Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q1 2019 Earnings Presentation
54 slides from Thai Union Group Public's earnings presentation, May 8, 2019
Slide 1: 1Q19 Analyst Meeting
1Q19 Analyst Meeting Thai Union Group PCL. 8 May, 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: 1Q19 Key Highlights
1Q19 Key Highlights Recent Developments 1Q19 Financial Results Business Outlook
Slide 4: CEO message on solid operating recovery
C6 With great focus on operational excellence, cost management, and profitability improvement, we continued a solid operating recovery. ” Thiraphong Chansiri President and CEO
Slide 5: 1Q19 key results: sales, gross profit, operating and net profit
(THB mn) Sales Gross Profit Operating Net Profit Profit 29,369 4,382 1,020 1,273 Sales improved YoY Operation improvement Solid recovery Recovery partly offset by lower FX gains 1Q19 sales up 2.3% YoY Gross profit improved Operating profit up 997% YoY, Net profit up 46.5% YoY: exclude FX impact: 29.
Slide 6: 1Q19 Net Profit up 46.5% YoY to THB 1,273 million
1Q19 Net Profit Financial Summary1 1Q18 1Q19 up 46.5% YoY to (THB million) +0.1% THB 1,273 million 29,329 29,369 +29.3% Share price movement +26.6% 4,382 20182 20192 (Jan – Dec 18) (Jan - May 19) 3,388 -21.7% +15.4% +46.5% 2,818 +997% 2,226 Strong cash flow and debt 1,273 repayment improve debt rati
Slide 7: Quarterly sales, GPM and NPM trend
Total sales (THB mn) GPM NPM 18.0% 60,000 15.8% 14.8% 14.5% 14.9% 14.9% 16.0% 14.2% 13.8% 14.0% 50,000 13.4% 14.0% 11.6% 12.0% 40,000 34,847 33,775 34,169 36,012 33,715 34,400 34,733 30,958 29,329 29,369 10.0% 30,000 8.0% 4.6% 4.9% 5.1% 6.0% 20,000 4.1% 4.1% 4.1% 4.3% 3.0% 3.4% 2.7% 4.0% 10,000 2.0%
Slide 8: Agenda: Recent Developments
1Q19 Key Highlights Recent Developments 1Q19 Financial Results Business Outlook
Slide 9: Thai Union Feedmill partial IPO
• Thai Union Feedmill (TFM) is one of Strong aquaculture growth track record Thailand’s leading aqua feed producers Global shrimp production ('000 • TFM consistently delivers profitable tons) operation with top quality shrimp and fish 6000 feeds 5000 • Investing into growing Indonesian 4000 3000 aqu
Slide 10: Recent developments: MOUs and awards
• Thai Union signed MOU 12 19 March April with Thai Marine Fish Farmers Association • Thai Union, Alibaba • Provide world-class Group’s Shanghai standard seabass to Thai Win-Chain Supply Airways Catering's inflight Chain Management meals Co., Ltd., signed MOU • To supply Thai Union’s seafood product
Slide 11: Sustainability awards and commitments
26 2 • Thai Union published April May 2018 Sustainability Report, detailing positive • Thai Union was shortlisted for two progress made in 2018 sustainability awards. and Thai Union’s • The Global Good Awards 2019, under performance against KPI’s the categories of: and targets outlined in • Communit
Slide 12: New product launches
14 29 March March • Fisho brand introduced two new • Monori brand launched a new flavors under the product line product line Fisho Max 3 • Crispy salmon skin in salty egg • “Extreme barbeque” and flavor and original flavor “super spicy” flavors • Available at supermarkets and • Available at supermar
