Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2018 Earnings Presentation
59 slides from Thai Union Group Public's earnings presentation, Nov 6, 2018
Slide 1: 3Q18 Results Presentation
3Q18 Results Presentation Thai Union Group PCL. 6 November, 2018
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: 3Q18 Key Highlights
3Q18 Key Highlights Recent Developments 3Q18 Financial Results Business Outlook
Slide 4: CEO message on business diversification and innovation
“We will continue to work hard to weather the industry’s volatility as we focus on expanding our business portfolio through business diversification while continuing aggressive development of product innovation.” Thiraphong Chansiri President and Chief Executive Officer Slide 4
Slide 5: 3Q18 Key Highlights: Sales, Gross Profit, Operating and Net Profit
(THB mn) Sales Gross Profit Operating Net Profit Profit 34,174 5,378 1,834 1,730* Ex-FX, sales decline YoY Stable raw material prices Strict cost control Best net profit since 2015 3Q18 sales declined YoY Gross profit improved 8.5% Operating profit up 33.1% YoY, Normalized net profit up driven by: Y
Slide 6: 9M18 Financial Summary
-2.9% 9M18 Net Profit* Financial Summary1 9M17 9M18 down 13.3% YoY to (THB million) 100,220 -7.0% 3,967 million 97,314 THB 14,489 -7.2% 13,468 Share price movement -21.4% 8,865 -13.3% 8,229 20172 20182 (Jan- Dec 17 ) (Jan- Sep 28,18 ) 3,928 -5.7% -13.5% 4,576 3,967 3,087 Declining debt, while equity
Slide 7: Quarterly sales, GPM and NPM trend
Total sales (THB mn) GPM NPM 18.0% 60,000 15.7% 14.1% 14.7% 14.5% 14.2% 16.0% 13.4% 13.8% 14.0% 50,000 14.0% 11.5% 12.0% 40,000 35,050 34,174 33,715 34,404 34,852 34,739 33,803 30,963 29,337 10.0% 30,000 8.0% 4.5% 4.6% 4.9% 5.1% 6.0% 20,000 4.1% 4.1% 4.0% 2.7% 3.0% 4.0% 10,000 2.0% 0 0.0% % Growth Y
Slide 8: Agenda: Recent Developments
3Q18 Key Highlights Recent Developments 3Q18 Financial Results Business Outlook
Slide 9: Awards and recognition
October, 2018 — Thai Union, honored as one of 33 listed large September - October, 2018 — Asian investment community companies in SET100 as part of Thailand’s first ESG-focused continues to recognize Thai Union’s ongoing company efforts investment portfolio Thai Union was among top 16 recognized com
Slide 10: Dow Jones Sustainability Index and Stop Slavery Award
September - October, 2018 — Named to Dow Jones Sustainability Index, Thomson Reuters Foundation’s Stop Slavery Award • Included in the Dow Jones Sustainability Index (DJSI) Emerging Markets for 5th consecutive year. • Thai Union was announced 1 of 6 companies shortlisted for Thomson Reuters Foundati
Slide 11: SeaChange IGNITE collaboration
October, 2018 — Thai Union Group, Chicken of the Sea® and Monterey Bay Aquarium launch SeaChange® IGNITE • A collaboration to advance new sustainability initiatives and further contribute to SeaChange® sustainable development strategy • Focused on vertically integrating improvements throughout suppl
Slide 12: Premium tuna oil for infant formula
• • Leveraging our end-to-end supply chain to offer premium tuna oil suitable for infant formula and other high-end nutritional applications, Thai Union Marine Ingredients delivers the highest quality and safety to our customers from dock to door. Crude oil Fully refined oil
