Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q2 2020 Earnings Presentation
56 slides from Thai Union Group Public's earnings presentation, Aug 13, 2020
Slide 1: Analyst Meeting for 2Q20 Results
Analyst Meeting for 2Q20 Results Thai Union Group PCL. August 13, 2020
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
Slide 3: 2Q20 Key Highlights
2Q20 Key Highlights Slide 3 Analyst Meeting for 2Q20 Results
Slide 4: CEO quote on global seafood demand
“ With increasing global seafood demand, Thai Union will continue to work hard to ensure business continuity and maintain production capacity in order to deliver safe and quality products to consumers around the world. ” Thiraphong Chansiri President and CEO Slide 4 Analyst Meeting for 2Q20 Results
Slide 5: 2Q20: Record high operating profit and reported net profit up 15x YoY
2Q20: Record high operating profit and reported net profit up 15x YoY, amid COVID-19 pandemic THB mn Sales Gross Profit Operating Profit Net Profit 33,051 6,027 2,366 1,716 Top line improved from GPM of 18.2%, up 159bps Profit growth supported Reported net profit up 15x growing sales volume YoY YoY
Slide 6: 1H20 highest revenue growth in years, reported profit up 97%
1H20 Highest revenue growth in 3 years, 1H20 reported profit up 97%, Debt ratio improved from profitable operation 1H20 Reported net Profit +4.2% Financial Summary1 Up 97% YoY to (THB million) 64,154 THB 2,732 million 1H19 1H20 +13.6% 61,583 -1.7% Share price movement 11,067 +50.4% 6,089 5,984 9,746
Slide 7: 2Q20: 2.6% revenue growth, record quarterly gross margin
2Q20: 2.6% revenue growth, record quarterly gross margin Total sales (THB mn) GPM NPM 60,000 18.2% 20.0% 15.8% 16.7% 15.9% 16.1% 16.2% 18.0% 14.8% 14.5% 14.2% 14.9% 14.9% 50,000 13.8% 14.0% 16.0% 14.0% 11.6% 34,400 34,847 34,733 33,775 34,169 36,012 40,000 32,214 31,838 32,854 31,103 33,051 12.0% 30
Slide 8: Key Developments
Key Developments Slide 8 Analyst Meeting for 2Q20 Results
Slide 9: Overall impact from COVID-19 positive for operations during 1H20
Overall impact from COVID-19 has been positive for Thai Union’s operations during 1H20 Ambient business is the beneficiary Frozen to recover as cities resume • Ambient business saw strong sales • Food service customers were push in all regions during 1H20 affected during shutdown • Increased demand
Slide 10: Global supply chain, operations largely uninterrupted
With a global supply chain, our operations remained largely uninterrupted Norway UK Lithuania Poland Germany Canada France Portugal Pacific Ocean USA Atlantic Ocean UAE Pacific Ocean Thailand Ghana India Vietnam Seychelles Indian Ocean Brands Joint venture Production plant Innovation center Slide 10
Slide 11: All Red Lobster restaurants now open
All Red Lobster restaurants are now opened to serve great tasting seafood to American consumers • All outlets are open for off-premise (ToGo, curbside pickup, and delivery) • 600+ restaurants (more than 80%) are Placeholder for graphic opened for dining halls with social distancing measures, in acco
Slide 12: COVID-19 measures for safe guest experience
COVID-19 measures to maintain safe, high quality guest experience Focused on touchless customer experience • Single-use, disposable paper menus • QR code-enabled menus Placeholder for graphic • Contact-free payments via Apple Pay, credit (paste graphic, crops to H19.05*W16.93) card on Presto tablets
Slide 13: Deepens commitment into leading Russian seafood enterprise
