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2Q18 Results PresentationThai Union Group PCL.
7 August, 2018The Okura Prestige Bangkok
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.
Key Highlights
Recent Developments
2Q18 Financial Results
Business Outlook
Excluding FX, sales stable YoY
2Q18 sales declined YoY driven by:• THB appreciation and • Declining tuna sales. • Excluding FX, sales stable at -0.1% YoY
Stable raw material prices
Gross profit improved 40.1% QoQ, driven by: • GPM improved to 13.8%
from 11.3% in 1Q18• Stable raw material
prices• Gross profit down 5.0%
YoY from THB appreciation
Strict cost control
Normalized operating profit down 30.2% YoY, up 45x QoQ• Operation remains
challenged despite QoQrecovery
• Stringent cost control prompted 10.4% SG&A ratio
• Chicken of the Sea recorded USD 44mn accruals, reported operating losses of 285mn
Improved net profit QoQ
Normalized net profit up QoQ, supported by:• Good FX and tax
management • Insurance claim from
Ghana plant accident• Reported net profit of
THB 10mn
Sales Operating Profit
Gross Profit Net Profit
34,137
(THB mn)
4,709 1,368*1,142*
YoY Chg. -2.0% -5.0% -30.2% -3.7%
QoQ Chg +14.9% +40.1% +4,502% +57.5%
% of sales 13.8% 3.3% 4.0%*Remark: 2Q18 reported operating losses of THB 285mn and reported net profit of THB 10mn, including one-time majority accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
1H18 Net Profitdown 21.6% YoY to
THB 2,237 million
Declining debt, while equity reduced on dividend payment
2017 ND/E
1.38x2Q18 ND/E
1.41x(1.37x)**
2,853
5,746
2,481
9,505
66,244
2,237
4,922
1,167
8,068
63,839
Net profit EBITDA Operating profit Gross profit Total sales
Financial Summary1
(THB million)1H17 1H18
-3.6%
-15.1%
-53.0%
-14.3%
-21.6%
Share price movement
20172
(Jan- Dec 17 )
-5.7%
20182
(Jan- Jun 29,18 )
-23.7%
Source: 1TU; 2SET (Jan 4’17: THB21.1/share and Dec 29’17: THB19.9/share, Jan 3’18: THB20.7/share and Jul 29’18: THB15.8/share)Remark: Excluding one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn**Net debt to equity of 1.37X, excluding the net impact of the Chicken of the Sea’s legal settlements
34,401 35,050 33,71531,427
34,818 35,185 35,105 29,703
34,137
15.9%
14.1%13.4%
14.5% 14.2%13.2%
12.1%11.3%
13.8%
4.4% 4.5%
2.7%
4.6% 4.1%4.9%
4.1%2.9%
4.0%
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
2Q16 3Q16 4Q16 1Q17* 2Q17 3Q17 4Q17* 1Q18 2Q18
Total sales (THB mn) GPM NPM
% Growth YoY
Sales 12.4 7.5 1.1 0.7 1.2 0.4 4.1 -5.5 -2.0
Gross profit 4.5 -12.4 -4.2 -8.9 -14.5 -5.6 -5.9 -26.2 -5.0
Net profit 16.9 -1.9 19.1 16.4 -7.6 8.9 59.7 -39.3 -3.7
Remark: Excluding one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn
Key Highlights
Recent Developments
2Q18 Financial Results
Business Outlook
Thai Union was recognized as Best Public Company (SET) of the Year 2018 in Agro and Food Industry by Money & Banking Magazine, out of the Top 300 Public Companies in Stock Exchange of Thailand based on market capitalization.
Thai Union was recognized in Institutional Investor’s 2018 All-Asia (ex-Japan) Executive Team rankings for:• Best ESG/SRI Metrics (3rd place, 1st place
among ASEAN Consumer/Staples)• Best Analyst Days (1st place in Thailand)• Best CFO (3rd place, 1st place among ASEAN
Consumer/Staples)
For more information, visit their website here.
June 2018 — Strong recognition in Asia’s investment community
July 2018 — Strong recognition in Thailand’s investment community
Thai Union remains a constituent of the FTSE4Good Index for three consecutive years during the June 2018 Index review.
Thai Union has been included in the FTSE4Good Emerging Index since December 2016, which is designed to measure the performance of companies demonstrating strong ESG practices.
June 2018 — Released the 5th version of annual Sustainability Report
August 2018 — Remains a constituent of FTSE4Good Index Series
The report publicly details Thai Union’s 2017 performance against KPI’s and its SeaChange® sustainability strategy.
It was prepared in accordance with globally recognized sustainability reporting guidelines, Global Reporting Initiative (GRI) Guidelines version G4 and Food Processing Sector Supplement (FPSS).
For the online version, visit Thai Union’s website here.