Slide 13: Lobster Lab launched in China
November, 2018 — Lobster Lab, F&B concept store operated by Thammachart Seafood Retail launched in China • Thai Union has continued to expand business portfolio by introducing Thammachart Seafood’s premium seafood F&B store, The Lobster Lab through King Oscar brand • Located in Alibaba retail superm
Slide 14: Lobster Lab menu
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Slide 15: Lobster Lab menu dishes
é PRE Sime Ete aad ‘STEAMED LOBSTER ‘STEAMED TO CADER AND SERVED WITH OUR SPICY THAI SALICE FRIES AND SALAD ite ae Co GRELLED LOBSTER GAELED TO ORDER, TOPPED WITH OUR GARLIC HERES SAUCE, SENIVED WITH FRIES AND SALAD ZtReF Spee AG Ts CHEESY LOBSTER GALLED TO IN CHEESE AND SERVED WITH FISES AND SALAD
Slide 16: Agenda: 3Q18 Financial Results
3Q18 Key Highlights Recent Developments 3Q18 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 17: CFO message: Triple C approach
“We follow the Triple C approach: Cash, Cost productivity, Capital efficiency.” Joerg Ayrle Group Chief Financial Officer Slide 17
Slide 18: Consolidated results summary
Challenged • Excluding FX impact, 3Q18 sales slightly declined (-1.0% YoY), while volume sales slightly declined from same period last year top line • Reported sales at THB 34.2bn down 1.9% YoY, partly from THB appreciation • Margin recovery to 15.7%, up from 14.2% in 3Q17 and 14.0% in 2Q18 GPM • Tu
Slide 19: ESCo discontinued operation impact
3Q18 Sales (THBmn) 34,511 -337 34,174 Sales including ESCo ESCo sales Reported sales 3Q18 Gross profit (THBmn) 5,384 -6 5,378 Gross profit ESCo gross profit Reported gross profit including ESCo • Européenne de la Mer (Thai Union subsidiary) announced intention to divest loss-making chilled salmon bu
Slide 20: Tuna raw material price
2,600 (USD/ton) Quarterly average Monthly average 2,300 2,200 2,100 1,980 2,000 1,950 1,900 1,800 1,800 1,800 1,700 1,700 1,690 1,700 1,700 1,650 1,600 1,600 4Q17 1,550 1,525 1,500 3Q17 1,480 1,450 2,010 2,033 2Q17 2Q18 1,400 1Q17 1,763 1Q18 1,300 1,633 1,667 3Q18 1,577 1,467 1,000 Jan-17 Feb-17 Mar
Slide 21: Sales
Sales THB mn -1.9% YoY +1.1% QoQ ❖3Q18 sale declined 1.9% YoY was 40,000 driven by currency fluctuation YoY. 34,852 34,739 33,803 34,174 35,000 • Excluding FX impact, 3Q18 sales 29,337 30,000 down 0.8% 25,000 • Ambient business sales improved 20,000 4.4% YoY especially from OEM tuna 15,000 business
Slide 22: Revenue growth component
Revenue growth component THB mn -1.9% YoY +1,112 -290 +147 +7 -184 -115 -326 -11% +3% -404 +22% -2% 34,852 -8% +11 -245 -15% -134 +9% -18% -256 34,174 0% -12% -1% -2% -0.8% YoY Before currency impacts Tuna Sardine Salmon- Other Shrimp Salmon- Lobster Other Pet Care Value USD EUR 3Q17 & Ambient seafo
Slide 23: Sales breakdown by geography and business
Sales Breakdown by Geographic 100% 13% 14% 13% 15% 15% Others* 80% 7% 6% 6% 6% 6% ❖9M18 Sales contribution in key markets 7% 8% 8% 10% 10% Japan marginally shifted in favor of domestic Thai Domestic 60% 29% 29% 33% market 32% 31% Europe ❖Partly due to company focus on selling product 40% USA in dome
Slide 24: Gross Profit