Thai Union deepens commitment into leading Russian seafood enterprise • Thai Union has increased its holdings into TUMD Luxembourg S.a.r.l (TUMD) from 45% to 90% equity stake in July 2020. • TUMD owns three Russian companies, collectively known as DPR Group (DPR). • DPR is a retail focused fish and
Slide 14: We increase our commitment to innovation
We increase our commitment to innovation • SPACE-F announces leading Thai beverage company, ThaiBev as new corporate partner, Betagro and Deloitte are new supporting partners in 2nd year of operation • Opens for 2nd batch of start-ups (BATCH II) • SPACE-F is the first food-tech incubator and acceler
Slide 15: Qfresh rebranded as online channel becomes key opportunity
Qfresh rebranded as the online channel becomes a key opportunity During COVID-19, online channels have become more important for the retail grocery industry Through our collaboration with Thammachart Seafood, Qfresh has been rebranded to appeal to younger, tech-savvy consumers Slide 15 Analyst Meeti
Slide 16: Thai Union releases 7th annual Sustainability Report
Thai Union releases 7th annual Sustainability Report • Thai Union’s seventh annual Sustainability Report details its performance against KPIs outlined in the global sustainability strategy, SeaChange®. • The 2019 report was prepared in accordance with Global Reporting Initiative (GRI) Standards: Cor
Slide 17: 1H20 interim dividend of THB 0.32/share
With reported net profit recovery, TU announced 1H20 interim dividend of THB 0.32/share THB/Share 0.70 60% 59%* 59% 59% Interim dividend for the period: 1 January 0.60 57% 57% 53% 51% 51% 50% 51% 52% to 30 June, 2020 50% 50% 50% 0.50 DPS THB 0.32 0.40 29% Record Date 26 August, 2020 0.31 0.31 0.34 0
Slide 18: Financial Results: 2Q20 - Consolidated
Financial Results: 2Q20 - Consolidated Slide 18 Analyst Meeting for 2Q20 Results
Slide 19: CFO quote on cash preservation
“ Cash preservation and crisis management makes us think in minutes, rather than quarters. ” Joerg Ayrle Group CFO Slide 19 Analyst Meeting for 2Q20 Results
Slide 20: 2Q20: Key Takeaways
2Q20: Key Takeaways • 2.6% sales growth YoY driven by ambient business in US and Thailand Strong top line • The growth was partly offset by declining frozen sales and European ambient growth business normalization Record • Record high level GPM of 18.2%, vs 16.7% during 2Q19. quarterly gross • A hig
Slide 21: Tuna prices remained within a manageable range
Tuna prices remained within a manageable range 2,400 Tuna raw material price (USD/ton) 2,200 2,000 1,800 1,600 3Q17 4Q17 1,400 2Q17 2,010 2,033 1Q17 1Q18 2Q18 1,200 1,763 1Q19 1,633 1,577 1,667 3Q18 4Q18 1Q20 1,467 1,408 1,453 2Q19 3Q19 1,442 2Q20 1,000 1,267 1,217 1,217 4Q19 800 950 Aug-17 Sep-17 A
Slide 22: Sales growth driven by strong growth in ambient business
Sales growth driven by strong growth in ambient business Sales +2.5% YoY • 2Q20 sales improved 2.6% YoY, or a 2.5% THB mn +2.6% YoY Before currency impacts growth if excluding FX impact, driven by: +6.3% QoQ 32,214 31,838 32,854 31,103 33,051 • Sales growth driven mainly by ambient seafood sales (+1
Slide 23: Growth mainly driven by ambient seafood and PetCare
Growth mainly driven by ambient seafood and PetCare businesses Revenue growth component THB mn +2.6% YoY +212 +79 -1,286 +414 +36% +1,686 +32% +18% -345 +398 -43 +126 -85 33,051 -16% -341 +22 -2% +1% -1% -33% 32,214 +2.5% YoY +15% -20% +1% Before currency impacts +15% Tuna Sardine Salmon- Shrimp Lob
