Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — Q2 2015 Earnings Presentation

46 slides from Thai Union Group Public's earnings presentation, Aug 14, 2015

  1. Slide 1: 2Q15 Results Presentation

    2Q15 Results Presentation 14 August 2015

  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  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  4. Slide 4: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  5. Slide 5: More than 38 years of seafood processing experience

    More than 38 years of seafood processing experience Strategic Acquired third Expanded to Set up pet Founded Expanded to Entered to Expanded to Expanded partnership largest canned shrimp feed food Thai Union frozen seafood tuna fishing in shrimp farming capacity of with Mitsubishi seafood brand busin

  6. Slide 6: Group Structure

    Group Structure Thai Union Frozen Products Frozen & canned seafood, pet food, snack and ready-to-eat meals Core Branded Business OEM Business Business 100.00% THAI UNION HATCHERY (TUH) 90.50%* 98.00% 51.00%*** 94.44% Supporting TMK FARM CO., LTD. (TMK) Business 75.00% ASIAN PACIFIC CAN THAI UNION GR

  7. Slide 7: Acquisitions and re-classification tilting sales breakdown

    Acquisitions and re-classification tilting sales breakdown Higher contribution from salmon, sardine and shrimp & related business 1H15 Sales breakdown THB 59,248 mn 1 Tuna Shrimp and related business1 2 Frozen OEM 44% shrimp 3 4 5 6 Sardine & Salmon Pet Food Value-added & Mackerel other products2 Sh

  8. Slide 8: #1 Global leader in a consumer staple business

    #1 Global leader in a consumer staple business TUF is the world’s largest canned tuna producer, with the processing volume 18% of world production. World Canned Tuna Annual Production1 1.67 million tons Others 82% TUF 18% Source: 1Fishstat Plus (FAO) 2010, based on finished product production 7

  9. Slide 9: Global market leading brand portfolio

    Global market leading brand portfolio #1 #1 #1 •#1 canned seafood •#1 canned •#1 premium brand in the UK, Ireland seafood brands canned sardine and the Netherlands in France brand in France #1 #1 #1 •#1 premium canned • #1 canned tuna •#1 canned tuna sardine brand in US, brand in China brand in Thai

  10. Slide 10: Fully integrated global supply chain in canned tuna…

    Fully integrated global supply chain in canned tuna… Raw material flow Work-in-process and finished good flow Raw material sources Europe Production base Fishing fleet USA Thailand Ghana Seychelles West Pacific Ocean Atlantic ocean Vietnam Papua New Guinea Indian ocean TUF’s 7 own fleets Raw Materia

  11. Slide 11: … and frozen shrimp business

    … and frozen shrimp business Production base TUF’s export markets Chicken of the Sea Frozen Europe Food (COSFF) COSFF’s sourcing Asia COSFF’s distribution China Japan USA Thailand India Vietnam Pacific ocean Atlantic ocean Latin America Oceania Indian ocean Raw Material Acquisition Production Market

  12. Slide 12: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TUF TB/ TUF.BK As of 7 July 2015 Share price (11 Aug 2015) : THB 17.00 Historical price : Chansiri Family 52-week high THB 24.50 19.7% 52-week low THB 16.60 Niruttinanon No. of paid up shares : 4,771.8mn Family 6.9% Pa

  13. Slide 13: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  14. Slide 14: Recent developments

    Recent developments Jun 2015: TRIS maintained TUF’s credit rating at “AA-/Stable” Rating Rationale : • The ratings reflect TUF’s strong market position as one of the world’s leading tuna processors, the diversity of its products and markets and the group’s well-known brands in Europe and the United

  15. Slide 15: Recent developments (Cont'd)

    Recent developments (Cont’d) TUF brands in Europe receiving accolades Jun 2015: Jun 2015: Jul 2015: Petit Navire awarded “the Best John West awarded “Top MSC MW Brands awarded “Taste of Sales Force in the category of Canned Fish Brand 2015” for the the year 2015” Promotional Events for first time Gr

