Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — Q1 2017 Earnings Presentation

53 slides from Thai Union Group Public's earnings presentation, May 9, 2017

  1. Slide 1: 1Q17 Results Presentation

    1Q17 Results Presentation May 2017 Page 1

  2. Slide 2: Disclaimer

    Disclaimer 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 base

  3. Slide 3: Agenda

    Agenda  Key Highlights  Recent Developments  1Q17 Financial Results  2017 Business Outlook Page 3

  4. Slide 4: CEO quote: USD 8.0bn revenue target by 2020

    “Through organic growth, innovation and M&A efforts, we are committed to the USD 8.0bn revenue target by 2020.” Thiraphong Chansiri President and Chief Executive Officer Page 4

  5. Slide 5: 1Q17: Weaker operation YoY offset by investments and FX

    1Q17: Weaker operation YoY offset by investments and FX  Stable quarterly sales. 1Q17 sales growth YoY Chg % of sales marginally improved from the previous year due mainly driven by a product repricing from increased raw material prices 31,427 Sales (THB mn) +0.7% +3.5% without  Rising raw materia

  6. Slide 6: 1Q17 Net profits up 19.3% YoY

    1Q17 Net profits up 19.3% YoY Financial Summary1 1Q17 Net Profit (THB million) up 19.3% YoY to Total Sales 1Q17 1Q16* 31,427 31,210 +0.7% THB 1,469million 1Q17 4,330 Gross Profit -13.3% Share price movement Q1’12 1Q16* 4,996 Q1’11 20162 20172 Operating 1Q17 881 (Jan- Dec 16 ) (Jan- May 5,17 ) Profit

  7. Slide 7: 1Q17: Continued overall resilience to operational dynamic

    1Q17: Continued overall resilience to operational dynamic Total sales (THB mn) GPM NPM 60,000 20.0% 17.3% 16.9% 18.0% 50,000 16.0% 15.8% 13.8% 14.2% 14.1% 13.8% 16.0% 13.6% 14.0% 40,000 34,441 35,128 33,597 32,602 33,333 31,210 31,427 12.0% 30,642 30,000 28,606 10.0% 8.0% 20,000 5.3% 5.0% 4.7% 4.3%

  8. Slide 8: Agenda

    Agenda  Key Highlights  Recent Developments  1Q17 Financial Results  2017 Business Outlook Page 8

  9. Slide 9: Recent developments

    Recent developments Recognitions Award Award 24 March 17: TU won accolades in multiple categories at the annual 25 April 17: TU finance team has won awards for The Best Treasury Finance Asia awards including #1 Best managed company in Thailand, #1 Team of the year from the Asset magazine and for bes

  10. Slide 10: Recent developments

    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

  11. Slide 11: Recent developments

    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 enabl

  12. Slide 12: Stable dividend payment despite operational headwinds

    Stable dividend payment despite operational headwinds 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 THB/Share 0.70 59.9% 0.60 53.5% 57.2% 50.1% 50.4% 50.6% 50.7% 50.0% 51.

  13. Slide 13: Agenda

    Agenda  Key Highlights  Recent Developments  1Q17 Financial Results  TU’s Consolidated Results  Results by Business Unit  2017 Business Outlook Page 13

  14. Slide 14: CFO quote on shareholder value

    “Despite challenging operating environment, we remain committed to deliver solid growth and enhance our shareholders’ value.” Joerg Ayrle Group Chief Financial Officer Page 14

  15. Slide 15: The headwinds during 1Q17

    The headwinds during 1Q17 High tuna prices • Difficulty to pass on price increases to consumer (+30.0% YoY, +8.3% QoQ) • Competitive pressure in the private label business High shrimp prices • Rapid increase in shrimp price put pressure on profit margin (+13.8% YoY, +16.9% QoQ) • Salmon re-pricing e

  16. Slide 16: 1Q17: Continued overall resilience to operational dynamic

    1Q17: Continued overall resilience to operational dynamic Total sales (THB mn) GPM NPM 60,000 20.0% 17.3% 16.9% 18.0% 50,000 16.0% 15.8% 13.8% 14.2% 14.1% 13.8% 16.0% 13.6% 14.0% 40,000 34,441 35,128 33,597 32,602 33,333 31,210 31,427 12.0% 30,642 30,000 28,606 10.0% 8.0% 20,000 5.3% 5.0% 4.7% 4.3%