Slide 24: Revenue structure remained well-diversified
Revenue structure remained well-diversified Sales Breakdown by Geographic • 1H20 Sales contribution in US and Europe 100% 14% 13% 15% 15% 15% 14% Others increased slightly. 80% 6% 6% 6% 6% 6% 5% Japan • US and European sales increased 8% and 5% 8% 8% 9% 11% 12% 10% Domestic respectively from growing
Slide 25: 2Q20 record quarterly gross profit margin
2Q20 record quarterly gross profit margin Gross Profit THB mn 30.0% • 2Q20 Gross profit margin was at a quarterly +12.4% YoY record level of 18.2% due to: 28.0% +19.6% QoQ 26.0% 6,027 24.0% • A higher-margin Ambient business sales mix 5,364 5,077 5,288 5,040 22.0% 20.0% improved, resulting in higher
Slide 26: Record quarterly operating profit, up 51% YoY
Record quarterly operating profit, up 51% YoY, cost control further supported profit growth Operating Profit* • 2Q20 Operating profit was up 50.7% YoY to THB mn +50.7% YoY 20.0% THB 2,366mn: • Continued cost control prompt SG&A 18.0% +54.7% QoQ 16.0% 14.0% expenses to decline 3.5% vs sales growth of
Slide 27: 2Q20 EBITDA stable YoY
2Q20 EBITDA stable YoY, strong core operation offset by share of loss from affiliate 28.0% • 2Q20 EBITDA at THB3.4bn, an increase of EBITDA* 2.4% YoY, due to: THB mn +2.4% YoY 23.0% • 2Q20 share of loss was at THB 579mn (vs +27.2% QoQ THB110m share of profit during 2Q19) due mainly to Red Lobster op
Slide 28: 2Q20 reported net profit up 15x
2Q20 Reported net profit up 15x on absence of legal fee 14.0% Net Profit • 2Q20 reported net profit was THB 1,716mn, THB mn +13.4% YoY 12.0% up 1,440% YoY 10.0% • This is mainly accounted for the absence of +68.9% QoQ net US legal fee of THB1,402mn happened 8.0% 1,716 during 2Q19. 1,513 • On normali
Slide 29: 2Q20 adjusted net profit stable YoY
2Q20 Adjusted net profit was stable YoY on adjusted basis 20.0% Adjusted Net Profit 18.0% • Excluding one-off negative item during 2Q19 THB mn -0.1% YoY 16.0% amounted THB 205mn (provision on +68.9% QoQ 14.0% retirement benefit from the new labor law), 12.0% the 2Q20 adjusted profit was stable YoY.
Slide 30: EPS: 2Q20 reported EPS up 15x YoY
EPS: 2Q20 reported EPS was up 15x YoY Earning per Share (EPS)* • According to the consolidated financial THB +8.5% YoY statement, 2Q20 EPS was at THB 0.34, up +74.6% QoQ 1376% YoY, along with the reported net profit growth trajectory. 0.32 0.34 • However, excluding the one-off US legal fees 0.29 0.2
Slide 31: 2Q20: Crisis in the hospitality industry, Red Lobster impact
2Q20: A crisis like COVID-19 has never been seen in the hospitality industry Amid Covid-19 crisis, total financial impact from RL investment Key initiatives since onset of the pandemic: remains manageable, thanks to the prudent investment structure • Improved COVID-19 guest safety measures with THB
Slide 32: 2Q20: Record high free cash flow
2Q20: Record high free cash flow from improving profitability and low net working capital level Quarterly Free Cash Flow • Higher free cash flow was driven by both THB mn 5,609 strong operation profitability and strong cash conversion ability. 3,621 • Amid growing sales, TU maintain strong receivabl
Slide 33: 1H20: THB 3.7bn net debt reduction
1H20: THB 3.7bn net debt reduction, from strong cash flow generation and inventory level reduction THB mn ND/E 1.07x Income tax paid and other investing & financing ND/E 0.96x Free Cash Flow THB 6,687 mn Kd = 3.27% activities Kd = 3.07% 55,215 417 51,524 1,060 443 930 2,029 261 -114 -5,984 -2,366 -2