  16. Slide 16: Recent developments (Cont'd)

    Recent developments (Cont’d) Jul 2015: TUF released its 2nd Sustainability Report Key elements in this report: • Performance detail during 2014 that set the focus of our sustainability management • Preparation in accordance with the Global Reporting Initiative (GRI) version 4.0 (G4) guidelines • Eng

  17. Slide 17: Recent developments (Cont'd)

    Recent developments (Cont’d) Awards & recognitions by the financial community Jun 2015: Avanti listed as one of “Asia's 200 Best Under A Billion” company for 2015 by Forbes, a leading global business magazine. Avanti Feeds Limited, TUF’s associate in India, was listed in “Asia's 200 Best Under A Bil

  18. Slide 18: Preferential Public Offering (PPO)

    Preferential Public Offering (PPO) Feb – Jul 2015: Original Preferential Public Offering (PPO) timeline Feb 27 Apr 3 Jul 2 6 7 17 20 23 24 Determined Book Offering Subscription BOD’s AGM XB Date Record resolution Approval Date Closing Price & Period Date Entitlement (Jul 20 - 24) Ratio Jul 10: Entit

  19. Slide 19: Recent developments (Cont'd)

    Recent developments (Cont’d) Jul 2015: The U.S. State Department decided to keep Thailand in Tier 3* in its 2015 TIP report** Our Stand Our key Initiatives • A member of the Shrimp Sustainable Supply Chain • A leader and change driver not only our own Task Force supply chain but throughout the indus

  20. Slide 20: Global Treasury Centre & International Headquarter

    Global Treasury Centre & International Headquarter Permissions granted for Global Treasury Centre & International Headquarter Jun 12: Global Treasury Centre’s permission granted by Aug 6: International Headquarter’s permission granted the Ministry of Finance by the Revenue Department To provide bett

  21. Slide 21: Highest ever adjusted dividend per share with payout ratio of 52.3%

    Highest ever adjusted dividend per share with payout ratio of 52.3% Interim dividend for the period: 1 Jan 15 to 30 Jun 15 DPS THB 0.32 XD 25 Aug 2015 Book closing date 28 Aug 2015 Payment date 9 Sep 2015 THB/Share 0.60 70% 59.9% 0.50 53.5% 60% 50.1% 50.4% 50.6% 50.7% 50.0% 51.3% 50.5% 52.3% 50% 0.4

  22. Slide 22: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  23. Slide 23: 2Q15: Margin recovery despite strong FX volatility

    2Q15: Margin recovery despite strong FX volatility YoY Chg QoQ Chg 30.6 Sales 1.3%* 7.1% (THB bn) 16.9% GPM / GP 6.3% 31.6% 7.2% OPM / OP 11.3% 31.2% 1,412 Net profit -7.2% -6.3% (THB mn) Remark: *Without USD and EUR translation effect, 2Q15 sales should have been THB 32,457mn (+7.2% YoY) Operating

  24. Slide 24: 2Q15 Key highlights

    2Q15 Key highlights  Sales up 1.3% YoY to THB 30.6bn with key contribution from newly acquired business (MerAllliance and King Oscar) as well as lobster sales from Orion. Overall sales value growth was however limited by deep depreciation of EUR against THB and low commodity prices of tuna and shri

  25. Slide 25: Profitability in line with our annual target

    Profitability in line with our annual target Financial Summary1 Reported 1H15 net profit (THB million) up 18% YoY to 1H15 59,248 Total Sales 1H14 58,207 +1.8% THB 2,919million 1H15 Gross Profit Q1’12 9,138 +1.0% Share price movement 1H14 9,043 Q1’11 20142 20152 (Jan-Dec 14) (Jan- Aug 7’ 15 ) 1H15 5,

  26. Slide 26: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  27. Slide 27: EUR depreciation and lower RM prices eliminating most YoY sales growth

    EUR depreciation and lower RM prices eliminating most YoY sales growth from acquisitions Sales Breakdown by Category THB mn +1.3% YoY +1.8% YoY +7.1% QoQ 58,207 59,248 Value added & 30,258 30,642 Value added & other products2 28,606 Pet food other products2 Pet food Salmon Salmon Sardine & Mackerel

