Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — FY2019 Earnings Presentation
57 slides from Thai Union Group Public's earnings presentation, Feb 17, 2020
Slide 1: 4Q19/FY2019 Analyst Meeting
4Q19/FY2019 Analyst Meeting Thai Union Group PCL. 17 February, 2020 wameee oF v8 In Collaboration with RobecoSAM &® FTSE4Good
Slide 2: Forward-looking statements 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: 4Q19 Key Highlights
4Q19 Key Highlights /~” Slide 3.
Slide 4: CEO message: committed to profitability
€€ Thai Union remains committed to profitability with a key focus on core operations, new value-enhancing businesses, and creating value in existing strategic investments. 33 Thiraphong Chansiri President and CEO Thai Union rN
Slide 5: 4Q19 Sales, Gross Profit, Operating Profit, Net Profit
(THB mn) Sales Gross Profit Operating Profit Net Profit 32,854 5,288 1,537 1,057 Top line dropped on lower raw GPM of 16.1%, up 122bps YoY Solid performance Strong operation partly offset by material prices and currencies YoY higher non-operating expenses 4Q19 sales down 3.7% YoY Gross margin recove
Slide 6: 2019 Net Profit Financial Summary
2019 Net Profit Financial Summary1 2018 2019 up 0.5% YoY to (THB million) -5.3% THB 5,218 million +6.4% 133,285 126,275 +9.2% 20,110 Share price movement 18,892 20182 20192 12,033 (Jan – Dec 18) (Jan – Dec 19) 11,016 +20.8% +0.5% -21.7% -16.7% 5,642 ND/E lowered from new bond 5,191 5,218 4,669 issua
Slide 7: Total sales, GPM and NPM by quarter
Total sales (THB mn) GPM NPM 16.7% 16.1% 18.0% 60,000 15.8% 15.9% 14.8% 14.5% 14.9% 14.9% 16.0% 14.2% 13.8% 14.0% 50,000 14.0% 11.6% 12.0% 40,000 34,400 34,847 34,733 33,775 34,169 36,012 30,958 32,214 31,838 32,854 10.0% 29,329 29,369 30,000 8.0% 4.6% 4.9% 5.1% 4.7% 6.0% 20,000 4.1% 4.1% 4.1% 4.3%
Slide 8: Recent Developments
Recent Developments & 4 Thai Slide 8 Union
Slide 9: SPACE-F startup preview event
• 23 startups from Germany, India, Norway, Singapore, Thailand and US, pitched innovative food-tech ideas at the SPACE-F exclusive preview • The event was joined by Thai Union executives and other potential investors • SPACE-F is Thailand’s first global food-tech startup incubator and accelerator, e
Slide 10: SPACE-F Demo Day invitation
Fo ¥. Menaged by: SPACE[Fy 7 7 IN EN Ta ©) EXPARA omeeenetest Ll Mi] Qt. @ SPACE min {. © AGENDA 13.30-14.00 REGISTRATION 14.00-14.10 OPENING 14.10-15.25 PITCH FOODTECH : 25688 REAL ACCELERATOR 15.35-15.45 KEYNOTE SPEECH ON THAI UNION AND DEMO DAY | INNOVATION 15.45-17.00 PITCH March 5, 2020 17.00-1
Slide 11: Speak Out hotline
• As part of Thai Union Global UPDATED Compliance Program • ‘Speak Out’ hotline and web-solution are a global platform in addition to existing local reporting systems • ‘Speak Out’ gives the opportunity to report illegal or unethical activity • Launched in December 2019
Slide 12: Tuna donation to Wuhan hospitals
• Thai Union China donated more than 52,000 cans of King Oscar tuna as humanitarian assistance to Wuhan, which has been heavily impacted by the COVID-19. • Conducted through local logistics service and online food delivery operator in China. • The tuna was distributed in two shipments: • To people w
Slide 13: New product launches
Get fit with SEALECT Tuna Fitt Premium, sustainably harvested Brisling Sardine in Natural Lemon Flavor by King Oscar USA • SEALECT Tuna Fitt is a new tuna product in Thailand to attract health-conscious consumers • The new Lemon flavor variety appeals to a younger and encourage healthier lifestyle t
Slide 14: Awards and recognition
• International Business Magazine Awards 2020 • Mr. Thiraphong Chansiri – CEO of the Year (Thailand: Food & Beverage) • Mr. Joerg Ayrle – CFO of the Year (Thailand: Food & Beverage) • Dr. Darian McBain – Most Inspiring Women (Thailand) • SET Awards 2019 by Stock Exchange of Thailand • Best Sustainab
Slide 15: Final dividend for 2H19
Final dividend for the period: 1 July, 2019 to 31 December, 2019 DPS THB 0.47 Record Date 3 March, 2020 Payment date 22 April, 2020 THB/Share 0.70 60% 59%* 59% 57% 57% 0.60 53% 52% 50% 50% 51% 51% 50% 51% 50% 0.50 0.40 29% 0.25 0.31 0.31 0.34 0.30 0.15 0.22 0.20 0.22 0.10 0.30 0.28 0.28 0.32 0.48 0.
