Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — FY2018 Earnings Presentation
55 slides from Thai Union Group Public's earnings presentation, Feb 21, 2019
Slide 1: FY2018 Analyst Meeting
FY2018 Analyst Meeting Thai Union Group PCL. 21 February, 2019
Slide 2: 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 based on assump
Slide 3: Agenda: FY2018 Key Highlights
FY2018 Key Highlights Recent Developments FY2018 Financial Results Business Outlook
Slide 4: CEO message: operational excellence and cost management
C6 Despite challenging market conditions, we continue to stay firmly focused on operational excellence, cost management, and profitability improvement. 33 Thiraphong Chansiri President and CEO
Slide 5: 4Q18 Key Financial Highlights
(THB mn) Sales Gross Profit Operating Net Profit Profit 36,012 5,356 1,499 1,223* Sales improved YoY Stable raw material prices Strict cost control Hindered by business restructuring expenses 4Q18 sales improved YoY Gross profit improved Operating profit up 55.2% YoY, Normalized net profit driven by
Slide 6: FY2018 Financial Summary
2018 Net Profit* -1.2% Financial Summary1 2017 2018 down 13.4% YoY to (THB million) -2.2% 134,937 THB 5,191 million -4.9% 19,310 18,892 133,285 Share price movement 11,579 11,016 20172 20182 (Jan- Dec 17) (Jan-Dec 18) -13.4% -5.1% -5.7% -21.7% 5,989 4,921 4,669 5,191 Declining debt, while equity red
Slide 7: Quarterly sales, GPM and NPM trend
Total sales (THB mn) GPM NPM 18.0% 60,000 15.7% 14.7% 14.5% 14.9% 16.0% 14.2% 13.8% 14.0% 50,000 13.4% 14.0% 11.5% 12.0% 40,000 34,852 33,803 34,174 36,012 33,715 34,404 34,739 30,963 29,337 10.0% 30,000 8.0% 4.6% 4.9% 5.1% 6.0% 20,000 4.1% 4.1% 4.0% 3.0% 3.40% 2.7% 4.0% 10,000 2.0% 0 0.0% % Growth
Slide 8: Agenda: Recent Developments
FY2018 Key Highlights Recent Developments FY2018 Financial Results Business Outlook
Slide 9: EU lifts Thailand's yellow card on IUU fishing
8 January, 2019 – European Union lifts Thailand’s yellow card on IUU (Illegal, Unreported, Unregulated) fishing industry • Thai Union is pleased European Union (EU) decided to lift yellow card on Thailand • The fight against IUU fishing has been ongoing in Thailand • Thai Union is proud to have work
Slide 10: Recent developments: sustainability collaborations and relief efforts
9 January, 2019 – Thai Union provides 1,000 24 December, 2018 – Thai Union, 39 other leading Thai humanitarian relief packs containing bottled firms launched the Global Compact Network Thailand water, SEALECT Mackerel, SEALECT Tuna, rice (GCNT) with United Nations and FISHO snacks to provide assista
Slide 11: SPACE-F food tech initiative, awards and WWF report
5 February, 2019 – Thai Union partners with National Innovation Agency (NIA) and Mahidol University’s Science Faculty to launch food tech startup initiative, SPACE-F, as Thai Union focuses on its strength in innovation as recipe for success in global food business. Aimed to drive growth and promote
Slide 12: Red Lobster launches first China store
21 December, 2018 – Red Lobster launched its first China store in Shanghai, as part of the American casual dining chain’s plan to tap Chinese market, growing demand for quality seafood • Located in IFC Mall, downtown Shanghai, China • JV with FYM Restaurants, operator of China’s Morton’s Steakhouse