Gross Profit 30.0% THB mn 28.0% +8.5% YoY 26.0% +14.0% QoQ 24.0% ❖ 3Q18 Gross profit was up 8.5% YoY, 5,378 22.0% • Despite weak sales trend, a stable 4,956 4,807 4,717 20.0% tuna raw material price and selling 3,373 18.0% price recovery support margin 15.7% 16.0% improvement, 14.0% 14.0% • Shrimp b
Slide 25: Operating Profit
20.0% Operating Profit 18.0% THB mn 16.0% +33% YoY 14.0% +55% QoQ 12.0% ❖ 3Q18 Operating profit was up 33% 1,834 10.0% YoY: 1,378 1,181 8.0% • Strong gross margin recovery QoQ 963 6.0% • Strict cost control initiatives 5.4% 4.0% ❖ SG&A-to-sales ratio was at 10.4% OP Margin 4.0% 72 3.5% 2.0% (from 10
Slide 26: EBITDA
28.0% EBITDA THB mn +5.6% YoY 23.0% +14.9% QoQ ❖ 3Q18 Normalized EBITDA up 5.6% YoY, 18.0% • Business profitability improved 3,049 3,221 2,683 2,803 • A prudent cost control keep SG&A 2,205 13.0% expenses under control ❖ 9M18 EBITDA was at THB 8,229mn, EBITDA Margin 8.7% 9.4% 8.0% down 7.2% YoY due
Slide 27: Net Profit
14.0% Net Profit THB mn 12.0% +0.4% YoY ❖ TU’s 3Q18 normalized net profit of 10.0% +26.5% QoQ 8.0% THB 1,730mn, up 0.4% QoQ and 1,723 1,730 highest quarterly profits since 4Q14: 1,413 1,368 5.1% 6.0% ▪ Improved operation from price NPM 869 1,310 recovery and stable raw material 4.9% 4.0% 4.1% 4.0% p
Slide 28: Adjusted Net Profit
20.0% Adjusted Net Profit 18.0% THB mn +8.8% YoY 16.0% ❖ Besides one-time asset impairment as a 14.0% result of potential business divestment +69.9% QoQ 12.0% amounted THB 420mn, which is non-cash 1,730 10.0% and non-operating, TU recorded no other 1,590 Adjusted 1,374 8.0% adjustment item during 3Q
Slide 29: Earnings per Share
Earning per Share (EPS)* THB +0.4% YoY +26.5% QoQ ❖ 3Q18 normalized EPS was at THB 0.36 0.36 0.36, up 0.4% YoY and 26.5% 0.30 0.29 QoQ, along with the net profit 0.18 trajectory. 3Q17 4Q17 1Q18 2Q18 3Q18 1.26 1.10 1.11 1.10 -13.3% YoY 0.96 9M17 0.83 9M18 2014 2015 2016 2017 2018 Remark: *EPS in this
Slide 30: Red Lobster contribution to net profit
Red Lobster has contributed THB 287mn to net profit THB mn 3Q18 2Q18 1Q18 4Q17 3Q17 ❖ 3Q18 net positive contributor of THB Share of 287mn, or 20% net profit accretive 64 -128 137 -317 -33 profit ❖ Red Lobster contributed THB64mn of Other equity income profit contribution, of 256 259 235 248 247 whic
Slide 31: Free cash flow
Quarterly Free Cash Flow THB mn 3,794 ❖ 3Q18 free cash flow of THB 2.2bn: 2,186 • Improved profitability, • A more stabilized raw material 1,369 prices, and 280 • An efficient inventory control. YTD -142 Inventory value dropped THB3.2bn 3Q17 4Q17 1Q18 2Q18 3Q18 ❖ 9M18 free cash flow of THB 7.3bn, Ca
Slide 32: Net debt movement
Unit: THB mn ND/E 1.38x Free Cash Flow** THB 7,349 mn Income tax paid and other investing & financing activities ND/E 1.40x Kd = 3.21% Kd = 3.08% Normalized ND/E 1.36x*** 66,419 +3,699 64,066 -400 +1,276 +3,723 +421 -8,228 +1,361 -3,616 -589 EBITDA Change in net Change in Other non- CAPEX Tax Net in
Slide 33: Interest-bearing debts by currency and maturity
Interest-bearing debts of THB 64,066mn By Currency By Maturity EUR 1.0% 1.5% USD 21% Short-term loan 22% 0.9% Current portion of long-term debt 2% 14% & finance lease 2020 2021 THB 98.1% 98.5% Long-term debt 76% 2022 65% onwards 2017 3Q18 2017 3Q18 Long-term loan by maturity THB 67.2bn THB 64.1bn TH
Slide 34: ROE, ROCE, working capital and leverage ratios