Slide 16: Financial Results 4Q19 Consolidated
Slide 17: Cash flow and margin quality
«6 Cash flow and margin quality remain our key focus areas. 35 Joerg Ayrle, Group CFO < Thai Union
Slide 18: 4Q19 results summary
Challenged • 4Q19 reported sales declined 8.8% YoY due to depreciation of key trading sales, mostly currencies vs THB, GBP (-8% YoY), EUR (-11%) and USD (-8%). due to FX • Ex-FX, TU sales -3.7% YoY due to declines in Thai ambient operations and EU Solid organic • 4Q19 sales volume continued to grew
Slide 19: Tuna raw material price
Tuna raw material price (USD/ton) 2,400 2,200 2,000 1,800 1,600 3Q17 4Q17 1,350 1,400 2Q17 2,010 2,033 1Q17 2Q18 1,763 1Q18 1,200 2Q16 4Q16 1,633 1,667 3Q18 1Q19 1,503 3Q16 1,508 1,577 4Q18 1Q16 1,433 1,467 1,408 1,453 2Q19 3Q19 1,000 1,257 1,217 1,217 4Q19 950 800 Dec-17 Dec-16 Dec-18 Dec-19 Jun-16
Slide 20: Sales
Sales -3.7% YoY Before currency THB mn -8.8% YoY impacts +3.2% QoQ • 4Q19 sales declined 3.7% YoY, 36,012 40,000 excluding FX impact, driven by: 32,214 31,838 32,854 35,000 ✓ Reported sales saw decline mainly 29,369 from key trading currencies 30,000 25,000 depreciation against THB GBP (- 20,000 8%
Slide 21: Revenue growth component
Revenue growth component THB mn -8.8% YoY 36,012 -718 -18 -99 -260 +17 +61 -6% -67 -37 -498 -1% -12% +4% +312 -905 -3% +4% -3% -2% -15% +16% -945 -8% 32,854 -3.7% YoY - Before currency 10% impacts Tuna Sardine Salmon- Other Shrimp Lobster Salmon Other Pet Value USD EUR 4Q18 & Ambient seafood & -Froz
Slide 22: Sales breakdown by geography and business
Sales Breakdown by Geographic 100% • 2019 Sales contribution in key markets 14% 13% 15% 15% 15% Others shifted in favor of domestic market 6% Japan 80% 6% 8% 8% 6% 6% 5% ✓ TU focused on domestic market, 9% 11% 12% Domestic resulted in 10% sales growth YoY. 60% 29% ✓ US sales contribution improved fr
Slide 23: Gross profit
Gross Profit 30.0% THB mn 28.0% -1.3% YoY 26.0% +4.2% QoQ 24.0% • 4Q19 Gross margin improved YoY, amid challenged sales 5,356 5,364 5,077 5,288 22.0% environment, 4,382 20.0% 16.7% 18.0% ✓ Ambient business delivered 15.9% 16.1% 14.9% 14.9% 16.0% margin improvement to 18.7%, up 14.0% from 16.7% in 4Q
Slide 24: Operating profit
20.0% Operating Profit 18.0% THB mn 16.0% +2.6% YoY +1.4% QoQ 14.0% • 4Q19 Operating profit was at THB 12.0% 1,537mn: 1,499 1,570 1,516 1,537 10.0% ✓ Prudent cost control prompt 8.0% SG&A expenses declined on 1,020 6.0% absolute basis (-2.8% YoY), OP 4.9% 4.8% 4.7% 4.0% although the SG&A ratio was a
Slide 25: EBITDA
28.0% EBITDA THB mn +2.1% YoY 23.0% -13.2% QoQ • 4Q19 EBITDA at THB2.8bn, an 18.0% increase of 2.1% YoY, 3,271 2,818 3,182 2,761 ✓ An improvement was driven by 2,703 operation improvement, FX gains 13.0% and improved affiliates’ EBITDA 10.2% 10.0% 8.0% operations, especially from 9.6% Margin 7.5% 8.