Slide 13: Final dividend DPS THB 0.15
Final dividend for the period: 1 July 2018 to 31 December 2018 DPS THB 0.15 XD Date 5 March 2019 Book closing date 7 March 2019 Payment date 23 April 2019 THB/Share 0.70 59.9% 58.8%* 0.60 56.7% 57.2% 53% 51.3% 52.3% 50% 50% 51% 50.7% 50.0% 50.5% 0.50 0.40 29.4% 0.25 0.31 0.31 0.34 0.30 0.15 0.20 0.2
Slide 14: Agenda: FY2018 Financial Results
FY2018 Key Highlights Recent Developments FY2018 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 15: Triple C is key: Cash, Cost productivity, Capital efficiency
C6 Triple C is key: Cash, Cost productivity, Capital efficiency. Joerg Ayrle Group CFO FY2018 A
Slide 16: 4Q18 results summary
Record • Sales at THB 36bn, an all-time record for Thai Union Group quarterly • Reported growth at 3.7%, adjusted growth at constant FX rates at 4.7% top line • GPM recovering at 14.9%, compared to 13.8% achieved LY and 15.8% in Q318 Strong GPM • Ambient OEM, PetCare and Frozen segments are the main
Slide 17: ESCo business closure
• Following Thai Union’s subsidiary, Européenne de la Mer’s, announcement of its intention to divest the loss-making chilled salmon business in Scotland, The Edinburgh Salmon Company Ltd (“ESCo”), no feasible alternative solution to closure had been found during collective consultation period. • As
Slide 18: Tuna raw material price
Tuna raw material price 2,400 (USD/ton) 2,200 2,000 1,800 1,600 4Q17 3Q17 2Q17 2,033 2,010 1,400 1Q17 1Q18 2Q18 4Q16 1,763 2Q16 3Q16 1,667 3Q18 1,633 1,577 4Q18 1,503 1,508 1,467 1,200 1Q16 1,433 1,408 1,257 1,280 1,000 Quarterly average Monthly average %Change QoQ 20.1% 19.6% -4.7% 5.2% 8.3% 8.0% 1
Slide 19: Sales
Sales THB mn +3.7% YoY +5.4% QoQ • 4Q18 sale improved 3.7% YoY driven 36,012 40,000 by: 34,733 33,775 34,169 35,000 ✓ Frozen and Chilled Seafood and 29,329 30,000 PetCare and Value-added 25,000 businesses saw strong sales volume 20,000 growth YoY 15,000 ✓ Ambient business sales saw 10,000 marginal d
Slide 20: Revenue growth component
Revenue growth component THB mn +3.7% YoY 175 -49 660 -359 36,012 446 -67 -129 +9% 0% 543 -3% -3% -6% +24% 34,733 96 -142 64 40 +38% +1% -5% +8% +11% +6% +4.7% YoY Before currency impacts Tuna Sardine Salmon- Other Shrimp Salmon- Lobster Other Pet Care Value USD EUR 4Q17 & Ambient seafood - & Frozen
Slide 21: Sales breakdown by geography and business
Sales Breakdown by Geographic 100% 13% 14% 13% • 2018 Sales contribution in key markets 15% 15% 7% 6% 6% 6% 6% Others* shifted in favor of domestic Thai market. 80% 7% 8% 8% 9% 11% Japan ✓ Partly due to company focus on selling 60% Domestic product in domestic market to offset 29% 29% 33% 31% 31% Eu
Slide 22: Gross profit
Gross Profit 30.0% THB mn 28.0% +11.4% YoY 26.0% -0.9% QoQ 24.0% • 4Q18 Gross profit was up 11.4% YoY, 5,406 5,356 22.0% ✓ Despite marginal THB 4,806 4,741 20.0% appreciation, increased sales and 3,388 18.0% regular price discussion prompted 15.8% 14.9% 16.0% strong margin recovery to 14.9%, 14.0% u
Slide 23: Operating profit