ROE1 INV Days 145 Debt to EBITDA 16.6% 16.8% 14.0% 13.5% 128 7.45 128 6.27 5.88 124 125 5.53 8.7% 5.03 42,155 43,184 40,691 39,708 39,996 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 INV (THB mn) INV Day Net WC3 131 ROCE2 ND/E4 1.41x 1.40x 1.38x 9.8% 114 115 1.37x 1.37x
Slide 35: Agenda: Results by Business Unit
3Q18 Key Highlights Recent Developments 3Q18 Financial Results • Consolidated Results • Results by Business Unit Business Outlook
Slide 36: Tuna, shrimp and salmon raw material prices
Tuna raw material price 2,400 (USD/ton) ❖ Tuna price closed at USD 1,525/ton in 2,200 October 2018. 2,000 • 3Q18 average price was USD 1,467/ton 1,525 (-27.0% YoY, -12.0% QoQ) 1,800 ❖ Shrimp price closed at THB 140/kg in 1,600 3Q17 4Q17 2Q17 2,010 2,033 October 2018. 1Q17 2Q18 1,400 1,633 1,763 1Q18
Slide 37: Currency movements: USD, EUR, GBP vs THB
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 37.64 32.77 1Q16 2Q16 32.0 3Q16 4Q16 1Q17 2Q17 38.0 1Q16 2Q16 3Q17 35.67 35.28 39.83 3Q16 4Q17 1Q18 34.84 35.39 35.12 34.30 3Q17 4Q17 3Q18 39.32 39.20 3Q18 33.39 32.95 1Q18 2Q18 32.97
Slide 38: Total 9M18 sales by business
Total 9M18 sales: THB 97,314 mn Ambient seafood Frozen, chilled seafood and related PetCare, value-added and others Sales: THB 47,269 mn Sales: THB 37,184 mn Sales: THB 12,861 mn Tuna Tuna slices Shrimp and related 1 Lobster PetCare Marine ingredients Sardine & mackerel Ambient and pouch salmon Froz
Slide 39: Ambient seafood sales
Sales (THB million) Quantity (Tons) +4.4% YoY -0.6% YoY +2.7% QoQ -0.7% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 16,363 16,806 20,000.00 114,000.00 113,000.00 112,000.00 111,000.00 19,000.00 18,000.00 16,090 15,223 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 1
Slide 40: Frozen and chilled seafood sales
Sales (THB million) Quantity (Tons) -8.1% YoY -3.5% YoY +0.4% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 20,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 105,000.00 104,000.00 103,000.00 102,000.00 +1.9% QoQ 101,0
Slide 41: PetCare and value-added sales
Sales (THB million) Quantity (Tons) -5.4% YoY +3.0% YoY -2.7% QoQ +4.6% QoQ 50,000.00 49,000.00 6,000.00 48,000.00 4,580 4,548 47,000.00 46,000.00 38,454 39,862 37,638 37,843 39,596 4,081 4,450 4,331 45,000.00 44,000.00 43,000.00 42,000.00 5,000.00 41,000.00 40,000.00 9% 8% 9% 39,000.00 38,000.00 37
Slide 42: Sales by region
31% Europe 39% United States 10% and Canada Thailand 20% Others (Asia, Australia, Middle East, Africa and South America)
Slide 43: United States and Canada sales
Sales THB mn -8.5% YoY -1.0% QoQ 20,000 18,000 16,000 13,986 13,743 12,931 14,000 11,821 12,801 12,000 10,000 8,000 6,000 4,000 2,000 - 3Q17 4Q17 1Q18 2Q18 3Q18 ❖ North America businesses sales decline by 8.5% in Thai Baht term. • Chicken of the Sea price recovery affect volume sales. • Frozen busin
Slide 44: Europe sales
Sales THB mn +0.4% YoY 20000 18000 +2.4% QoQ 16000 14000 10,850 9,929 10,640 10,894 8,962 12000 10000 8000 6000 4000 2000 0 3Q17 4Q17 1Q18 2Q18 3Q18 ❖ 3Q18 European sales stable (+0.4%) YoY ❖ Excluding THB appreciation against EUR by 2.2% YoY, sales growth should have been more pronounced ❖ European
Slide 45: Thailand sales