Slide 34: Majority THB funding, reducing currency risk
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 56,846mn By Currency By Maturity 1.3% 1.5% EUR 21% USD 0.0% Short-term loan 19% 4% Current portion 6% of long-term 2021 debt & finance THB 98.7% 98.5% lease 2023 Long-term debt 2022 onwards 75% 75% 20
Slide 35: Debt ratio target achieved, improved NWC management
Debt ratio target achieved, improved NWC management ROE INV Days Net Debt to EBITDA 11.9% 127 128 124 122 13.4%12.8% 120 5.27 5.38 12.3% 11.5% 4.59 4.64 4.32 Target 37,126 36,951 36,873 35,720 34,696 4.0-4.5 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 INV (THB mn) INV
Slide 36: Financial Results: 2Q20 – Business Units
Financial Results: 2Q20 – Business Units Slide 36 Analyst Meeting for 2Q20 Results
Slide 37: Key raw material prices remained stable
Key raw material prices remained stable 2,400 Tuna (USD/ton) Salmon raw material price Tuna prices dropped but Declined after reaching 2,200 remains within a 90 (NOK/kg) a peak level last quarter 2,000 85 manageable range 80 1,800 75 4Q17 1,600 70 3Q17 2,033 65 1,400 2,010 2Q17 60 1,200 1Q17 1,763 1
Slide 38: Thai Baht relatively stable against key currencies YoY
Thai Baht was relatively stable against key currencies YoY 38.0 48.0 USD/THB GBP/THB USD gained strength 46.0 36.0 Started to decline after against THB since 2019 year-end gaining strength since 44.0 34.0 3Q19 42.0 32.0 1Q17 35.1 2Q17 40.0 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 34.3 3Q18 4Q18
Slide 39: 3 strategic business segments
3 strategic business segments Total 1H20 sales: THB 64,154 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 32,025 mn Sales: THB 22,498 mn Sales: THB 9,631 mn Sales Split Sales Split Sales Split 41% 15% 7% 50% 59% 36% 35% 64% 93% Brand Brand Brand Pr
Slide 40: Ambient Seafood: Strong growth with stable raw material prices
Ambient Seafood: Delivering strong growth with stable raw material prices Sales (THB million) Quantity (tons) +29.6% YoY +16.8% YoY +1.5% QoQ +4.9% QoQ 120,000.00 119,000.00 101,136 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.
Slide 41: Frozen, chilled seafood and related: Lower sales from shutdown
Frozen, chilled seafood and related: Lower sales from shutdown Sales (THB million) Quantity (tons) -14.0% YoY -10.5% YoY +5.6% QoQ +0.2% QoQ 14,691 13,435 12,768 10,944 11,554 68,504 73,084 74,436 Brand 36% 61,179 61,284 38% 36% 38% 34% Brand 71% 71% 68% Private 73% 71% label 62% 64% 64% 66% 62% Pri
Slide 42: PetCare, value-added and others: Strong growth
PetCare, value-added and others: Strong growth with a focus on higher margin business Sales (THB million) Quantity (tons) +7.5% YoY +8.6% YoY +12.7% QoQ +16.7% QoQ 5,103 67,508 68,874 74,452 73,322 Brand 4,747 4,604 4,896 4,528 62,852 6% 6% Brand 5% 5% 13% 8% 8% 5% 5% 5% Private Private 92% 94% 94%
Slide 43: Geographic diversity: Sales
Geographic diversity: Sales Europe United States and Canada 30% 42% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 18% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 10% Slide 43 Analyst Meeting for 2Q20 Results
Slide 44: US & Canada: Strong ambient growth offset by weak food service
US & Canada: Strong growth in ambient seafood partly offset by weak food service channel Sales +8.9% YoY THB mn +5.7% QoQ 14,418 13,175 13,925 12,792 12,143 2Q19 3Q19 4Q19 1Q20 2Q20 • 2Q20 North America sales increased by 8.9% YoY in Thai Baht term. • US ambient seafood business has delivered a 48%