20.0% Operating Profit 18.0% THB mn +55.2% YoY 16.0% -19.7% QoQ 14.0% • 4Q18 Operating profit was up 55% 12.0% YoY: 1,866 10.0% ✓ Strong gross margin recovery YoY 1,499 1,212 8.0% ✓ Strict cost control initiatives 966 6.0% • SG&A-to-sales ratio was at 10.7% OP Margin 5.5% 4.0% (from 11.1% in 4Q17),
Slide 24: EBITDA
28.0% EBITDA THB mn +0.6% YoY 23.0% -16.9% QoQ • 4Q18 Normalized EBITDA up 0.6% 18.0% YoY, 3,254 2,686 2,834 2,703 ✓ While business profitability 2,226 13.0% improved from a more raw material price environment and EBITDA Margin 9.5% 8.0% stringent cost control, 7.7% 8.4% 7.6% 7.5% ✓ The weaker non-o
Slide 25: Net profit
14.0% Net Profit THB mn 12.0% -13.4% YoY -29.3% QoQ • 10.0% Despite strong recovery in operating 8.0% performance, TU’s 4Q18 reported 1,731 normalized net profit of THB 1,413 1,368 5.1% 1,223 6.0% 1,223mn, down 13.4% YoY, driven by: NPM 869 4.0% ✓ FX gains of THB 41mn (from THB 4.1% 4.1% 353mn in 4Q
Slide 26: Adjusted net profit
20.0% Adjusted Net Profit 18.0% THB mn -6.6% YoY 16.0% • Besides 4Q18 adjustments for Edinburgh 14.0% Salmon Company (ESCo) business closure- -29.3% QoQ 12.0% related expenses of THB69mn (4Q18) and 1,731 10.0% TMAC investment impairment of THB Adjusted 1,309 8.0% 87mn, TU recorded no other adjustmen
Slide 27: Earnings per share
Earning per Share (EPS)* THB -13.4% YoY -29.3% QoQ • 4Q18 normalized EPS was at THB 0.26, 0.36 down 13.4% YoY and 29.3% QoQ, 0.30 0.29 along with the net profit trajectory. 0.26 • 2018 normalized EPS was at THB 1.09, 0.18 down 13.4% YoY 4Q17 1Q18 2Q18 3Q18 4Q18 1.26 1.10 1.11 1.10 1.09 -13.4% YoY 20
Slide 28: Red Lobster contribution
Red Lobster has contributed THB 193mn to net loss in 4Q18 • 4Q18 remained a seasonally weak THB mn 4Q18 3Q18 2Q18 1Q18 4Q17 quarter for Red Lobster with total contribution weak at negative THB Share of -201 64 -128 137 -317 193mn, compared to negative THB profit 162mn in 4Q17 Other ✓ Interest income
Slide 29: Free cash flow
Quarterly Free Cash Flow THB mn 3,794 • 4Q18 free cash flow of THB 1.1bn: ✓ Improved profitability, 2,186 ✓ A more stabilized raw material 1,369 1,052 prices, and ✓ An efficient inventory control. 2018 -142 Inventory value dropped THB 4.8bn • 2018 free cash flow of THB 8.4bn, 4Q17 1Q18 2Q18 3Q18 4Q1
Slide 30: Net debt movement
Unit: THB mn ND/E 1.38x Free Cash Flow** THB 8,401 mn Income tax paid and other investing & financing activities ND/E 1.35x Kd = 3.21% Kd = 3.07% Normalized ND/E 1.29x*** 66,419 +3,699 62,913 +975 -211 +4,898 +433 -11,016 +1,376 -3,485 -174 EBITDA Change in net Change in Other non- CAPEX Tax Net int
Slide 31: Interest-bearing debts by currency and maturity
Interest-bearing debts of THB 64,499mn By Currency By Maturity EUR 1.0% 1.6% USD 21% Short-term loan 22% 0.9% Current portion of long-term debt 2% 14% & finance lease 2020 2021 THB 98.1% 98.3% Long-term debt 76% 2022 65% onwards 2017 2018 2017 2018 Long-term loan by maturity THB 67.2bn THB 64.5bn TH
Slide 32: ROE, inventory days, debt to EBITDA, ROCE, ND/E
ROE1 INV Days Debt to EBITDA 16.2% 145 7.38 12.7% 12.5% 11.4% 128 6.26 5.82 5.97 128 125 4.98 7.8% 115 43,184 40,691 39,708 39,996 38,371 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 INV (THB mn) INV Day ROCE2 Net WC3 ND/E4 131 115 111 109 100 1.41x 1.40x 1.38x 9.9% 1.3