Slide 26: Net profit
14.0% Net Profit THB mn 12.0% -13.6% YoY 10.0% • 4Q19 Normalized reported profit -23.0% QoQ of THB 1,057mn, down 13.6% YoY, 8.0% excluding one-off impairment on 1,513 subsidiary closure during 4Q18. 1,374 6.0% 1,223 1,273 1,057 • Finance cost was marginally lower NPM 4.3% 4.7% 4.3% 4.0% by 3.9% YoY
Slide 27: Adjusted net profit
20.0% Adjusted Net Profit 18.0% THB mn +0.6% YoY 16.0% • Only adjustment is the impairment 14.0% of our investment in Nutrifish -10.5% QoQ 12.0% • Nutrifish is a French startup who 1,718 10.0% produces marine natural ingredients Adjusted 1,223 1,374 8.0% derived from seafood to 1,111 1,230 NP 6.0% n
Slide 28: Earnings per share
Earning per Share (EPS)* THB -13.6% YoY -23.0% QoQ • 2019 normalized EPS was at THB 0.32 1.09, down 13.6% YoY, along with 0.27 0.29 0.26 the net profit trajectory. 0.22 • However, the reported EPS show a significant recovery of 17.2% compared to 2018 reported EPS 4Q18 1Q19 2Q19 3Q19 4Q19 1.26 1.11 1
Slide 29: Red Lobster contribution to net loss
Red Lobster has contributed THB 165mn to net loss in 4Q19 4Q19 3Q19 2Q19 1Q19 4Q18 THB mn • 4Q19 remain a seasonally weak Share of quarter operationally with guest -243 -34 -9 144 -201 profit count remain a key challenge • With lower tax expense and a Other 252 242 249 249 258 stable interest income
Slide 30: Quarterly and annual free cash flow
Quarterly Free Cash Flow THB mn 3,627 • Higher free cash flow was driven by both operating cash flow, strong cash conversion ability, 1,052 1,259 1,178 and efficient inventory 1,085 management, especially during the key raw material prices were low during the quarter. 4Q18 1Q19 2Q19 3Q19 4Q19 Cash C
Slide 31: Net debt movement; back in target range
Unit: THB mn ND/E 1.40x Income tax paid and other investing & financing ND/E 1.07x Free Cash Flow THB 7,149 mn activities Kd = 3.04% Kd = 3.27% 1.35x before adoption of TFRS 9 and 16 64,374 We are back in the target range of 1,729 1.0-1.1x 4,555 -214 -57 2,531 55,215 224 -10,174 -523 -1,230 -6,000 E
Slide 32: Interest-bearing debts
Interest-bearing debts of THB 59,905mn By Currency By Maturity EUR 1.7% 1.4% USD 21% Short-term 0.0% loan 19% Current portion 14% 6% of long-term debt & finance 2021 lease THB 98.3% 98.7% 2023 2022 onwards Long-term 65% 75% debt 2018 2019 2018 2019 Long-term loan by maturity THB 64.5bn THB 59.9bn TH
Slide 33: ROE, inventory days, net debt to EBITDA
ROE1 INV Days Net Debt to EBITDA 14.1% 13.0% 11.5% 11.8% 135 9.4% 125 5.95 5.63 124 121 4.85 5.06 5.00 115 Target 38,371 36,859 37,126 36,951 36,873 4.0-4.5 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 INV (THB mn) INV Day ROCE2 Net WC3 ND/E4 118 107 109 100 105 9.9% 1.