Slide 45: Europe: Seafood sales normalized
Europe: Seafood sales normalized as Covid-19 is under control Sales -3.0% YoY THB mn +0.1% QoQ 9,726 9,164 9,417 9,430 7,986 2Q19 3Q19 4Q19 1Q20 2Q20 • 2Q20 EU sales declined 3.0% YoY, • Ambient seafood under brand John West, Petit Navire and Mareblu reported sales normalized at similar level seen l
Slide 46: Thailand: Affected by lower tourism activities
Thailand: Affected by lower tourism activities Sales THB mn -10.5% YoY -7.9% QoQ 3,562 4,003 4,039 3,460 3,187 2Q19 3Q19 4Q19 1Q20 2Q20 • 2Q20 Thailand sales was down 10.5% YoY. • Food service is the key business for domestic sales and was affected by lower tourism activities. • Increased sales to r
Slide 47: EM and rest of the world: Strong demand for seafood
EM and rest of the world: Strong demand for seafood Sales THB mn +6.1% YoY +28.9% QoQ 6,134 6,529 6,411 6,509 5,052 2Q19 3Q19 4Q19 1Q20 2Q20 • 2Q20 sales saw a strong increase in both South America and Middle East markets, which were mostly contributed by ambient business. • Japan and China markets
Slide 48: 2Q20 Segment profitability
2Q20 Segment profitability Business Sales Margin Gross profit segment THB mn % THB million Ambient seafood • Tuna • Sardine and mackerel 16,394 23.3 3,828 • Ambient and pouch salmon Frozen, chilled seafood and related • Shrimp and related 1 11,554 7.4 856 • Lobster • Frozen, chilled and smoked salmo
Slide 49: Business Outlook
Business Outlook “ During the current situation, our key focus is on cash preservation, capturing opportunities and managing daily operations, with health and safety as our no. 1 priority. There is not sufficient information to provide an update on the business outlook. ” Slide 49 Analyst Meeting fo
Slide 50: Slide 50
Slide 51: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 June, 2020 Share price (10 August, 2020) THB 13.10 Others Historical price 50.6% 52-week high THB 18.30 Chansiri 52-week low THB 11.90 Family 19.4% No. of paid up shares 4,771.8mn Par
Slide 52: 2Q20 Income statement
2Q20 Income statement Consolidated 2Q20 2Q20 % % % (Unit: THB mn) 2Q20 2Q19 1Q20 2Q19 1Q20 to sales to sales to sales * Change Change Sales 33,051 100% 32,214 100% 31,103 100% 2.6% 6.3% Cost of sales (27,024) -81.8% (26,850) -83.3% (26,063) -83.8% 0.6% 3.7% Gross profit 6,027 18.2% 5,364 16.7% 5,040
Slide 53: 2Q20 Income statement (excluding US legal expenses)
2Q20 Income statement (excluding US legal expenses) Consolidated 2Q20 2Q20 % % % (Unit: THB mn) 2Q20 2Q19* 1Q20 2Q19 1Q20 to sales to sales to sales * Change Change Sales 33,051 100% 32,214 100% 31,103 100% 2.6% 6.3% Cost of sales (27,024) -81.8% (26,850) -83.3% (26,063) -83.8% 0.6% 3.7% Gross profi
Slide 54: Statement of Financial Position as of 30 June 2020
Statement of Financial Position as of 30 June 2020 % to total % to total (Unit: THB mn) 2Q20 2019 Change assets assets Cash and cash equivalents* 5,322 3.8% 4,689 3.3% 13.5% Trade and other receivables - net 13,904 10.0% 14,869 10.5% -6.5% Inventories - net 34,696 24.9% 36,873 26.0% -5.9% Other curr
Slide 55: 2Q20 Statement of cash flow
2Q20 Statement of cash flow Consolidated (Unit: THB mn) 1H20 1H19 Change Profit before income tax 3,145 1,349 1,796 Adjustments for depreciation & amortisation expenses 1,946 1,803 143 Other adjustments 1,058 970 88 Changes in operating assets and liabilities 2,568 484 2,084 Cash flows receipts from
Slide 56: Slide 56 Analyst Meeting for 2Q20 Results
Slide 56 Analyst Meeting for 2Q20 Results