July 2018 — Launch of packaging innovation product at retail stores in UK
Thai Union’s John West has launched an innovative clear plastic packaging for ambient tuna products that is 100% recyclable, has a resealable lid, easy peel foil, and allows customers to see what they are purchasing.
The product is now placed on the shelves of two large retail stores in United Kingdom, Tesco and Asda, through a series of promotions.
July 2018 — Chicken of the Sea Infusions product launched in USA
Thai Union has continued its expansion of product portfolio by launching the product line of ‘infusions’ under Chicken of the Sea brand in United States.
Chicken of the Sea Infusions is a ready-to-eat, flavored ambient seafood product that has been rolled out through national retailers in USA.
July 2018 — Launch of fresh, pasteurized tuna chilled product under Petit Navire brand
Thai Union’s Petit Navire has launched an innovative, pasteurized tuna chilled product which is produced by natural processes to preserve a tender texture of tuna. It is served in a 100% recyclable clear plastic packaging.
The product is now placed on the shelves of large retail stores in France through a series of promotions.
July 2018 — Commercialization of Yellowfin Tuna Slices through the Food Service business
• Thai Union’s Yellowfin Tuna Slices™ are the world’s first pre-sliced, pre-seasoned tuna made from whole yellowfin tuna loins.
• Inspired by healthful eating trends, new Yellowfin Tuna Slices deliver quality and convenience—ready-to-serve for a stunning variety of menu applications.
• Received multiple awards, including 2018 Seafood Excellence Award in the Best New Foodservice Product category (Boston’s Seafood Expo), International Innovation Award 2017 from Enterprise Asia, and a finalist in 2018 Seafood Excellence Global Awards, Seafood Expo Global in Brussels
July 2018 — The acquisition in Thammachart Seafood Retail Co., Ltd (TSR)
Thai Union has completed the acquisition of 25.1% shares to TSR in Thailand, as part of efforts to expand the company’s business portfolio. • TSR was established in 2007 with 660 THB annual
sales• Operates 2 F&B concepts at 8 locations - The Dock
Seafood Bar, The Lobster Lab, and management of the Ocean Bar
• Services to Thai retailers for seafood counters, handling fresh and frozen product at 158 locations
July 2018 — Strategic investment to TUMD Luxembourg S.a.r.l (TUMD)
Thai Union has continued its focus on expansion by completing an acquisition of 45% equity in TUMD Luxembourg S.a.r.l (TUMD). TUMD wholly owns three Russian companies, collectively known as the DPR Group (DPR). • DPR is a retail focused fish and seafood business• Russia’s #1 canned tuna producer• Sales of around US$45m• Operates in both frozen and ambient segments• Brand portfolio includes Maguro, Captain of Tastes
and Rybar
Interim dividend for the period: 1 Jan 18 to 30 June 18
DPS THB 0.25
Book closing date 21 August 2018
Payment date 3 September 2018
0.30 0.28 0.28 0.32 0.48 0.40 0.39 0.53 0.15 0.30 0.32 0.32 0.32 0.25
0.22
0.25 0.31 0.31 0.34
50% 50%53%
51% 50.7% 50.0%
29.4%
51.3%
59.9%
50.5%
56.7% 57.2%52.3% 53.3%*
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 2017 1H18
THB/Share
DPS (LHS) Payout Ratio (RHS)
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. • *Chicken of the Sea’s net legal accruals impact not considered for the payout calculation for 1H18 dividend payment
Key Highlights
Recent Developments
2Q18 Financial Results
• Consolidated Results
• Results by Business Unit
Business Outlook
Chicken of the Sea has reached settlement with Walmart
Further discussions and relations with other plaintiffs underway
Estimated total risk of USD 44mn (including other litigation costs)
The overall process will take another 2 years to fully resolve
Ongoing legal fees of approx. USD 2.0mn per quarter
*Remark: Excluding one-time accruals for US legal settlement of THB1,416mn and related tax credit of THB 57mn
• Exclude FX impact, 2Q18 sales is stable (-0.1%) YoY, while volume sales was also stable from same period last year
• Reported sales at THB 34.1bn down 2.0% YoY from THB appreciationChallenged top line
• Margin recovery to 13.8%, up from 11.3% in 1Q18, but slightly below 2Q17.
• Tuna segment saw margin recovery from price recovery and stable tuna material price. Branded tuna margin still below historical level.