  17. Slide 17: The key take away for 1Q17 results

    The key take away for 1Q17 results • Sales +0.7% YoY, due to soft demand and weak currency Resilient sales growth • At constant exchange rates, sales would have increased by 3.5% • High tuna and shrimp prices putt pressure on profit margin A weaker GPM from high raw • European salmon business produc

  18. Slide 18: Red Lobster operational seasonality

    Red Lobster operational seasonality Lent Period Seasonality Christmas & NYE THB mn 1Q17 4Q16 Share of profit 203 -118 Other Income 261 240 Q1 Q2 Q3 Q4 Finance Costs -127 -102 Average Fluctuation • Red Lobster is very dependent on guest footfall Income Tax -113 39 development, and seasonality play cr

  19. Slide 19: Strong initiatives at Red Lobster

    Strong initiatives at Red Lobster 1. Kitchen of the Future 2. RL’s Signature Events 3. Smart PR Activity 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 Growing sales a

  20. Slide 20: 1Q17 A stable sales trend

    1Q17 A stable sales trend Sales +0.7% YoY THB mn -6.5% QoQ  1Q17 sales grew by 0.7% YoY to THB 31,427mn (up 2.8% YoY in dollar term to USD895mn), driven 34,441 35,128 33,597 by: 31,210 31,427  Ambient seafood business was facing difficult business environment from sluggish demand in Europe and Eur

  21. Slide 21: 1Q17 resilient sales growth, hindered by the FX impact

    1Q17 resilient sales growth, hindered by the FX impact Revenue growth component (THB million) +0.7% YoY +538 -237 -457 +320 -2% 31,427 +909 -320 31,210 -722 +208 +15% -23 -5% +14% -22% -1% +7% -6% +14% +2.9% YoY Before currency impacts Sardine Value 1Q16 Tuna &Shrimp related Lobster & Salmon Pet add

  22. Slide 22: Stable branded sales mix amid foreign currency volatility

    Stable branded sales mix amid foreign currency volatility Sales Breakdown by Geographic  Lower sales contribution from the European 100% markets to 31% (from 33% during 2016) was 14% 13% 14% 13% 14% driven by significant Thai Baht appreciation 80% 8% 7% 6% 6% 6% 7% 7% 8% 8% 8% Others* against Europ

  23. Slide 23: Gross margin under pressure from high raw material prices

    Gross margin under pressure from high raw material prices 30.0% 28.0% Gross Profit -13.3% YoY 26.0% THB mn -5.2% QoQ 24.0%  1Q17 Gross profit of THB 4,330mn, down 13.3% 22.0% YoY, driven mostly by raw material prices 4,996 5,428 volatility and currency appreciation YoY 4,937 20.0% 4,565 4,330  1Q1

  24. Slide 24: Operating profit: Prudent cost control

    Operating profit: Prudent cost control 15.0% Operating Profit 13.0% -45.0% YoY THB mn -29.7% QoQ 11.0%  1Q17 Operating profit of THB 881mn, up down 45.0% YoY, driven mostly by a weak gross margin 2,062 9.0% during the quarter 1,872 1,602 7.0%  Due to stringent cost control, 1Q17 SG&A expenses was

  25. Slide 25: Stable EBITDA supported by investments and FX gains

    Stable EBITDA supported by investments and FX gains 28.0% EBITDA -1.6% YoY THB mn +38.5% QoQ 23.0%  Despite a weak operating profits, TU reported 1Q17 EBITDA of THB 2,899mn, down 1.6% YoY. 18.0% The stable EBITDA YoY was supported by interest 3,181 2,946 2,917 2,899 income and equity profits contri

