kg
In 1Q19, average raw material prices closed at:• Tuna
USD 1,453/ton (-7.8% YoY, +3.2% QoQ) • Shrimp
THB 167/kg (-8.6% YoY, 15.0% QoQ)• Salmon
NOK 64/kg (+5.3% YoY, +10.3% QoQ)
1,633 1,763
2,010 2,033
1,577 1,667
1,467 1,408 1,453
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
Tuna raw material price (USD/ton)
Quarterly average Monthly average
1Q172Q17
3Q17 4Q17
1Q18 2Q183Q18 4Q18
1Q19
1Q19
Prices fluctuating within the range of 1,300 – 1,700
USD/ton since 2018
145
Sideway upward trend after last year’s decline
66 6759
5360
69
58 5864
40
50
60
70
80
90Salmon raw material price
(NOK/kg)
Quarterly average Monthly average
1Q17 2Q173Q17
4Q171Q18
2Q18
3Q18 4Q181Q19
Price seems to be trending up after some retracement
from peak last year
In April 2019, average FX rates closed at:USD/THB – THB 31.85EUR/THB – THB 35.75GBP/THB – THB 41.49
In 1Q19, average FX rates closed at:USD/THBTHB 31.61 (0.2% YoY, -3.7% QoQ)EUR/THBTHB 35.90 (-7.4% YoY, -4.1% QoQ)GBP/THBTHB 41.18 (-6.3% YoY, -2.4% QoQ)
USD/THB EUR/THB
GBP/THB
Source: Thai Union Group
43.52 43.87 43.69 43.74 43.93 43.44 42.9942.19
41.18
39.0
41.0
43.0
45.0
47.0
49.0
Quarterly average Monthly average
1Q18 2Q18 3Q181Q17 2Q17 3Q17 4Q17
4Q18
Continued decline since 1Q18
Risk factor
1Q19
37.41 37.72
39.20 38.78 38.7838.05 38.35
37.4235.90
35.0
36.0
37.0
38.0
39.0
40.0
41.0
Quarterly average Monthly average
1Q182Q18 3Q18
1Q17 2Q17
3Q174Q17
4Q18 1Q19
Continued depreciation with recent sharp decline
Risk factor
35.1234.30
33.39 32.9531.54 31.92
32.97 32.8131.61
28.0
30.0
32.0
34.0
36.0
38.0
Quarterly average Monthly average
1Q18 2Q183Q18
1Q17 2Q173Q17 4Q17 4Q18
1Q19
Weakening continues after gaining some strength in 2018
Tuna Tuna slices
Sardine & mackerel Ambient and pouch salmon
Sales: THB 11,529 mn
Frozen, chilled seafood and related
39%46%
58%42%
Sales Split
35%65%
12%
88%
15%
Brand
Private label
Brand
Private label
Brand
Private label
Remark: 1.Shrimp & related business includes frozen shrimp, lobster, shrimp feed and value-added shrimp2.Other seafood includes frozen cephalopod, crab, scallop, shellfish and other fish3.Value-added business includes ready-to-eat products, maguro & cephalopod sashimi, local products, bakery products and snack4.Other products include scrap, fishery and others2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
Total 1Q19 sales: THB 29,369 mn
Sales: THB 13,456 mn
Ambient seafood
Sales: THB 4,384 mn
PetCare, value-added and others
Shrimp and related 1 Lobster
Frozen, chilled & smoked salmon Other seafood2
PetCare Marine ingredients
Value-added 3 Other products4
49% 54% 53% 58%49%
51%46% 47% 42%
51%
79,973
- 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
1Q18 2Q18 3Q18 4Q18 1Q19
Sales (THB million) Quantity (Tons)
Gross Profit Margin (Percent)
-4.6% YoY
-10.3% QoQ
-4.0% YoY
-10.0% QoQ
Brand
Private label
Brand
Private label
Total
Brand
Private label
42% 44% 44% 50% 42%
58%56% 56% 50%
58%
14,100 16,363 16,806
14,994 13,456
- 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
1Q18 2Q18 3Q18 4Q18 1Q19
15%
22% 21%
17%
20%
13% 12%
16%16% 17%14%
18% 19%17% 19%
1Q18 2Q18 3Q18 4Q18 1Q19
• 1Q19 ambient sales declined 4.6% YoY, while gross profit improved 27% YoY.