• Frozen business pressured from weak European salmon business
GPM recovery
• SG&A to sales ratio amount to 10.4%* vs. 9.5% in 2Q17
• Increase is mainly due to various negative one offs as well as ongoing legal costs related to US legal settlement
Continued cost control
• FX management policy posted good FX gains of THB 222mn in 2Q18, comprised of THB 400mn losses from operation and THB 622mn gains from corporate investment activities
• Other income also grew significantly mainly due to insurance claim
Non-operating items support net profit
• Chicken of the Sea reached first settlement signed with customer, and the rest are underway
• Chicken of the Sea estimated the total risk at THB 1.4bn, amount accrued as SG&A in 2Q18 reported financial statement
Accruals for US legal case settlement
500
420
3
103
203
303
403
503
603
1Q18 (THBbn) 2Q18 (THBbn)
0.4
Export cost increase due to THB appreciationTHB bn
Currency movement, 2Q18 change YoYLocal currency per USD
❖USD depreciated by 7% vs. THB in 2Q18 (10% in 1Q18)
❖Volatility pressures Thai operations productivity
❖With costs of approx. THB 7.2bn per quarter and 78% Thai operations for Export business, we estimate inflation impact on costs denominated in THB around USD 13mn - THB 420mn
❖In 1Q18, same calculation led to THB 500mn so total YTD impact represents THB 920 mn
❖As regional currencies did not strengthen to USD, could be difficult to pass effect to customer pricing. This negative impact of THB 420mn contributed to 2Q18 OP shortfall.
❖Other ASEAN currencies weakened to USD while THB gained 7% comparable to CNY
(per USD) ThailandTHB/USD
PhilippineVND/USD
IndonesiaIDR/USD
ChinaCNY/USD
2Q17 34.40 49.8 13,310 6.86
2Q18 31.92 52.5 13,944 6.38
Change% YoY 7.2% -5.4% -4.7% 7.0%
1,700 1,700
1,500
1,690 1,700
1,900 1,950
1,980
2,100
2,300
2,000
1,800
1,550 1,480
1,700
1,800
1,600 1,600
1,300
800
1,300
1,800
2,300
2,800
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
1Q17 1,633
2Q17 1,763
3Q17 2,010
4Q17 2,033
1Q18 1,577
(USD/ton)
-22.5%
2Q18 1,667
%ChangeQoQ
8.3% 8.0% 14.0% 1.2% -22.5% 5.7%
%ChangeYoY
30.0% 17.3% 40.2% 34.8% -3.5% -5.4%
34,818 35,185 35,105
29,703
34,137
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2Q17 3Q17 4Q17 1Q18 2Q18
SalesTHB mn
+14.9% QoQ
-2.0% YoY
USD mn 1,0691,015 1,054 1,065 942
121,402 125,183 134,375 136,535
66,244 63,839
2014 2015 2016 2017 2018
7.6% 3.1% 7.3% 1.6%
6M17 6M18YoY Growth
-3.6% YoY
❖Exclude FX, 2Q18 sales was stable YoY. • Ambient business sales stable YoY
from price recovery, • US business sales contracted 10% in
THB term, but up 3% in USD terms. • Frozen and chilled sales affected by
shrimp price down 16% YoY, while volume delivered growth
• However, THB appreciation vs USD prompted THB sales decline.
❖Excluding FX impact, 1H18 sales was down 1.5% YoY.
2Q17 2Q18
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
-2.0% YoY
-0.1% YoYBefore currency
impacts
34,137
34,818 +195
Tuna Shrimp &
related business1
Sardine&
Mackerel
Salmon-Ambient
Pet Care Value added
& other products2
USDeffect
EUReffect
LobsterOther seafood -Ambient
Salmon-Frozen
Other seafood -
Frozen
-353
+31 +7 +29 -98 -380+593 +5 -44 -762
+95
+2%-13% +5% +3% 0%
-9%
-16% +25%
0% -2%
-7% +1%
Brand35%
**FS -Brand
6%**FS -Private Label
6%
Private Label53%
Remark: *Others represent Asia, Australia, Middle East, Canada, Africa and South America**FS stands for Food Service
44% 42% 39% 38% 38%
29% 29% 33% 32% 32%
7% 8% 8% 10% 10%
7% 6% 6% 6% 6%
13% 14% 13% 15% 15%
0%
20%
40%
60%
80%
100%
2014 2015 2016 2017 1H18
Sales Breakdown by Geographic
Others*
Japan
Domestic
Europe
USA
Brand36%
**FS -Brand
5%**FS -Private Label
5%
Private Label54%
Sales Breakdown by Business
THB 63.8bnTHB 136.5bn
2017 1H18
❖1H18 Sales contribution in key markets marginally shifted in favor of domestic Thai market, due partly to the company was focusing more on selling product in domestic market to offset weaker export sales as a result of intense competition, TU continue to grow its new product initiatives into Thai market.
❖1H18 branded sales mix was quite stable at 41.2% (compared to 41.6% during 2017) leaving private label sales contributing remaining 58.8% of 1H18 sales
❖1H18 total branded sales decreased 7.5% YoY, mainly due to USD depreciation resulted in weaker sales contribution from US branded sales
❖Private label sales report 1.3% YoY growth due mainly to price adjustment to reflect higher raw material price YoY.