Slide 33: Agenda: Results by Business Unit
FY2018 Key Highlights Recent Developments FY2018 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 34: Raw material prices: tuna, shrimp, salmon
Tuna raw material price • In January 2019, raw material prices closed at: (USD/ton) 2,400 Tuna - USD 1,280/ton 2,200 Shrimp - THB 178/kg 2,000 Salmon - NOK 64/kg 1,800 3Q17 4Q17 • In 4Q18, average raw material prices closed at: 1,600 1Q17 2Q17 2,033 2Q18 Tuna 2,010 1Q18 1,400 1,763 3Q18 4Q18 USD 1,4
Slide 35: Foreign exchange rates
USD/THB EUR/THB 38.0 41.0 Continued depreciation from 2017 sees slight 36.0 40.0 recovery in 2Q18 and 3Q18 34.0 39.0 1Q16 2Q16 2Q16 3Q16 4Q16 1Q17 1Q16 3Q16 3Q17 32.0 35.90 35.51 35.34 35.26 35.12 2Q17 3Q17 4Q17 38.0 39.83 4Q17 1Q18 3Q18 34.30 3Q18 4Q18 39.32 4Q16 39.20 2Q18 33.39 32.95 1Q18 2Q18 32
Slide 36: Agenda: Business Outlook
FY2018 Key Highlights Recent Developments FY2018 Financial Results Business Outlook
Slide 37: Total 2018 sales by business
Total 2018 sales: THB 133,285 mn Ambient seafood Frozen, chilled seafood and related PetCare, value-added and others Sales: THB 62,263 mn Sales: THB 52,793 mn Sales: THB 18,229 mn Tuna Tuna slices Shrimp and related 1 Lobster PetCare Marine ingredients Sardine & mackerel Ambient and pouch salmon Fro
Slide 38: Ambient seafood results
Sales (THB million) Quantity (Tons) -1.5% YoY -1.4% YoY -10.8% QoQ -4.7% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 16,363 16,806 14,994 20,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 90,065 93,855 93,236 19,000
Slide 39: Frozen and chilled seafood results
Sales (THB million) Quantity (Tons) +4.6% YoY +8.0% YoY +20.1% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 +6.5% QoQ 20,000.00 105,000.00 104,000.00 103,000.00 102,000.00 101,
Slide 40: PetCare and value-added results
Sales (THB million) Quantity (Tons) +18.0% YoY +14.2% YoY +23.9% QoQ +15.0% QoQ 6,000.00 5,367 50,000.00 45,539 4,548 49,000.00 48,000.00 39,862 37,638 37,843 39,596 4,080 4,450 4,332 47,000.00 46,000.00 5,000.00 7% 45,000.00 44,000.00 43,000.00 42,000.00 41,000.00 40,000.00 11% Brand 8% 9% 9% Brand
Slide 41: Sales by region
30% Europe 39% United States 11% and Canada Thailand 20% Others (Asia, Australia, Middle East, Africa and South America)
Slide 42: North America sales
Sales THB mn +10.6% YoY +18.7% QoQ 20,000 15,193 18,000 16,000 13,743 12,931 12,801 14,000 11,821 12,000 10,000 8,000 6,000 4,000 2,000 - 4Q17 1Q18 2Q18 3Q18 4Q18 • 4Q18 North America sales improved by 10.6% in Thai Baht term. ✓ THB was stable YoY ✓ US Frozen businesses, both shrimp and lobster, del
Slide 43: European sales
Sales THB mn +5.8% YoY 20000 18000 -3.6% QoQ 16000 14000 9,929 10,640 10,894 10,503 8,962 12000 10000 8000 6000 4000 2000 0 4Q17 1Q18 2Q18 3Q18 4Q18 • 4Q18 European sales up 5.8% YoY • Despite falling tuna price, European market saw strong sales volume growth, resulting in favorable revenue growth •
Slide 44: Thailand sales
Sales THB mn 20000 18000 16000 14000 +26.9% YoY 12000 10000 +25.5% QoQ 8000 6000 3,439 3,379 4,242 4000 3,342 3,169 2000 0 4Q17 1Q18 2Q18 3Q18 4Q18 • 4Q18 Thailand sales up 26.9% YoY. • Diversifying sales in home market to offset weaker export market from THB appreciation against key currencies • St