• Weak sales were mostly attributed to the depreciating European currencies (EUR/THB -7.1% YoY and GBP/THB -6.3% YoY)
• Gross profit margin at 18.6%, up from 14.0% in 1Q18: ✓ A stable tuna price environment✓ A focus on higher-value product sales✓ Automation implementation enables a
more efficient work process.Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
83,314 93,855 93,236 88,841
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
8%8%
8% 9%
10%
6%
9%
11%10%
7%
7%8%
10% 10%8%
1Q18 2Q18 3Q18 4Q18 1Q19
• 1Q19 frozen and chilled seafood sales up 3.4% YoY, driven mainly by volume growth (16.3% YoY) that outpaced shrimp price decline (-8.6% YoY).
• Gross profit margin was at 8.0%, up 113bps YoY, due to focus on value added products
• Lobster business turnaround with business profitability improving from the previous year from strong volume growth
Sales (THB million)
+3.4% YoY
-26.3% QoQ
Brand
Private label66% 65% 64% 65%
65%
34%35% 36%
35%
35%
11,149 12,962 13,031
15,651
11,529
- 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
1Q18 2Q18 3Q18 4Q18 1Q19
30% 30% 29% 33% 29%
70% 70% 71% 67% 71%
53,201 62,253 63,443 67,552
61,862
- 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
1Q18 2Q18 3Q18 4Q18 1Q19
Quantity (Tons)
+16.3% YoY
-8.4% QoQ
Brand
Private label
Gross Profit Margin (Percent)
Total
Brand
Private label
• PetCare and valued added sales increased 7.5% YoY, on the back of sales volume increase 4.0% over the same period.✓ Pet food business delivered a solid sales
growth, driven mainly by sales volume. ✓ Value-added products and others segment
reported average selling price increase from increased sales of higher value-added products.
• Gross margin has improved due to strong sales growth and growing value-added product sales mix.
+4.0% YoY
94% 94% 94% 93% 96%
6%6%
6%7% 4%
- 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
1Q18 2Q18 3Q18 4Q18 1Q19
92% 91% 91%93%
88%
8% 9% 9%
7%
12%4,080 4,450 4,332
5,367 4,384
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
1Q18 2Q18 3Q18 4Q18 1Q19
16% 17%21%
24% 22%
1Q18 2Q18 3Q18 4Q18 1Q19
Brand
Private label
Sales (THB million)
+7.5% YoY
-18.3% QoQ
Brand
Private label
Quantity (Tons)
-8.0% QoQ
Total
Gross Profit Margin (Percent)
Remark: 2018 figures exclude one-time net accrual for US legal-related settlement of THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18).
65,256
57,394
67,126 73,769 67,838
(Asia, Australia, Middle East, Africa and South America)
United Statesand Canada
42% Europe
28%
Thailand
13%
17%Others
11,821 12,931 12,80115,192
12,207
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1Q18 2Q18 3Q18 4Q18 1Q19
SalesTHB mn
+3.3% YoY
-19.6% QoQ
• 1Q19 North America sales improved by 3.3% in Thai Baht term.✓ USD/THB exchange rate was stable✓ US Frozen businesses, both shrimp
and lobster, deliver solid sales growth ✓ US Canned tuna sales dropped on
lower sales of lower-margin products• Red Lobster operation improved YoY
• 1Q19 European sales declined 9.4% YoY in Thai Baht term, largely driven by weakened EUR and GBP exchange rate against Thai Baht YoY,
• However, the EU branded tuna business still deliver gross profit improvement due to stable tuna raw material price environment.