Remark: The 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
19,020 19,501 19,927 19,166
9,505 8,068
-
5,000
10,000
15,000
20,000
25,000
2014 2015 2016 2017 2018
-15.1% YoY
4,954 4,6584,263
3,360
4,709
14.2%13.2%
12.1% 11.3%
13.8%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
2Q17* 3Q17 4Q17* 1Q18 2Q18
Gross ProfitTHB mn
-5.0% YoY
+40.1% QoQ
GPM
6M176M18
14.3% 12.6%
❖ 2Q18 Gross profit was up 40.1% QoQ, • A seasonally strong sales up 14.9%
QoQ,• Stable tuna price and selling price
recovery support margin expansion,• Shrimp business diversify out of
highly-competitive US market, and• A lobster business recovery.
❖ 1H18 gross profit was down 15.1% YoY, due to volatile material prices and FX volatility mainly during 1Q18.
GPM 15.7% 15.6% 14.8% 14.0%
1,636
1,319
922
25
1,142
4.7%3.7%
2.6%0.1%
3.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2Q17 3Q17 4Q17 1Q18 2Q18
Operating ProfitTHB mn
Remark: Excluding one-time accrual for US legal settlement of THB1,427mnThe 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
-30.2% YoY
+4,502% QoQ
6,990 6,785 6,805
4,680
2,481
1,167
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2014 2015 2016 2017 2018
OP Margin
-53.0% YoY
OPM 5.8% 5.4% 5.1% 3.4%
SG&A% 9.5% 9.5% 8.7% 11.2% 10.4%
6M17
6M18
❖ 2Q18 Operating profit was up 45 times QoQ: • Strong margin recovery QoQ• Strict cost control initiatives
❖ SG&A-to-sales ratio was at 10.4% (from 9.5% in 2Q17), due to: • THB sales was down 2.0% YoY, • Other one-off expenses and US
legal fees prompted an increase. ❖ 1H18 SG&A ratio was at 10.8%, from
10.6% in 1H17. TU focuses on cost efficiency.
3.7% 1.8%
Remark: Excluding one-time accrual for US legal settlement of THB1,427mn*The 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
❖ 2Q18 Normalized EBITDA up 28.0% QoQ, • Business profitability improved • A prudent cost control• YoY, EBITDA remain challenge from
competitive environment, down 4.2%.
❖ 1H18 EBITDA was at THB 4,922mn, down 14.3% YoY due to weak 1Q18 performance.
EBITDAMargin
9.1% 9.2% 8.4% 8.3%
2,883 2,9902,640
2,159
2,763
8.3% 8.5%7.5% 7.3% 8.1%
3.0%
8.0%
13.0%
18.0%
23.0%
28.0%
2Q17 3Q17 4Q17* 1Q18 2Q18
EBITDATHB mn
-4.2% YoY
+28.0% QoQ
10,999 11,526 11,269 11,366
5,746 4,922
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2014 2015 2016 2017 2018
-14.3% YoY
EBITDA Margin
6M176M188.7% 7.7%
Remark: Excluding one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn*The 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
1,4211,737
1,440
869
1,369
4.1%4.9%
4.1%2.9%
4.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2Q17* 3Q17 4Q17* 1Q18 2Q18
Net ProfitTHB mn
-3.7% YoY
+57.5% QoQ
5,092 5,302 5,254 5,989
2,853 2,237
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014 2015 2016 2017 2018
-21.6% YoY
NPM
NPM 4.2% 4.2% 3.9% 4.4%
6M17
6M18
❖ TU’s 2Q18 net profit up 57.5% QoQ: ▪ Improved operation from price
recovery and stable raw material prices,
▪ FX gains of THB 222mn is a mix of FX losses from operations in Thailand and a positive impact from unwinding hedging transactions.
▪ Other income increased 221m vs 2Q17 due mainly to insurance claim from Ghana plant accident.
▪ Weak equity income YoY from weak Red Lobster operation.
❖ 1H18 Net profits was down 21.6% YoY, mainly from a weak 1Q18.
4.3% 3.5%
Adjusted NP Margin
Remark: Excluding one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn*The 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
1,3721,590
1,374
690
1,018
3.9% 4.5% 3.9%2.3%
3.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2Q17 3Q17 4Q17 1Q18 2Q18
Adjusted Net ProfitTHB mn
-25.8% YoY
+47.5% QoQ
1,368 -79
1,018
2Q18 Normalized NP
2Q18Adjusted NP
+20
Tax related to claims
-133
Insurance claims
❖ Excluding one-off quarter-end items, 2Q18 adjusted net profit was at THB 1,018mn, representing an improvement of 47.5% QoQ, but was down 25.8% YoY: • One-off net positive items during
2Q18 of THB 113mn was due to the insurance claims in regards to the accident at Ghana production facility which TU received during 2Q18.