Slide 45: Other markets sales
Sales THB mn -21.4% YoY 20000 18000 16000 14000 -14.5% QoQ 12000 7,725 10000 7,063 7,100 8000 6,074 6000 5,115 4000 2000 0 4Q17 1Q18 2Q18 3Q18 4Q18 • 2018 sales was at THB 25.3bn, down 2.0% YoY from weaker sales in Middle East and Japan • Initiatives in China, including collaboration with Thammachar
Slide 46: Business segment sales and margin
Sales Margin Gross profit Business segment THB million % THB million Ambient seafood • Tuna 14,994 16.8 2,511 • Sardine and mackerel • Ambient and pouch salmon Frozen, chilled seafood and related • Shrimp and related 1 15,651 10.0 1,570 • Lobster • Frozen, chilled and smoked salmon • Other seafood2
Slide 47: 2019 guidance
Sales: 5% YoY growth Gross profit margin: 15% SG&A to sales: 10% Effective interest rate: No material change from 2018 CAPEX: Approx. THB 4.8bn Dividend policy: At least 50% dividend payout ratio
Slide 48: Appendix
Appendix} Slide 48 FY2018 Analyst Meeting
Slide 49: Stock performance, major shareholders, dividend policy
Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 28 December, 2018 Share price (18 February, 2019) THB 18.30 Others 51.0% Historical price 52-week high THB 20.50 Chansiri Family THB 20.00 19.6% 52-week low No. of paid up shares 4,771.8mn Par value THB 0.25 Thai
Slide 50: Consolidated income statement 4Q18
Consolidated 4Q18/ 4Q18/ % % % (Unit: THB mn) 4Q18 4Q17** 3Q18 4Q17 3Q18 to sales to sales to sales Change Change Sales 36,012 100% 34,733 100% 34,169 100% 3.7% 5.4% Cost of sales (30,656) -85.1% (29,927) -86.2% (28,762) -84.2% 2.4% 6.6% Gross profit 5,356 14.9% 4,806 13.8% 5,407 15.8% 11.4% -0.9% S
Slide 51: Consolidated income statement FY2018
2018/ % % (Unit: THB mn) 2018 2017** 2017 to sales to sales Change Sales 133,285 100% 134,937 100% -1.2% Cost of sales (114,393) -85.8% (115,627) -85.7% -1.1% Gross profit 18,892 14.2% 19,310 14.3% -2.2% SG&A expenses (14,221) -10.7% (14,389) -10.7% -1.2% FX gain (loss) 971 0.7% 1,256 0.9% -22.7% Ot
Slide 52: Consolidated balance sheet
(Unit: THB mn) 2018 % to total assets 2017 % to total assets Change Cash and cash equivalents* 1,586 1.1% 815 0.6% 94.6% Trade and other receivables - net 16,018 11.3% 16,344 11.2% -2.0% Inventories - net 38,371 27.0% 43,184 29.6% -11.1% Other current assets 3,046 2.1% 2,174 1.5% 40.1% Total current
Slide 53: Consolidated cash flow
Consolidated (Unit: THB mn) 2018 2017 Change Profit before income tax 3,664 6,362 (2,698) Adjustments for depreciation & amortisation expenses 2,989 2,761 228 Other adjustments 3,021 1,383 1,638 Changes in operating assets and liabilities 3,659 (2,830) 6,489 Cash flows receipts from operating activi
Slide 54: Quarterly financial summary
(in mTHB) Q117 Q217 Q317 Q417 FY 2017 Q118 Q218 Q318 Q418 FY 2018 Sales 30,958 34,400 34,847 34,733 134,937 29,329 33,775 34,169 36,012 133,285 Cost of sales 26,376 29,428 29,896 29,927 115,628 25,941 29,034 28,762 30,656 114,393 Gross Profit 4,582 4,971 4,951 4,806 19,310 3,388 4,741 5,406 5,356 18
Slide 55: Investor relations contact
thaiunion.com investor.thaiunion.com +66 2298 0024 [email protected] Line ID: @irthaiunion