Thai Union Frozen Products: Q2/2010 profits and dollar sales rose 6% and 3% in the first half

August 3, 2010 14:36

Thai Union Frozen Products PCL. announced its operating results for the first half of 2010, with profits rising 6% on a 3% increase in dollar sales, due to the expansion of the company's product portfolio, especially in value-added products. All overseas subsidiaries also achieved strong growth. The company is confident its business strategy is on the track for sustainable growth, reports with reference to TUF.

Thiraphong Chansiri, president of Thailand's leading seafood producer Thai Union Frozen Products PLC (TUF), revealed that for the first 6 months of 2010, the company's net profit reached 1,704 million baht, up 6% from the same period last year, which saw a net profit of 1,608 million baht. Earnings per share also rose 6% from 1.82 baht for the first half of last year to reach 1.93 baht for the same period this year. Sales revenue for the period in dollar term was 1,026 million USD, up 3% from the previous year's figure of 996 millions USD. In Thai baht term, sales revenue fell 4% from 34,861 million baht the same period last year to 33,421 million baht this year. However, the company still managed to achieve continual sales revenue and profit growth in US dollar term as a result of product diversification to include more value-added products. All of TUF's overseas subsidiaries also showed strong performance despite the volatility in prices of key raw materials, such as tuna and shrimp, and the 7% appreciation of the Thai currency, compared with the previous year.

Mr Thiraphong added that for Q2/2010 alone, sales in US dollar term continued to grow, rising 6% from 497 million USD in the previous year to 529 million USD this year. In Thai baht term, sales dipped slightly from 17,195 million THB to 17,092 million THB. Net profits declined 9% from 955 million THB in Q2/2009 to 873 million THB for the same period of 2010.

The figures for the second quarter of 2010 show that sales revenue in US dollar term is on the rise, but as a result of the significant appreciation in the Thai currency, sales in Thai baht term was affected. The decline in net profits for this quarter was a result of rising costs of raw materials which depressed profit margins. Provisions associated with the sale of the American Samoa plant to the Samoan government also affected net profits. Excluding these asset write-down items, net profit for the quarter would have been above 900 million baht. Furthermore, this second quarter also showed a satisfactory 5% rise in net profits, from 831 million THB in the first quarter to 873 million THB. Based on these figures, the company plans to follow its typical dividend payout policy of at least 50% of net profits as interim dividends.

For Q2/2010, tuna products still make up the largest share in the company's product portfolio at 39%, followed by frozen shrimp (24%), canned cat food (9%), canned seafood (8%), products for the domestic market (7%), shrimp feeds (7%), canned sardines and mackerels (3%) and frozen cephalopod/salmon (3%). Main export markets include the US (49%), European Union (12%), Japan (12%), Africa (5%), other Asia (3%), Australia (3%), the Middle East (2%), South America (1%), and Canada (1%). Domestic market accounts for 12% of total sales.

Major challenges that TUF had to face during the first 6 months of this year include the foreign exchange situation and the costs of raw materials. This year saw much greater fluctuations of shrimp and tuna prices than in the previous year. The unusually warm temperature resulted in a delayed shrimp harvest while tuna prices shot up to 1,700 USD per ton. However, Mr Chansiri affirmed that he believed the situation would return to normal in the last two quarters of the year. The company is confident that it can attain further growth in the second half of the year, as it is the company's typical high season.

Furthermore, Thiraphong elaborated on the company's plan to purchase MW Brands, stating that TUF's board of directors decided on July 27 to purchase all of MW Brands Holdings SAS's ordinary shares. This decision must then be approved by the shareholders in the extraordinary general shareholders' meeting on September 2. MW Brands is a leading European producer and distributor of canned seafood products, with trademarks including John West, Petit Navire, Hyacinthe Parmentier, and Mareblu. This move will make TUF one of the world's leading canned tuna producers, putting it one among a few company with a complete global production and distribution network.

He then added, "TUF is confident "the investment in MW Brands will greatly enhance the firm's production capacity, raw material sourcing capability, and marketing power, since MW Brands has 5 fishing vessels in the Indian and Atlantic Oceans, 4 production locations, in France, Portugal, Seychelles, and Ghana, and a strong market presence in the European market. The acquisition will allow TUF greater and faster access to new supply bases and new markets, consistent with the company's overall strategic plan for a sustainable growth and the 2012 sales target of 3 billion USD."

Thiraphong concluded, "With MW Brands' sales contribution to the group's, it is highly probable that this ambitious target would be achieved before 2012."

Corporate Communications Department
Thai Union Frozen Products PCL.
Tel.0-2298-0024 ext. 675-678

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