-237
FX derivative unwinding
1.10 1.11 1.101.26
0.60 0.47
2014 2015 2016 2017 2018
0.30
0.37
0.30
0.18
0.29
2Q17 3Q17 4Q17 1Q18 2Q18
Earning per Share (EPS)*THB
-3.7% YoY
+57.5% QoQ
-21.6% YoY
6M17 6M18
❖ 2Q18 normalized EPS was at THB 0.29, up 57.5% QoQ but down 3.7% YoY.
Remark: *EPS in this slide represents fully diluted EPS based on current number of shares of 4,771,815,496**Excluding one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn***The 2Q17 and 4Q17 figures were restated mainly due to COGS reclassification
THB mn
❖ 2Q18 net positive contributor of THB 96mn, or 7.5% net profit accretive
❖ My Red Lobster Rewards loyalty program grew faster than projected
❖ Off-premise sales continue to grow YoY with over 470k active users
❖ A slight decline in SRS,❖ Red Lobster is introducing new menu
to attract more customers.❖ RL will work with TU to improve
supply collaboration
2Q18 1Q18 4Q17 3Q17 2Q17
-128 137 -317 -33 -49
259 235 248 247 259
-129 -128 -131 -134 -136
93 22 38 300 160
96 266 -162 380 235
0.02 0.06 -0.03 0.08 0.05
Share of profit
Other income
Finance costs
Income tax
Net income
EPS (THB/share)
Red Lobster has contributed THB 96mn to net profit
5,544
2,938
5,163
2016 2017 1H18
Annual Free Cash FlowTHB mn
1,751
280 -142
1,369
3,794
2Q17 3Q17 4Q17 1Q18 2Q18
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 0.79 0.12 -0.08 0.94 1.23
Cash Conversion Rate1 0.67 0.34 1.11
❖ 2Q18 free cash flow of THB 3.8bn:• Improved profitability, • A more stabilized raw material
prices, and • An efficient inventory control
❖ 1H18 free cash flow of THB 5.2bn
-400
+826
+2,553 +187
+2,408
Free Cash Flow** THB 5,163 mn
Unit: THB mn
ND/E 1.38xKd = 3.21%
ND/E 1.41xKd = 3.04%
64,951
+958
-3,220
-4,922
66,419
Net Debt as of
31 Dec 2017
Net Debt as of
30 Jun 2018
+142
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
**New definition of free cash flow, excluding income tax paid***Excluding the one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn
Other Investing & Financing activities*
CAPEXOther non-cash
expenses
Tax payments
Net interest paid
Dividends paid
Change in other assets
and liabilities
EBITDA Change in net working capital
Income tax paid and other investing & financing activities
Normalized ND/E 1.37x***
2017 1Q18
98.1% 96.3%
0.9%
1.0%1.7%
2017 2Q18
Interest-bearing debts of THB 65,923mn
Long-term loan by maturityTHB 47,732mn
By Maturity
2022 onwards
2021
2020
2019
Long-term debt
Current portionof long-term debt & finance lease
Short-term loan 23%
76%
2%
EUR
By Currency
USD
THB
THB 67.2bn THB 65,923mn
21%
73%
6%
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 *Excluding the one-time accrual for US legal settlement of THB1,427mn and related tax credit of THB 68mn
Net WC3
8.6%
6.1%7.0%
8.4%8.1%
2Q181Q184Q173Q172Q17
1.41x
1.35x
1.38x1.37x
1.33x
2Q181Q184Q173Q172Q17
ROCE2
ROE1 Debt to EBITDA
ND/E4
12.5%
7.8%
12.9%15.6%
12.9%
2Q181Q184Q173Q172Q17
INV Days
5.997.61
6.405.645.69
2Q181Q184Q173Q172Q17
43,821 44,701 43,744 41,665 41,735
111113 113
129
110
2Q17 3Q17 4Q17 1Q18 2Q18
WC (THB mn) WC Day
40,418 42,155 43,184 40,691 39,708
119122
125
143
123
2Q17 3Q17 4Q17 1Q18 2Q18
INV (THB mn) INV Day
1.37x*
Key Highlights
Recent Developments
2Q18 Financial Results
• Consolidated Results
• Results by Business Unit
Business Outlook
Source: Thai Union Group and Bloomberg
❖ Tuna price closed at USD 1,600/ton in June 2018. • 2Q18 average price was USD 1,667/ton
(-5.4% YoY, +5.7% QoQ) ❖ Shrimp price closed at THB 144/kg in June 2018.