  26. Slide 26: Net profit: Strong growth supported by investments and FX impact

    Net profit: Strong growth supported by investments and FX impact 14.0% Net Profit +19.3% YoY THB mn 12.0% +62.8% QoQ  1Q17 net profit of THB 1,469mn, up 19.3% YoY, 10.0%  The increased net profit was driven by:  Positive income contribution from a strategic 8.0% 1,527 1,594 1,469 6.0% investment

  27. Slide 27: Normalized net profit of THB 1,052mn

    Normalized net profit of THB 1,052mn 20.0% Normalized 18.0% Net Profit -2.9% YoY THB mn 16.0%  Excluding the one-off quarter-end items, 1Q17 -26.1% QoQ 14.0% normalized net profit was at THB 1,052mn, stable 12.0% YoY. 10.0%  One-off positive items during 1Q17 of THB 417mn 1,446 comprised of: 1,384

  28. Slide 28: EPS: Keeps momentum despite operational headwinds

    EPS: Keeps momentum despite operational headwinds EPS* +19.3% YoY THB +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 0.32 0.33 0.31 0.26 0.19 1Q16 2Q16 3Q16 4Q16 1Q17 1.07 1.11 0.98 0.60 +19.3% YoY 0.26 0.31 2012 2013 2014 1Q16 1Q17 Remark:

  29. Slide 29: 1Q17 strong free cash flow amid high raw material prices

    1Q17 strong free cash flow amid high raw material prices Quarterly Free Cash Flow THB mn  Despite high raw material prices, 1Q17 Free cash flow (FCF) was solid at THB 785mn, due mainly to 4,483 positive contribution from recent investments and FX gains 786 -29 -192 -425 1Q16 2Q16 3Q16 4Q16 1Q17 Cas

  30. Slide 30: Debt refinancing secured long-term funding for investments

    Debt refinancing secured long-term funding for investments Interest-bearing debts of THB 64,854mn By Maturity 20% 2018 Short-term Loan 56% 1% Current 2019 Portion of Long- term Debt 2020 5% 2% & finance lease 2021 39% 79% onwards Long-term 42% Debt 2016 1Q17 Long-term loan by maturity THB 51,209mn P

  31. Slide 31: 1Q17: Strong operating cashflow allowed debt repayment

    1Q17: Strong operating cashflow allowed debt repayment Unit: THB mn Operating Activities Investing & Financing Activities ND/E 1.37x THB 1,695mn ND/E 1.34x Kd = 2.74% Kd = 3.04% Free Cash Flow THB 786 mn 64,942 -2,899 +300 +182 +108 64,384 +909 +852 +264 -89 +178 Net Debt EBITDA Change in Change in

  32. Slide 32: Improving financial strength

    Improving financial strength ROE1 INV Days Debt to EBITDA 7.87 13.8% 14.8% 13.5% 131 10.9% 117 119 5.59 8.4% 106 108 3.80 2.97 3.02 1Q16* 2Q16 3Q16 4Q16 1Q17 1Q16* 2Q16 3Q16 4Q16 1Q17 1Q16* 2Q16 3Q16 4Q16 1Q17 ROCE2 Net WC3 ND/E4 1.37x 1.34x 121 12.1% 13.0% 0.92x 10.7% 114 114 0.74x 9.3% 0.69x 6.4%

  33. Slide 33: Agenda

    Agenda  Key Highlights  Recent Developments  1Q17 Financial Results  TU’s Consolidated Results  Results by Business Unit  2017 Business Outlook Page 33

  34. Slide 34: Raw material price increased YoY during 1Q17

    Key operating impact: Raw material price increased YoY during 1Q17 Raw material prices Skipjack tuna raw material prices (USD/ton) 2,500  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). 2,000 1,690 1,500 (Apr’17) 1,000 500 Jan-14 Ja

  35. Slide 35: Key operating impact: Exchange rate

    Key operating impact: Exchange rate USD/THB 38  In April, USD/THB closed at 34.63. In 1Q17, average USD/THB was 36 at 35.12 (-1.5% YoY, -0.8% QoQ). 34 34.63 (Apr’17) 32 30 28 Jan-14 Jan-15 Jan-16 Jan-17 EUR/THB 50  In April, EUR/THB closed at 37.62. In 1Q17, average EUR/THB was at 37.41 (-4.9% YoY