Slide 13: Agenda: 1Q19 Financial Results
1Q19 Key Highlights Recent Developments 1Q19 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 14: Triple C is key: Cash, Cost productivity, Capital efficiency
4 Triple C is key: Cash, Cost productivity, Capital efficiency. 9 Joerg Ayrle Group CFO
Slide 15: Consolidated results summary
Growing • Delivering organic sales growth, mainly from frozen seafood and pet care, whereas European sales weaken from EU currencies depreciation (6-7% YoY) topline • Reported growth at 0.1%, or adjusted growth at constant FX rates at 2.3% • GPM recovering at 14.9%, compared to 11.6% achieved in 1Q1
Slide 16: TFRS 16 and TFRS 9 adoption
Operating Finance Objective: To align accounting standards for Thai Lease Union Group Lease Hedge Accounting As per existing rule (TAS 17): • Classification was based on complex rules and tests Minimize volatility and appropriately represent • Some lessees avoid recognizing finance lease items risk
Slide 17: Restated 2018 numbers: limited impact
✓ Restated 2018 reported numbers: limited impact as expected Main impacts on balance sheet include: ✓ TFRS 16: Right of use appearance and lease liabilities increase ✓ TFRS 9: decrease of the derivatives assets/ liabilities & investment in debt instrument Impact on Net Debt/equity ratio is detailed
Slide 18: Impact on balance sheet and 1Q19 P/L
Impact is on our BS as of March 31, 2019 and 1Q19 P/L: As expected positive impact on our sales and gross profit TFRS 16 TFRS 9 Total Impact Assets Current assets - - - - - Non-current assets - Right of use 1,342 - - - 1,342 - Other long-term investments - - - 10,954 10,954 - LT- loans to related pa
Slide 19: Tuna raw material price
Tuna raw material price 2,400 (USD/ton) 2,200 2,000 1,800 4Q17 1,600 3Q17 2Q18 2Q17 2,033 1,667 2,010 1Q17 1Q18 1,400 2Q16 4Q16 1,763 3Q18 3Q16 1,633 4Q18 1Q19 1,577 1,503 1,508 1,467 1,453 1,200 1Q16 1,433 1,408 1,257 1,000 May-16 May-17 May-18 Jun-16 Nov-16 Dec-16 Jun-17 Oct-17 Nov-17 Dec-17 Jun-1
Slide 20: 1Q19 sales improved 2.3% YoY excluding FX
+2.3% YoY Sales Before currency THB mn +0.1% YoY impacts -18.4% QoQ • 1Q19 sale improved 2.3% YoY, 36,012 40,000 excluding FX impact, driven by: 33,775 34,169 35,000 ✓ Frozen and Chilled Seafood and 29,329 29,369 30,000 PetCare businesses saw strong sales 25,000 volume growth YoY 20,000 ✓ Ambient OE
Slide 21: Revenue growth component
Revenue growth component THB mn +0.1% YoY 107 -664 233 22 624 18 -63 -115 0% 29,329 -22 90 -135 +2% -4% +6% 29,369 -55 -6% +10% 0% +4% -7% -17% -19% +9% +2.3% YoY Before currency impacts Tuna Sardine Salmon- Other Shrimp Salmon- Lobster Other Pet Care Value USD EUR 1Q18 & Ambient seafood - & Frozen
Slide 22: Sales breakdown by geography and business
Sales Breakdown by Geographic 100% 14% 13% 14% Others • 1Q19 Sales contribution in key markets 15% 15% 6% 6% 6% 6% 5% Japan shifted in favor of domestic and US markets. 80% 8% 8% 9% 11% 13% Domestic ✓ TU focused on selling product in 60% domestic market, resulted in 12% sales 29% 33% Europe 31% 31%