  28. Slide 28: Weak EUR and lower tuna sales restricting growth

    Weak EUR and lower tuna sales restricting growth Revenue growth component (THB million) +1.3% YoY +411 +176 -131 -6% +1% -1,991 +1,758 +12% 30,642 30,258 +474 +152% -18% -1,178 + 864 +28% -8% +12% 2Q14 Tuna Shrimp Sardine Salmon Pet food Value USD EUR 2Q15 & related business1 & added effect effect M

  29. Slide 29: Stable market breakdown, but rising brand contribution

    Stable market breakdown, but rising brand contribution Sales Breakdown by Geographic Sales Breakdown by Business THB 121,402mn THB 59,247mn 2014 1H15 13% 13% 7% 6% Others Brand Brand 7% 8% 41.3% 43.0% Japan 29% 31% Domestic Europe 44% USA 42% OEM OEM 58.7% 57.0% 2014 1H15  Higher sales contribution

  30. Slide 30: GPM rebounding in 2Q15 with a vengeance

    GPM rebounding in 2Q15 with a vengeance Gross Profit THB mn +6.3% YoY +1.0% YoY +31.6% QoQ 9,138 5,192 4,885 3,945 9,043 2Q14 1Q15 2Q15 1H14 1H15 GP Margin 16.1% 13.8% 16.9% 15.5% 15.4%  2Q15 gross profit (GP) rose 6.3% YoY thanks to sales contributions from King Oscar, MerAlliance, and Orion as we

  31. Slide 31: RM prices down YoY in 2Q15, but rebounding now

    RM prices down YoY in 2Q15, but rebounding now Skipjack tuna raw material prices White shrimp raw material prices (USD/ton) (THB/kg. of 60 pcs./kg) 3,000 300 2,500 250 2,000 200 164 1,400 (Jul’15) 1,500 (Jul’15) 150 1,000 100 500 50 0 0 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-11 Jan-12 Jan-13 Jan-14

  32. Slide 32: Sharp QoQ recovery in operating profit

    Sharp QoQ recovery in operating profit Operating Profit THB mn +8.0% YoY -9.7% YoY +134.0% QoQ 3,480 3,141 2,200 2,037 940 Operating 2Q14 1Q15 2Q15 1H14 1H15 Margin 6.7% 3.3% 7.2% 6.0% 5.3%  2Q15 operating profit (OP) rose 8.0% YoY, but surged by 134.0% QoQ The sharp recovery was mainly a result of

  33. Slide 33: 2Q15 EBITDA dented by FX loss

    2Q15 EBITDA dented by FX loss EBITDA THB mn -4.4% YoY +6.1% YoY -0.8% QoQ 5,879 3,062 2,951 2,928 5,538 EBITDA 2Q14 1Q15 2Q15 1H14 1H15 Margin 10.1% 10.3% 9.6% 9.5% 9.9%  2Q15 EBITDA down by 4.4% YoY mainly due to a FX loss of THB 179 mn (vs. a gain of THB 141mn in 2Q14) despite a higher OP. On QoQ

  34. Slide 34: Net profit driven by operating margin improvement

    Net profit driven by operating margin improvement Net Profit THB mn -7.2% YoY +18.1% YoY -6.3% QoQ 2,919 2,471 1,522 1,507 1,412 2Q14 1Q15 2Q15 1H14 1H15 NP Margin 5.0% 5.3% 4.6% 4.2% 4.9%  2Q15 net profit (NP) dropped 7.2% YoY and 6.3% QoQ to THB 1,412mn due to a FX loss (THB 179mn), higher taxes

  35. Slide 35: Normalized net profit up QoQ, but down YoY

    Normalized net profit up QoQ, but down YoY Normalized Net Profit THB mn -16.8% YoY +1.8% YoY +1.8% QoQ 2,990 1,813 2,938 1,481 1,508 2Q14 1Q15 2Q15 1H14* 1H15** NP Margin 6.0% 5.2% 4.9% 5.0% 5.0%  Normalized 2Q15 net profit up 6.8% from the reported figure The figure was arrived by adding back one-