  36. Slide 36: Thai Union's global footprint

    Thai Union’s global footprint Page 36

  37. Slide 37: 3 strategic business segments

    3 strategic business segments Total 1Q17 sales: THB 31,427mn Frozen, chilled seafood PetCare, value added and Ambient seafood Sales: THB 14,069 mn and related others Sales: THB 12,914 mn Sales: THB 4,444 mn Shrimp & related Tuna business PetCare business1 Ambient & Pouch Frozen, chilled & Value-adde

  38. Slide 38: Ambient Seafood

    Ambient Seafood cS , Gatz art (9h 222 roorpaisr ance 1) comsnarion

  39. Slide 39: Ambient Seafood: 1Q17 soft starts for European market

    Ambient Seafood 1Q17 soft starts for European market Sales (THB million) Quantity (Tons) -7.4% YoY -6.8% YoY 1.6% QoQ -0.9% QoQ 20,000.00 19,000.00 17,261 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 94,086 103,387 90,028 88

  40. Slide 40: Frozen, chilled seafood and related

    Frozen, chilled seafood and related Page 40

  41. Slide 41: Frozen, chilled seafood and related: Solid sales growth

    Frozen, chilled seafood and related Solid sales growth Sales (THB million) Quantity (Tons) +5.6% YoY +2.8% YoY -15.7% QoQ -16.7% QoQ 90,000.00 89,000.00 88,000.00 20,000.00 87,000.00 86,000.00 19,000.00 85,000.00 84,000.00 83,000.00 82,000.00 81,000.00 18,000.00 17,000.00 15,138 15,317 80,000.00 79,

  42. Slide 42: PetCare, value-added and others

    PetCare, value-added and others Page 42

  43. Slide 43: PetCare delivering strong operational performance

    PetCare, value-added and others PetCare delivering strong operational performance Sales (THB Million) Quantity (Tons) +17.4% YoY +13.8% YoY -2.3% QoQ +16.0% QoQ 6,000.00 5,177 50,000.00 49,000.00 48,000.00 47,000.00 42,493 5,000.00 4,549 4,444 46,000.00 45,000.00 44,000.00 43,000.00 42,000.00 34,654

  44. Slide 44: 2017 Segment Profitability

    2017 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 14,069 16.2% 2,282 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 12,914 8.3% 1,066 THB 4,330 million related *Shrimp & related busine

  45. Slide 45: Agenda

    Agenda  Key Highlights  Recent Developments  1Q17 Financial Results  2017 Business Outlook Page 45

  46. Slide 46: 2017 Guidance

    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

  47. Slide 47: Five key focus areas into 2017

    Five key focus areas into 2017 Category Highlight Continue to profitably grow market share in European ambient markets 1 Operation improvement Improved profitability of the tuna business (COSI and Private Label business) European salmon business improvement M&A / Post Merger Successfully drive growt

  48. Slide 48: Appendix

    ia Thai Page 48 ® Union

  49. Slide 49: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 31 Mar 2017 Share price (5 May 2017) : THB 22.00 Historical price : Chansiri Family 52-week high THB 22.80 20.5% 52-week low THB 19.50 No. of paid up shares : 4,771.82mn Niruttinanon Others Family 6.

  50. Slide 50: 1Q17 Income Statement

    1Q17 Income Statement Consolidated 1Q17/ 1Q17/ % % % (Unit: THB mn) 1Q17 1Q16** 4Q16** 1Q16 4Q16 to sales to sales to sales 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%

  51. Slide 51: Statement of Financial Position as of 31 March 2017

    Statement of Financial Position as of 31 March 2017 % to total % to total (Unit: THB mn) 1Q17 2016 Change assets assets 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 asse

  52. Slide 52: 1Q17 Statement of Cash Flow

    1Q17 Statement of Cash Flow Consolidated (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 fro

  53. Slide 53: Thank you

    Thank you Corporate website: http://www.thaiuniongroup.com IR website: http://www.thaiuniongroup.com/en/investor.ashx E-mail: [email protected] Tel:53+66 2298 0024 Page

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