9,04410,612 10,890 10,503
8,198
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1Q18 2Q18 3Q18 4Q18 1Q19
SalesTHB mn
-9.4% YoY
-21.9% QoQ
• 1Q19 Thailand sales up 12.0% YoY.• Diversifying sales in home market to
offset weaker export market from THB appreciation against key currencies
• Strong export sales from Ambient, Frozen and PetCare business
3,439 3,169 3,379 4,242 3,853
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1Q18 2Q18 3Q18 4Q18 1Q19
SalesTHB mn
+12.0% YoY
-9.2% QoQ
5,0257,063 7,099
6,0755,111
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1Q18 2Q18 3Q18 4Q18 1Q19
SalesTHB mn
+1.7% YoY
-15.9% QoQ
• 1Q19 sales was at THB 5.1bn, up 1.7% YoY due to new market penetration, such as into Africa and South America.
• Initiatives in China, including collaboration with Thammachart Seafood on food service should gradually deliver growth from the Chinese market starting 2019
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
Gross profitTHB million
Margin%
SalesTHB million
Business segment
4,382
Ambient seafood
• Tuna• Sardine and mackerel• Ambient and pouch salmon
13,456 18.6 2,508
Frozen, chilled seafood and related
• Shrimp and related 1
• Lobster• Frozen, chilled and smoked salmon• Other seafood2
11,529 8.0 920
PetCare, value-added and others
• PetCare• Value-added and others1
• Other products2
4,384 21.8 954
Total 29,369 14.9
1Q19 Key Highlights
Recent Developments
1Q19 Financial Results
Business Outlook
Sales:
3-5% YoY growth
Gross profit margin:
~15%
SG&A to sales:
10-10.5%
Effective interest rate:
No material change from 2018
CAPEX:
Approx. THB 4.8bn
Dividend policy:
At least 50% dividend payout ratio
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
5
10
15
20
25
2013 2014 2015 2016 2017 2018 2019
TU
SET
Minimum 50% payout of our net profit with semi-annual payments
THB
Bloomberg/ Reuters TU TB/ TU.BK
Share price (3 May, 2019) THB 18.60
Historical price
52-week high THB 19.50
52-week low THB 14.70
No. of paid up shares 4,771.8mn
Par value THB 0.25
Market Capitalization THB 88.8bn
Chansiri Family19.6%
Thai NVDR7.9%
Mitsubishi Corporatio
n 7.3%
Social Security
Office 7.2%
Niruttinanon Family
6.9%
Others51.1%
Source: SET and TU
As of 7 March, 2019
Free float 68.3%
Foreign ownership/ Foreign limit 32.5%/ 45.00%
Stock Performance at a Glance Major Shareholders
Dividend Policy
DPS (THB per share)
Period 2H18 1H18 2H17 1H17 2H16 1H16
DPS 0.15 0.25 0.34 0.32 0.31 0.32
TBU
1Q19/ 1Q19/
1Q18 4Q18
Change Change
Sales 29,369 100% 29,329 100% 36,012 100% 0.1% -18.4%
Cost of sales (24,988) -85.1% (25,941) -88.4% (30,656) -85.1% -3.7% -18.5%
Gross profit 4,382 14.9% 3,388 11.6% 5,356 14.9% 29.3% -18.2%
SG&A expenses (3,362) -11.4% (3,295) -11.2% (3,857) -10.7% 2.0% -12.8%
FX gain (loss) 81 0.3% 580 2.0% 41 0.1% -86.0% 97.6%
Other income 497 1.7% 543 1.9% 493 1.4% -8.5% 0.8%
Share of profits from investments in
associates and joint ventures347 1.2% 301 1.0% (137) -0.4% 15.3% -353.3%
EBIT 1,945 6.6% 1,517 5.2% 1,896 5.3% 28.2% 2.6%
Finance cost (528) -1.8% (503) -1.7% (524) -1.5% 5.0% 0.8%