Slide 23: Gross profit up 29.3% YoY
Gross Profit 30.0% THB mn 28.0% +29.3% YoY 26.0% -18.2% QoQ 24.0% • 1Q19 Gross profit was up 29.3% YoY, 5,406 5,356 22.0% ✓ With tuna raw material prices 4,741 become more stable in recent 4,382 20.0% 3,388 18.0% quarters, product price discussion 15.8% 14.9% 14.9% 16.0% prompted ambient seafood mar
Slide 24: Operating profit up 997% YoY
20.0% Operating Profit 18.0% THB mn +997% YoY 16.0% -32.0% QoQ 14.0% • 1Q19 Operating profit was at THB 12.0% 1,020mn, up 997% YoY: 1,866 10.0% ✓ Strong gross margin recovery YoY 1,499 1,212 8.0% ✓ SG&A cost remain under control 1,020 6.0% from various cost control initiatives OP Margin 5.5% 4.0% •
Slide 25: EBITDA up 26.6% YoY
28.0% EBITDA THB mn +26.6% YoY 23.0% +4.3% QoQ • 1Q19 EBITDA up 26.6% YoY, 18.0% ✓ Sales growth, gross margin 3,254 2,834 2,703 2,818 improvement and continued cost 2,226 13.0% control all contributed to the EBITDA improvement EBITDA Margin 9.5% 9.6% 8.0% ✓ Business profitability improved 7.6% 8.4%
Slide 26: Net profit up 46.5% YoY
14.0% Net Profit THB mn 12.0% +46.5% YoY +4.1% QoQ • 10.0% With strong recovery in operating 8.0% performance, TU’s 1Q19 net profit 1,731 was at THB 1,273mn, up 46.5% YoY, 1,368 5.1% 1,223 1,273 6.0% despite the key non-operating items NPM 869 4.0% lowered: 4.1% 4.3% ✓ FX gains of THB 81mn (from THB
Slide 27: Adjusted net profit
20.0% Adjusted Net Profit 18.0% THB mn +61.0% YoY 16.0% • Excluding the one-off quarter-end items, 14.0% 1Q19 adjusted net profit was at THB -9.2% QoQ 12.0% 1,111mn, representing 61.0% increase 1,731 10.0% YoY Adjusted 8.0% • One-off positive items during 1Q19 of 1,223 1,111 NP Margin 1,018 6.0% THB
Slide 28: Earnings per share
Earning per Share (EPS)* THB +46.5% YoY +4.1% QoQ • 1Q19 EPS was at THB 0.27, up 46.5% 0.36 YoY and 4.1% QoQ, along with the net 0.29 profit trajectory. 0.26 0.27 0.18 1Q18 2Q18 3Q18 4Q18 1Q19 1.26 1.11 1.10 1.09 0.27 0.18 +46.5% YoY 2015 2016 2017 1Q18 1Q19 Remark: *EPS in this slide represents ful
Slide 29: Red Lobster contribution to net profit
Red Lobster has contributed THB 284mn to net profit in 1Q19 • 1Q19 continued to be a seasonally THB mn 1Q19 4Q18 3Q18 2Q18 1Q18 strong quarter with net profit improving from the same period last Share of 144 -201 64 -128 137 year, resulting in an improved equity profit income contribution. Other ✓ I
Slide 30: Free cash flow of THB 1.3bn
Quarterly Free Cash Flow THB mn 3,794 • 1Q19 free cash flow of THB 1.3bn was due largely to an improved 2,186 profitability and EBITDA, 1,369 1,052 1,259 • However, despite efficient inventory control, the 1Q19-end tuna raw material price (USD1,600/ton) was higher than 2018-end tuna price 1Q18 2Q18
Slide 31: Net debt movement
Unit: THB mn ND/E 1.39x Free Cash Flow THB 1,259 mn Income tax paid and other investing & financing activities ND/E 1.36x Kd = 3.07% Kd = 3.24% 1.35x before adoption of TFRS 9 and 16 64,374 63,415 +641 +81 +965 -88 +590 -333 +272 -2,818 -268 EBITDA Change in net Change in Other non- CAPEX Tax Net in
Slide 32: Interest-bearing debts by currency and maturity