• 2Q18 average price was THB 141/kg (-16.6% YoY, -23.0% QoQ)
❖ Salmon price closed at NOK 64/kg in June 2018. • 2Q18, average price was NOK 69/kg
(+3.0% YoY, +15.0% QoQ)
❖ USD/THB closed at 32.46 in June 2018. • In 2Q18, average USD/THB was at 31.92
(-7.0% YoY, +1.2% QoQ)❖ EUR/THB closed at 37.90 in June 2018
• In 2Q18, average EUR/THB was at 38.05 (+0.9% YoY, -1.9% QoQ)
❖ GBP/THB closed at 43.14 in June 2018. • In 2Q18, average GBP/THB was at 43.44
(-1.0% YoY, -1.1% QoQ)
USD/THB EUR/THB
Continued depreciation from 2017 sees slight recovery in 2Q18
Brexit vote
Relatively stable since Brexit vote
GPB/THB
Tuna Tuna slices
Sardine & mackerel Ambient and pouch salmon
Sales: THB 24,846 mn
Frozen, chilled seafood and related
39%48%
57%43%
Sales Split
34%66%
9%
91%
14%
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 others
Total 1H18 sales: THB 63,839 mn
Sales: THB 30,463 mn
Ambient seafood
Sales: THB 8,530 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
51% 50% 56% 49% 54%
49% 50% 44%51%
46%
96,849 93,883 90,158 83,314 93,855
- 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
2Q17 3Q17 4Q17 1Q18 2Q18
Sales (THB million) Quantity (Tons)
Gross Profit Margin (Percent)
-1.6% YoY
+16.0% QoQ
-3.1% YoY
+12.7% QoQ
Brand
Private label
Brand
Private label
Total
Brand
Private label
41% 41% 48% 42% 44%
59% 59% 52% 58%56%
16,631 16,111 15,250 14,100 16,363
- 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
2Q17 3Q17 4Q17 1Q18 2Q18
21% 19%17% 15%
22%
11% 14%17%
13% 12%
17% 17% 17%
14%
18%
2Q17 3Q17 4Q17 1Q18 2Q18
❖ 2Q18 ambient sales down 1.6% YoY, due partly to THB appreciation.
❖ Pricing recovery prompted a volume decline
❖ Gross profit margin up 141bps YoY and 363bps QoQ: • Exhaustion of high-priced inventory• Price recovery improve branded margin
QoQ, but more improvement needed❖ 1H18 ambient sales of THB 30.5bn, down
1.6% YoY, due mainly to THB appreciation
11%10% 9%
8%8%
9%9%
9%
6%8%
9% 10% 9%
6%8%
2Q17 3Q17 4Q17 1Q18 2Q18
❖ 2Q18 frozen and chilled seafood sales down 2.6% YoY, driven mainly by THB appreciation and falling shrimp prices.
❖ Sales volume improved 3.2% YoY. ❖ Gross profit margin was at 8.2%, down
127bps YoY, due to Baht appreciation and intense competition.
❖ US lobster business recovered ❖ European salmon business weakened from
recent high salmon prices. ❖ 1H18 frozen and chilled sales volume growth
of 2.4% YoY
Sales (THB million)
-2.6% YoY
+15.6% QoQ
Brand
Private label
65% 67% 66% 67% 66%
35% 33% 34%33%
34%
13,685 14,494 15,307
11,522 13,324
- 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
2Q17 3Q17 4Q17 1Q18 2Q18
28% 30% 32% 31% 31%
72% 70% 68%69% 69%
61,185 66,203 63,045 53,739
63,137
- 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
2Q17 3Q17 4Q17 1Q18 2Q18
Quantity (Tons)
+3.2% YoY
+17.5% QoQ
Brand
Private label
Gross Profit Margin (Percent)
Total
Brand
Private label
❖ PetCare and valued added sales declined 1.2% YoY • Sales reclassification of ready-to-eat tuna. • Pet food price adjustment prompt marginal
sales decline.❖ Gross margin has declined from last year from
intense competition.
+2.6% YoY
90% 90% 89% 90% 91%
10% 10% 11% 10% 9%36,884 38,454 39,862 37,638 37,842
- 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
2Q17 3Q17 4Q17 1Q18 2Q18
88% 91% 92% 92% 91%
12% 9% 8%8% 9%
4,502 4,580 4,548 4,081 4,450
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
2Q17 3Q17 4Q17 1Q18 2Q18
20%16% 18% 16% 17%
2Q17 3Q17 4Q17 1Q18 2Q18
Brand
Private label
Sales (THB million)
-1.2% YoY
+9.1% QoQ
Brand
Private label
Quantity (Tons)
+0.5% QoQ
Total
Gross Profit Margin (Percent)
(Asia, Australia, Middle East, Africa and South America)
United Statesand Canada
38% Europe
32%
Thailand
9%
21%Others
13,467 13,753 14,05411,821 12,931
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2Q17 3Q17 4Q17 1Q18 2Q18
SalesTHB mn
-4.0% YoY
+9.4% QoQ
❖ North America businesses delivered 3.0% growth in USD-term. • Frozen business deliver growth, both
volume and value, • Chicken of the Sea price recovery
affect volume sales. ❖ THB sales was down 4.0% YoY, mainly
due to THB appreciation. ❖ Red Lobster operation continued to
record negative SRS.
