TUF moves forward with 27% growth in Q1/2010 net profits

May 12, 2010 11:00

 TUF, Thailand's major producer and exporter of canned and frozen seafood products, announced its quarterly results, with the most significant achievement being a 27% increase in net profits for the first quarter of 2010. The company has also been successful at maintaining consistently high margin by focusing on value-added products, and said it is on a path of sustainable growth based on its strong management and operational capabilities, reports www.megafishnet.com with reference to Thai Union Group.

       Thai Union Frozen Products PLC (TUF)'s President, Thiraphong Chansiri, revealed that for the first quarter of 2010, the company's net profit reached 831 million baht, representing a 27% increase over the same period last year, which saw a net profit of 653 million baht. Earnings per share for the quarter also rose 27% to reach 0.94 baht. Sales revenue for the quarter in dollar term was 498 million USD, little changed from the same period a year ago, which stood at 499 million USD. In Thai baht term, sales revenue fell 8% from 17,666 million baht the same period last year to 16,329 million baht this year. Total revenue in Thai baht term also fell 6% from 17,889 million baht in Q1/2009 to 16,740 million baht this year.

       Mr. Thiraphong elaborated that the remarkable growth in net profit was a result of efficient operations and effective management, as well as the ability of overseas subsidiary companies, namely the US-based Tri-Union Seafoods and Empress to generate higher profits. The restructuring of the management and operation structure, such as relocation of manufacturing activity from the American Samoa facility to a new plant in Georgia, USA, has begun paying off in terms of better flexibility and greater efficiency. While sales revenue in US dollar term did not rise above last year's figure, due to an 8% drop in prices of raw materials, which necessitated reduction of product prices, the figure was still comparable. In addition, when sales to related companies are included, total sales revenue grew 9% in US dollar term, or 1% in Thai baht term, reflecting the group's strategic focus on internal collaboration to exploit each individual company's full market potential.

       Mr. Thiraphong further stated that net sales in Thai baht term fell 8% in this quarter compared to the same quarter last year, largely due to the fact that the Thai currency had risen 7.6% between these periods. Despite a host of unfavorable factors, the company was able to maintain gross margin, operating margin, and net margin on a level comparable to the previous year.

       He added, "Sales revenue for the Q1/2010 might not have grown, but total sales volume grew 11% over the same period last year, for example, frozen shrimp up 20% while sales volume of frozen cephalopod / salmon products rose 15%." Mr. Thiraphong also said, "We are satisfied with this performance, which has greatly exceeded our expectations, and I am confident that our results for the entire year should meet our growth target."

       For this quarter, tuna products still make up the largest share in the company's product portfolio at 42%, followed by frozen shrimp (21%), canned pet food (9%), canned seafood (8%), products for the domestic market (7%), shrimp feeds (6%), canned sardines and mackerels (4%) and frozen cephalopod/salmon (3%). Main export markets include the US (49%), Japan (11%), European Union (11%), Africa (6%), other Asia (3%), Australia (3%), the Middle East (2%), South America (2%), and Canada (1%). Domestic market accounts for 12% of total sales.

       Mr. Thiraphong commented, "The company has been closely monitoring new developments that could affect our business, particularly the state of the global economy and currency fluctuations. Over the last three months we were faced with a continuous rise of the Thai baht, coupled with worsening political crisis. With our strategy focused on diversifying our portfolio with more value-added products, conducting research and development to adapt to quickly evolving market preference, maintaining the best product quality, and providing the best services to our clients, we were able to raise our gross profit for the quarter, as well as achieving sustainable growth in net profit. As for the currency issue, TUF has been playing it safe and prudent, with a clear policy on risk management. We are actively hedging against currency fluctuations while steering clear of speculative activities." He added that if the Thai baht had been more stabilized with a slower ascent, the company's performance would have been even more impressive.

       The TUF president also presented a summary of 2010 market strategy by saying that the TUF would continue to expand both in existing and new markets. Value-added products would be an area of expansion for established markets, while for new markets, such as Russia, TUF would concentrate on frozen products. The company will pay more attention to the Middle East and Africa as well.

       "With this set of strategies, we are confident that we can continue on a path of sustained growth far into the future," concluded Mr. Thiraphong.

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