Slide 34: Slide
Slide 34
Slide 35: Raw material prices: tuna, shrimp, salmon
Tuna raw material price In January 2020, raw material prices closed at: 2,400 (USD/ton) Price continued its • Tuna - USD 1,350/ton 2,200 downtrend to lowest level • Shrimp - THB 158/kg since 2009, with sharp 2,000 increase in January 2020 to • Salmon - NOK 77/kg 1,800 a normalized level 1,600 4Q17 I
Slide 36: Currency risk factors
USD/THB Risk EUR/THB Risk 38.0 factor factor Continues to decline 36.0 41.0 against THB after 40.0 Continued gaining strength in 2018 depreciation 34.0 39.0 since 2018 38.0 32.0 1Q17 37.0 3Q174Q171Q18 35.1 2Q17 3Q17 36.0 1Q17 2Q1739.2 38.8 38.8 2Q18 3Q18 4Q18 34.3 4Q17 3Q18 4Q18 33.4 32.9 1Q18 2Q18
Slide 37: Total 2019 sales by business
Total 2019 sales: THB 126,275 mn Frozen, chilled seafood and Ambient seafood PetCare, value-added and others related Sales: THB 55,221 mn Sales: THB 52,424 mn Sales: THB 18,630 mn Tuna Tuna slices Shrimp and related 1 Lobster PetCare Marine ingredients Sardine & mackerel Ambient and pouch salmon Fro
Slide 38: Ambient seafood sales
Sales (THB million) Quantity (Tons) -11.5% YoY -11.3% YoY -1.4% YoY -6.5% YoY -8.3% QoQ -3.1% QoQ 359,248 62,262 335,924 55,221 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 88,841 79,973 78,018 90,353 108,000.00 1
Slide 39: Frozen and chilled seafood sales
Sales (THB million) Quantity (Tons) -6.1% YoY -0.7% YoY +10.2% YoY +12.8% YoY +15.1% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 +1.8% QoQ 52,794 52,424 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 105,000.00 277,886 20,
Slide 40: PetCare, value-added and others sales
Sales (THB million) Quantity (Tons) -8.8% YoY +2.2% YoY +0.9% YoY +3.2% YoY +8.1% QoQ +6.3% QoQ 269,910 278,672 18,229 18,630 5% 5,367 10 73,769 67,838 67,508 68,874 74,452 6% 6,000.00 4,896 8% Brand80,000.00 4,384 4,747 4,604 79,000.00 78,000.00 77,000.00 76,000.00 7% % 75,000.00 74,000.00 73,000.0
Slide 41: Sales by region
28% Europe 41% United States 12% and Canada Thailand 19% Others (Asia, Australia, Middle East, Africa and South America)
Slide 42: United States and Canada sales
Sales THB mn -5.1% YoY -2.2% YoY 52, 51, 74 56 +18.7% QoQ 20000 60000 5 0 15,192 18000 50000 16000 14,418 14000 12,207 12,792 12,143 40000 12000 30000 10000 8000 20000 6000 4000 10000 2000 0 0 4Q18 1Q19 2Q19 3Q19 4Q19 2018 2019 • 2019 North America sales declined by 2.2% in Thai Baht term. ✓ USD dep
Slide 43: Europe sales
Sales THB mn -30.1% YoY 60000 -14.6% YoY 20000 -25.2% QoQ 50000 18000 41,049 35,074 16000 40000 14000 12000 10,503 9,726 9,813 30000 10000 8,198 7,337 8000 20000 6000 4000 10000 2000 0 0 4Q18 1Q19 2Q19 3Q19 4Q19 2018 2019 • 2019 EU sales declined 14.6% YoY, ✓ EUR (-11% YoY) and GBP (-12% YoY) deprec
Slide 44: Thailand sales
Sales THB mn 20000 18000 30000 -4.8% YoY 16000 25000 +10.2% YoY 14000 12000 20000 +0.9% QoQ 15,680 10000 15000 14,229 8000 6000 4,242 3,853 3,785 4,003 4,039 10000 4000 5000 2000 0 0 4Q18 1Q19 2Q19 3Q19 4Q19 2018 2019 • 2019 Thailand sales up 10.2% YoY. • Diversifying sales in home market partly off
Slide 45: Other markets sales