❖ 2Q18 European sales down 9.0% YoY. ❖ Branded business price recovery
affect volume sales. Profitability improved QoQ.
❖ Tough European salmon business from high salmon price.
11,949 11,183 10,295 9,42210,879
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2Q17 3Q17 4Q17 1Q18 2Q18
SalesTHB mn
-9.0% YoY
+15.5% QoQ
❖ 2Q18 Thailand sales up 13.1% YoY.❖ Diversifying sales in home market
to offset weaker export market as a result of intense competition
❖ Focus on product initiatives: Sealect meal product, Qfreshfrozen seafood and Monorishrimp snack
2,8034,317
3,342 3,439 3,169
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2Q17 3Q17 4Q17 1Q18 2Q18
SalesTHB mn
13.1% YoY
-7.8% QoQ
6,598 5,9327,414
5,0207,157
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2Q17 3Q17 4Q17 1Q18 2Q18
SalesTHB mn
+8.5% YoY
+42.6% QoQ
❖ 2017 Emerging markets sales up 8.5% YoY.
❖ Initiatives in China, both branded and OEM, are growing well.
❖ TU recently completed an acquisition of 45% equity in Russia’s top canned tuna producer.
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
4,709 THB mn
Ambient seafood
• Tuna• Sardine and mackerel• Ambient and pouch salmon
16,363 17.6 2,880
Frozen, chilled seafood and related
• Shrimp and related 1
• Lobster• Frozen, chilled and smoked salmon• Other seafood2
13,324 8.2 1,094
PetCare, value-added and others
• PetCare• Value-added and others1
• Other products2
4,45016.5 735
Total 34,137 13.8
Key Highlights
Recent Developments
2Q18 Financial Results
Business Outlook
Prices have begun successful re-adjustment for our Branded business in Europe and will further repricing will continue onto 3Q18
Spot prices and average inventory cost more balanced
Positive outlook on shrimp cost and improving market dynamics in US
Product innovations and Marine Ingredient business will go live this year
Continued cost management focus, new cost program of -1bn THB initiated
Strong cash focus with continued deleveraging balance sheet trend
Sales: Continued growth despite market challenges
Gross profit margin: 14 – 15%
SG&A to sales: 10.5%
Effective interest rate: Slightly below 2017
Tax rate: 15%
CAPEX: Approx. THB 4.8bn
Dividend policy: At least 50% dividend payout ratio
❖ Incorporated in July 2007 as Thammachart Seafood Retail Co., Ltd.
❖ Offers retailers in Thailand professional management service for seafood counters with fresh, frozen or value-added products
❖ Currently works with Central Food Retail, The Mall Group, Villa Supermarket, Big-C and Tesco
❖ Operating at 150+ locations around Thailand from north to south, including Chiang Mai and Hat Yai
❖ Products sourced from 25 countries and 236+ varieties of seafood
Salmon
Fish
Shellfish
Smoked
Value-added
Others
Salmon47%
Fish20%
Shellfish6%
Smoked4%
Value-added22%
Others1%
❖ F&B (restaurant) operations)• Targeted in and around Bangkok before
expanding out to main province of each part of Thailand
• 9 x The Dock• 1 x Lobster Lab• 1 x Ocean Bar
❖ Retail (supermarket) operations• Allows us to reach our customer as
much as we can• 150+ stores nationwide• Fresh, value-added & frozen including
the first retail caviar counter
Strong retail platform brand
and network
Working with Qfresh brand high-quality
frozen products
Launching F&B format into new
markets
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
TU
SET
Minimum 50% payout of our net profit with semi-annual payments
THB
Bloomberg/ Reuters TU TB/ TU.BK
Share price (3 August 2018) THB 17.50
Historical price
52-week high THB 20.20
52-week low THB 19.90
No. of paid up shares 4,771.8mn
Par value THB 0.25
Market Capitalization THB 83.5bn
Chansiri Family20.3%
Mitsubishi Corporatio
n 7.3%Social
Security Office 7.1%
Thai NVDR7.1%
Niruttinanon Family
6.9%
Others51.3%
Source: SET and TU
As of 29 June, 2018
Free float 67.4%
Foreign ownership/ Foreign limit 32.6%/ 45.00%
Stock Performance at a Glance Major Shareholders
Dividend Policy
DPS (THB per share)
Period 1H18 2H17 1H17 2H16 1H16 2H15
DPS 0.25 0.34 0.32 0.31 0.32 0.31
*The company changed the par value from THB 1 to THB 0.25 and registered with the Ministry of Commerce on 25 Dec 2014.