Interest-bearing debts of THB 64,218mn By Currency By Maturity EUR 1.7% 1.7% USD 21% 23% Short-term loan 0.0% Current portion 14% of long-term debt 16% & finance lease 2021 THB 2023 98.3% 98.3% onwards Long-term debt 65% 61% 2022 2018 1Q19 2018 1Q19 Long-term loan by maturity THB 64.5bn THB 64.2bn T
Slide 33: ROE, inventory days, net debt ratios
ROE1 INV Days Net Debt to EBITDA 16.2% 145 12.5% 135 7.32 11.5% 11.8% 128 125 5.73 5.95 5.63 7.8% 4.92 115 Target 40,691 39,708 39,996 38,371 36,859 4.0-4.5 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 INV (THB mn) INV Day ROCE2 131 Net WC3 ND/E4 118 111 109 100 1.35x 1
Slide 34: Agenda: Results by Business Unit
1Q19 Key Highlights Recent Developments 1Q19 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 35: Tuna, shrimp and salmon raw material prices
Tuna raw material price In April 2019, raw material prices closed at: 2,400 (USD/ton) • Tuna - USD 1,450/ton Prices fluctuating within the • Shrimp - THB 138/kg 2,200 range of 1,300 – 1,700 • Salmon - NOK 69/kg 2,000 USD/ton since 2018 1,800 In 1Q19, average raw material prices closed at: 1,600 3Q17
Slide 36: Foreign exchange rate trends
Risk USD/THB EUR/THB factor 38.0 Weakening continues 41.0 after gaining some 36.0 strength in 2018 Continued depreciation with 40.0 recent sharp decline 34.0 39.0 1Q17 2Q17 32.0 3Q17 38.0 3Q17 35.12 4Q17 3Q18 4Q18 4Q17 1Q18 34.30 1Q18 33.39 2Q18 1Q19 37.0 39.20 38.78 38.78 2Q18 3Q18 32.95 32.97 32.8
Slide 37: Total 1Q19 sales by business
Total 1Q19 sales: THB 29,369 mn Ambient seafood Frozen, chilled seafood and related PetCare, value-added and others Sales: THB 13,456 mn Sales: THB 11,529 mn Sales: THB 4,384 mn Tuna Tuna slices Shrimp and related 1 Lobster PetCare Marine ingredients Sardine & mackerel Ambient and pouch salmon Froze
Slide 38: Ambient seafood results
Sales (THB million) Quantity (Tons) -4.6% YoY -4.0% YoY -10.3% QoQ -10.0% 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 93,855 114,000.00 113,000.00 112,000.00 20,000.00 19,000.00 18,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00
Slide 39: Frozen and chilled seafood results
Sales (THB million) Quantity (Tons) +3.4% YoY +16.3% YoY -26.3% 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 -8.4% 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) +7.5% YoY +4.0% YoY -18.3% QoQ -8.0% QoQ 6,000.00 5,367 80,000.00 65,256 67,126 73,769 67,838 79,000.00 78,000.00 77,000.00 57,394 4,080 4,450 4,332 76,000.00 5,000.00 7% 4,384 75,000.00 74,000.00 73,000.00 72,000.00 71,000.00 70,000.00 69,000.00 68,000.00 7% 4% B
Slide 41: Sales by region
28% Europe 42% United States 13% and Canada Thailand 17% Others (Asia, Australia, Middle East, Africa and South America)
Slide 42: North America sales
Sales THB mn +3.3% YoY -19.6% QoQ 20,000 15,192 18,000 16,000 14,000 11,821 12,931 12,801 12,207 12,000 10,000 8,000 6,000 4,000 2,000 - 1Q18 2Q18 3Q18 4Q18 1Q19 • 1Q19 North America sales improved by 3.3% in Thai Baht term. ✓ USD/THB exchange rate was stable ✓ US Frozen businesses, both shrimp and
Slide 43: European sales