Sales THB mn 20000 18000 +16.2% YoY 40000 -5.1% YoY 16000 35000 14000 +20.1% QoQ 25,263 23,962 30000 12000 25000 10000 7,061 20000 8000 6,075 5,911 5,879 6000 5,111 15000 10000 4000 5000 2000 0 0 4Q18 1Q19 2Q19 3Q19 4Q19 2018 2019 • 2019 sales was down 5.1% YoY mainly driven mainly by falling raw ma
Slide 46: Business segment sales, margin and gross profit
Sales Margin Gross profit Business segment THB million % THB million Ambient seafood • Tuna 13,268 18.7 2,476 • Sardine and mackerel • Ambient and pouch salmon Frozen, chilled seafood and related • Shrimp and related 1 14,691 11.7 1,726 • Lobster • Frozen, chilled and smoked salmon • Other seafood2
Slide 47: Business Outlook 2020
2020 8) Business Outlook oe Slide 47 Z ef oe ict Thal pee : Union
Slide 48: We remain committed
We remain committed Thai Union is one of the world’s most innovative seafood operators, delivering highly nutritious and responsible food products to ensure sustainable value to our stakeholders. Healthy Living, Healthy Oceans New value- Strengthening Value creation Leadership in enhancing core busi
Slide 49: 2020 guidance
Sales 3-5% YoY growth Gross profit ~ 16% margin SG&A to sales ~ 10 – 11% Effective No material interest rate change from 2019 CAPEX ~ THB 4.9bn Dividend policy At least 50% dividend payout ratio
Slide 50: Thai Union Group PCL.
Thai Union Group PCL.
Slide 51: Appendix
Appendix » << ee | ae Slide 51 4Q19/FY2019 Analyst Meeting
Slide 52: Stock performance, major shareholders, dividend policy
Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 December, 2019 Others Share price (14 February, 2020) THB 15.00 51.0% Historical price 52-week high THB 19.50 Chansiri Family 19.4% 52-week low THB 12.90 No. of paid up shares 4,771.8mn Par value THB 0.25 Marke
Slide 53: Consolidated 4Q19 income statement
Consolidated 4Q19 4Q19 % * % % (Unit: THB mn) 4Q19 4Q18 3Q19 4Q18 3Q19 to sales to sales to sales Change Change Sales 32,854 100% 36,012 100% 31,838 100% -8.8% 3.2% Cost of sales (27,567) -83.9% (30,657) -85.1% (26,762) -84.1% -10.1% 3.0% Gross profit 5,288 16.1% 5,356 14.9% 5,077 15.9% -1.3% 4.2% S
Slide 54: Consolidated 2019 income statement
Consolidated 2019 * % % 2018 (Unit: THB mn) 2019 2018 to sales to sales Change Sales 126,275 100% 133,285 100% -5.3% Cost of sales (106,165) -84.1% (114,394) -85.8% -7.2% Gross profit 20,110 15.9% 18,892 14.2% 6.4% SG&A expenses (14,467) -11.5% (14,222) -10.7% 1.7% FX gain (loss) 543 0.4% 972 0.7% -
Slide 55: Consolidated balance sheet
% to total % to total (Unit: THB mn) 2019 2018 Change assets assets Cash and cash equivalents* 4,689 3.3% 1,586 1.1% 195.7% Trade and other receivables - net 14,869 10.5% 15,518 10.9% -4.2% Inventories - net 36,873 26.0% 38,371 27.0% -3.9% Other current assets 3,115 2.2% 3,086 2.2% 0.9% Total curren
Slide 56: Consolidated cash flow
Consolidated (Unit: THB mn) 2019 2018 Change Profit before income tax 4,313 3,664 649 Adjustments for depreciation & amortisation expenses 3,691 2,989 702 Other adjustments 3,245 3,021 223 Changes in operating assets and liabilities 450 3,659 (3,209) Cash flows receipts from operating activities 11,
Slide 57: Investor relations contact
+66 2298 0024 [email protected] investor.thaiunion.com @irthaiunion