Remark: *Including share of income from investment in associates**2Q17 figures were restated mainly due to COGS reclassification
2Q18/ 2Q18/
2Q17 1Q18
Change Change
Sales 34,137 100% 34,818 100% 29,703 100% -2.0% 14.9%
Cost of sales (29,428) -86.2% (29,863) -85.8% (26,343) -88.7% -1.5% 11.7%
Gross profit 4,709 13.8% 4,954 14.2% 3,360 11.3% -5.0% 40.1%
SG&A expenses (3,567) -10.4% (3,318) -9.5% (3,335) -11.2% 7.5% 6.9%
FX gain (loss) 222 0.7% 40 0.1% 581 2.0% 454.1% -61.8%
Other income* 672 2.0% 530 1.5% 844 2.8% 26.8% -20.4%
EBIT 2,036 6.0% 2,206 6.3% 1,449 4.9% -7.7% 40.4%
Finance cost (500) -1.5% (563) -1.6% (505) -1.7% -11.2% -1.0%
EBT 1,535 4.5% 1,643 4.7% 944 3.2% -6.6% 62.6%
Tax (63) -0.2% (22) -0.1% 13 0.0% 188.1% -598.2%
Profit (Loss) from discontinued operarion 07 0.0% (80) -0.2% 10 0.0% -109.2% -25.3%
Net income 1,479 4.3% 1,541 4.4% 957 3.2% -4.0% 54.6%
Net income (loss) attributable to:
Equity holders of the Company 1,369 4.0% 1,421 4.1% 869 2.9% -3.7% 57.5%
Non-controlling interests of the subsidiaries 110 0.3% 120 0.3% 88 0.3% -7.7% 25.7%
Earnings per share
Basic earnings per share 0.29 0.29 0.18 -1.1% 57.5%
Diluted earnings per share 0.29 0.29 0.18 -1.1% 59.3%
Exchange rate
THB/USD 31.92 34.30 31.54 -6.9% 1.2%
(Unit: THB mn) 2Q18%
to sales2Q17**
%
to sales
Consolidated
1Q18%
to sales
Remark: *Including short-term investments
Cash and cash equivalents* 972 0.7% 815 0.6% 19.3%
Trade and other receivables - net 15,637 10.9% 16,344 11.2% -4.3%
Inventories - net 39,708 27.7% 43,184 29.6% -8.1%
Other current assets 2,040 1.4% 2,174 1.5% -6.2%
Total current assets 58,357 40.7% 62,581 42.8% -6.7%
Fixed assets 26,320 18.4% 25,261 17.3% 4.2%
Goodwill and other intangible assets 13,862 9.7% 14,080 9.6% -1.5%
Other non-current assets 44,851 31.3% 44,169 30.2% 1.5%
Total Assets 143,390 100% 146,092 100% -1.8%
Bank overdrafts and short-term loans 14,145 9.9% 15,365 10.5% -7.9%
Trade and other payables 18,843 13.1% 19,823 13.6% -4.9%
Current portion of long-term loans 721 0.5% 849 0.6% -15.1%
Current portion of debentures 3,150 2.2% 0 0.0% -
Current portion of finance lease liabilities 45 0.0% 47 0.0% -4.6%
Other current liabilities 2,027 1.4% 573 0.4% 253.6%
Total current liabilities 38,930 27.1% 36,657 25.1% 6.2%
Long-term loans from financial institutions 14,671 10.2% 14,712 10.1% -0.3%
Debentures 33,061 23.1% 36,169 24.8% -8.6%
Finance lease liabilities - net of current portion 131 0.1% 155 0.1% -15.4%
Other non-current liabilities 10,483 7.3% 10,348 7.1% 1.3%
Total Liabilities 97,276 67.8% 98,040 67.1% -0.8%
Non-controlling interests of the subsidiaries 3,140 2.2% 3,768 2.6% -16.7%
Total Shareholders’ Equity 46,114 32.2% 48,051 32.9% -4.0%
Total liabilities and shareholders’ equity 143,390 100% 146,092 100% -1.8%
Change(Unit: THB mn) 1H18% to total
assets2017
% to total
assets
(Unit: THB mn) 1H18 1H17 Change
Profit before income tax 1,069 3,285 (2,216)
Adjustments for depreciation & amortisation expenses 1,437 1,356 81
Other adjustments 1,653 1,152 502
Changes in operating assets and liabilities 3,556 (638) 4,194
Cash flows receipts from operating activities 7,716 4,705 3,011
Net cash receipts (payments) from operating activities 7,529 4,275 3,253
Net cash payments for investing activities (2,124) (1,840) (284)
Net cash receipts (payments) for financing activities (5,308) (2,703) (2,605)
Net increase (decrease) in cash and cash equivalent 97 (267) 364
Cash and cash equivalents - opening balance 573 731 (158)
Exchange gain (loss) on cash and cash equivalents 2 8 (6)
Cash and cash equivalents - closing balance 672 472 200
CAPEX (2,553) (2,384) (169)
Management Est. Free Cash Flows* 5,163 2,801 2,362
Consolidated