  36. Slide 36: Declining WC greatly reducing net debts and leverage

    Declining WC greatly reducing net debts and leverage Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.85x THB 9,632 mn ND/E 0.68x Kd = 3.75% Kd = 3.60% Free Cash Flow THB 7,915 mn 40,144 -5,882 -5,421 1,193 -566 33,418 562 1,717 477 448 746 Net Debt EBITDA Change in Change i

  37. Slide 37: Accelerating inventory turn driving down WC and leverage

    Accelerating inventory turn driving down WC and leverage ROE1 18.9% ROCE2 A/R Days 15.0% 15.4% 13.8% 14.2% 12.7% 12.3% 12.1% 45 41 41 42 8.9% 39 6.6% 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 INV Days Net WC3 ND/E4 133 0.85x 0.80x 0.80x 0.76x 131 0.68x 122 125 117 11

  38. Slide 38: Sequential improvement in inventories and WC

    Sequential improvement in inventories and WC Inventory Days Net Working Capital Days 138 135 135 134 133 131 126 125 124 125 123 122 124 121 120 119 119 117 117 116 33,54734,637 33,885 35,809 40,496 44,438 36,18136,917 34,464 37,518 34,133 33,169 37,050 42,634 40,088 40,340 40,278 40,514 39,918 39,3

  39. Slide 39: Strong cash flow thanks to high cash conversion rate

    Strong cash flow thanks to high cash conversion rate Free Cash Flow from operating activities Free Cash Flow THB mn THB mn 5,499 4,550 4,161 3,365 3,150 2,392 2Q14 1Q15 2Q15 2Q14 1Q15 2Q15 Cash Conversion 0.98 1.97 1.47 Rate1 Remark: 1Cash Conversion Rate = FCF / EBIT 38

  40. Slide 40: Continual decline of debts with balanced maturities

    Continual decline of debts with balanced maturities Interest-bearing debts By Currency By Maturity EUR 4% USD 18% 2% 18% Short-term Loan 49% 2016 Current Portion of Long- 2% THB 78% term Debt 2% 2017 80% 2019 onwards Long-term 49% 42% 2018 Debt 2014 1H15 1H15 Long-term loan by maturity THB 46,300 mn

  41. Slide 41: 2Q15 Income Statement

    2Q15 Income Statement Consolidated 2Q15/ 2Q15/ (Million baht) 2Q15 % to sales 2Q14 % to sales 1Q15 % to sales 2Q14 1Q15 Change Change Sales 30,642 100.0% 30,258 100.0% 28,606 100.0% 1.3% 7.1% Cost of sales (25,450) -83.1% (25,373) -83.9% (24,660) -86.2% 0.3% 3.2% Gross profit 5,192 16.9% 4,885 16.1%

  42. Slide 42: 1H15 Income Statement

    1H15 Income Statement Consolidated 1H15/ 1H14 (Million baht) 1H15 % to sales 1H14 % to sales Change Sales 59,248 100.0% 58,207 100.0% 1.8% Cost of sales (50,110) -84.6% (49,164) -84.5% 1.9% Gross profit 9,138 15.4% 9,043 15.5% 1.0% SG&A expenses (5,997) -10.1% (5,563) -9.6% 7.8% FX gain (loss) 939 1

  43. Slide 43: Statement of Financial Position as of 30 Jun 2015

    Statement of Financial Position as of 30 Jun 2015 Consolidated % to total % to total (Million baht) 2Q15 2014 Change assets assets Cash and cash equivalents* 5,589 5.1% 6,156 5.3% -9.2% Trade and other receivables 14,807 13.4% 15,404 13.3% -3.9% Inventories 33,169 30.0% 37,518 32.5% -11.6% Other cur

  44. Slide 44: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  2Q15 Financial Results  2015 Guidance

  45. Slide 45: Up-to-date 2015 Guidance

    Up-to-date 2015 Guidance FY 2015 Sales USD 4.5 - 5bn GPM 15% - 16 % SG&A < 10% of sales Effective interest rate c.4% Effective tax rate 15% - 20% CAPEX Approximately THB 3.5bn Dividend policy At least 50% dividend payout 44

  46. Slide 46: Thank you

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

Thai Union Group Public Company — Q2 2015 Earnings Presentation on 6ix