Sales THB mn -9.4% YoY 20000 18000 -21.9% QoQ 16000 14000 10,612 10,890 10,503 9,044 12000 10000 8,198 8000 6000 4000 2000 0 1Q18 2Q18 3Q18 4Q18 1Q19 • 1Q19 European sales declined 9.4% YoY in Thai Baht term, largely driven by weakened EUR and GBP exchange rate against Thai Baht YoY, • However, the
Slide 44: Thailand sales
Sales THB mn 20000 18000 16000 14000 +12.0% YoY 12000 10000 -9.2% QoQ 8000 6000 3,439 3,379 4,242 3,853 4000 3,169 2000 0 1Q18 2Q18 3Q18 4Q18 1Q19 • 1Q19 Thailand sales up 12.0% YoY. • Diversifying sales in home market to offset weaker export market from THB appreciation against key currencies • Str
Slide 45: Other markets sales
Sales THB mn +1.7% YoY 20000 18000 16000 14000 -15.9% QoQ 12000 10000 7,063 7,099 8000 6,075 6000 5,025 5,111 4000 2000 0 1Q18 2Q18 3Q18 4Q18 1Q19 • 1Q19 sales was at THB 5.1bn, up 1.7% YoY due to new market penetration, such as into Africa and South America. • Initiatives in China, including collab
Slide 46: Business segment sales, margin and gross profit
Sales Margin Gross profit Business segment THB million % THB million Ambient seafood • Tuna 13,456 18.6 2,508 • Sardine and mackerel • Ambient and pouch salmon Frozen, chilled seafood and related • Shrimp and related 1 11,529 8.0 920 • Lobster • Frozen, chilled and smoked salmon • Other seafood2 Pet
Slide 47: Agenda: Business Outlook
1Q19 Key Highlights Recent Developments 1Q19 Financial Results Business Outlook
Slide 48: 2019 outlook
Sales: 3-5% YoY growth Gross profit margin: ~15% SG&A to sales: 10-10.5% Effective interest rate: No material change from 2018 CAPEX: Approx. THB 4.8bn Dividend policy: At least 50% dividend payout ratio
Slide 49: Appendix
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Slide 50: Stock performance, major shareholders, dividend policy
Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 7 March, 2019 Share price (3 May, 2019) THB 18.60 Others 51.1% Historical price 52-week high THB 19.50 Chansiri Family THB 14.70 19.6% 52-week low No. of paid up shares 4,771.8mn Par value THB 0.25 Thai NVDR Marke
Slide 51: Consolidated income statement
Consolidated 1Q19/ 1Q19/ % % % (Unit: THB mn) 1Q19 1Q18 4Q18 1Q18 4Q18 to sales to sales to sales Change Change Sales 29,369 100% 29,329 100% 36,012 100% 0.1% -18.4% Cost of sales (24,988) -85.1% (25,941) -88.4% (30,656) -85.1% -3.7% -18.5% Gross profit 4,382 14.9% 3,388 11.6% 5,356 14.9% 29.3% -18.
Slide 52: Consolidated balance sheet
(Unit: THB mn) 1Q19 % to total assets 2018 % to total assets Change Cash and cash equivalents* 803 0.6% 1,586 1.1% -49.4% Trade and other receivables - net 14,798 10.7% 15,968 11.2% -7.3% Inventories - net 36,859 26.6% 38,371 26.9% -3.9% Other current assets 2,619 1.9% 3,086 2.2% -15.1% Total curren
Slide 53: Consolidated cash flow
Consolidated (Unit: THB mn) 1Q19 1Q18 Change Profit before income tax 1,400 954 446 Adjustments for depreciation & amortisation expenses 873 709 164 Other adjustments (45) (96) 52 Changes in operating assets and liabilities (4) 1,035 (1,039) Cash flows receipts from operating activities 2,225 2,602
Slide 54: Investor relations contact
thaiunion.com investor.thaiunion.com +66 2298 0024 [email protected] Line ID: @irthaiunion