EBT 1,417 4.8% 1,014 3.5% 1,372 3.8% 39.7% 3.3%
Tax (27) -0.1% 13 0.0% 35 0.1% -307.7% -177.1%
Profit (Loss) from discontinued operarion (43) -0.1% (60) -0.2% (60) 0.0% -28.3% -28.3%
Net income 1,347 4.6% 967 3.3% 1,347 3.7% 39.3% 0.0%
Net income (loss) attributable to:
Equity holders of the Company 1,273 4.3% 869 3.0% 1,223 3.4% 46.5% 4.1%
Non-controlling interests of the subsidiaries 73 0.2% 98 0.3% 124 0.3% -25.5% -41.1%
Earnings per share
Basic earnings per share 0.27 0.18 0.26 46.5% 4.1%
Diluted earnings per share 0.27 0.18 0.26 50.0% 5.3%
Exchange rate
THB/USD 31.61 31.54 32.81 0.2% -3.7%
(Unit: THB mn) 1Q19%
to sales1Q18
%
to sales
Consolidated
4Q18%
to sales
Remark: *Including short-term investments
Cash and cash equivalents* 803 0.6% 1,586 1.1% -49.4%
Trade and other receivables - net 14,798 10.7% 15,968 11.2% -7.3%
Inventories - net 36,859 26.6% 38,371 26.9% -3.9%
Other current assets 2,619 1.9% 3,086 2.2% -15.1%
Total current assets 55,078 39.7% 59,011 41.4% -6.7%
Fixed assets 26,409 19.0% 26,272 18.4% 0.5%
Goodwill and other intangible assets 28,939 20.9% 29,407 20.6% -1.6%
Other non-current assets 28,245 20.4% 27,785 19.5% 1.7%
Total Assets 138,671 100% 142,474 100% -2.7%
Bank overdrafts and short-term loans 15,130 10.9% 13,468 9.5% 12.3%
Trade and other payables 17,357 12.5% 19,713 13.8% -12.0%
Current portion of long-term loans 147 0.1% 147 0.1% -0.1%
Current portion of debentures 9,497 6.8% 9,149 6.4% 3.8%
Current portion of finance lease liabilities 408 0.3% 432 0.3% -5.6%
Other current liabilities 939 0.7% 893 0.6% 5.2%
Total current liabilities 43,478 31.4% 43,802 30.7% -0.7%
Long-term loans from financial institutions 14,482 10.4% 14,569 10.2% -0.6%
Debentures 23,470 16.9% 27,014 19.0% -13.1%
Finance lease liabilities - net of current portion 1,084 0.8% 1,182 0.8% -8.3%
Other non-current liabilities 9,540 6.9% 9,736 6.8% -2.0%
Total Liabilities 92,054 66.4% 96,302 67.6% -4.4%
Non-controlling interests of the subsidiaries 3,327 2.4% 3,261 2.3% 2.0%
Total Shareholders’ Equity 46,616 33.6% 46,172 32.4% 1.0%
Total liabilities and shareholders’ equity 138,671 100% 142,474 100% -2.7%
Change(Unit: THB mn) 1Q19 % to total assets 2018 % to total assets
Remark: *Figures as reported in May 2019
(Unit: THB mn) 1Q19 1Q18 Change
Profit before income tax 1,400 954 446
Adjustments for depreciation & amortisation expenses 873 709 164
Other adjustments (45) (96) 52
Changes in operating assets and liabilities (4) 1,035 (1,039)
Cash flows receipts from operating activities 2,225 2,602 (377)
Net cash receipts (payments) from operating activities 2,558 2,532 026
Net cash payments for investing activities (1,106) (1,052) (055)
Net cash receipts (payments) for financing activities (2,449) (1,857) (592)
Net increase (decrease) in cash and cash equivalent (997) (377) (620)
Cash and cash equivalents - opening balance 1,311 573 738
Exchange gain (loss) on cash and cash equivalents (19) (6) (13)
Cash and cash equivalents - closing balance 294 190 105
CAPEX (965) (1,233) 267
Management Est. Free Cash Flows* 1,259 1,369 (110)
Consolidated