Sales THB mn 20000 18000 16000 14000 -9.1% YoY 12000 10000 +6.6% QoQ 8000 3,718 6000 4000 3,342 3,439 3,169 3,379 2000 0 3Q17 4Q17 1Q18 2Q18 3Q18 ❖ 3Q18 Thailand sales down 9.1% YoY. ❖ Export sales was affected by declining tuna and shrimp raw material prices, but tuna business has shown margin reco
Slide 46: Emerging markets sales
Sales THB mn +12.7% YoY 20000 18000 16000 14000 +0.5% QoQ 12000 7,725 10000 8000 6,298 7,063 7,100 6000 5,115 4000 2000 0 3Q17 4Q17 1Q18 2Q18 3Q18 ❖ 2017 Emerging markets sales up 12.7% YoY. ❖ Initiatives in China, including collaboration with Thammachart Seafood on food service to open new channel
Slide 47: Business segment sales and gross profit
Sales Margin Gross profit Business segment THB million % THB million Ambient seafood • Tuna 16,806 18.9 3,171 • Sardine and mackerel • Ambient and pouch salmon Frozen, chilled seafood and related • Shrimp and related 1 13,037 10.1 1,316 • Lobster • Frozen, chilled and smoked salmon • Other seafood2
Slide 48: Agenda: Business Outlook
3Q18 Key Highlights Recent Developments 3Q18 Financial Results Business Outlook
Slide 49: Business outlook
Prices have begun successful re-adjustment for our Branded business in Europe and will further repricing will continue onto 3Q18 Spot prices and average inventory cost more balanced Positive outlook on shrimp cost and improving market dynamics in US Product innovations and Marine Ingredient business
Slide 50: Appendix
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Slide 51: Stock performance, major shareholders, dividend policy
Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 28 September, 2018 Others Share price (2 November 2018) THB 16.80 51.3% Historical price 52-week high THB 18.10 Chansiri Family 52-week low THB 17.90 19.9% No. of paid up shares 4,771.8mn Par value THB 0.25 Mitsub
Slide 52: Consolidated income statement 3Q18
Consolidated 3Q18/ 3Q18/ % % % (Unit: THB mn) 3Q18 3Q17** 2Q18 3Q17 2Q18 to sales to sales to sales Change Change Sales 34,174 100% 34,852 100% 33,803 100% -1.9% 1.1% Cost of sales (28,795) -84.3% (29,896) -85.8% (29,086) -86.0% -3.7% -1.0% Gross profit 5,378 15.7% 4,956 14.2% 4,717 14.0% 8.5% 14.0%
Slide 53: Consolidated balance sheet
(Unit: THB mn) 9M18 % to total assets 2017 % to total assets Change Cash and cash equivalents* 764 0.5% 815 0.6% -6.2% Trade and other receivables - net 15,852 11.1% 16,344 11.2% -3.0% Inventories - net 39,996 28.1% 43,184 29.6% -7.4% Other current assets 2,449 1.7% 2,174 1.5% 12.6% Total current as
Slide 54: Consolidated cash flow
Consolidated (Unit: THB mn) 9M18 9M17 Change Profit before income tax 2,542 5,042 (2,501) Adjustments for depreciation & amortisation expenses 2,181 2,038 143 Other adjustments 2,103 913 1,190 Changes in operating assets and liabilities 4,147 (1,804) 5,951 Cash flows receipts from operating activiti
Slide 55: Quarterly income statement trend
(in mTHB) Q117 Q217 Q317 Q417 Q118 Q218 Q318 Sales 30,963 34,404 34,852 34,739 29,337 33,803 34,174 Cost of sales 26,406 29,428 29,896 29,932 25,965 29,086 28,795 Gross Profit 4,557 4,976 4,956 4,807 3,373 4,717 5,378 in % of Net sales 14.7% 14.5% 14.2% 13.8% 11.5% 14.0% 15.7% SG&A expenses 3,688 3,
Slide 56: Thai Union's global footprint
Thai Union’s global footprint Slide 56 3Q18 Results Presentation
Slide 57: Premium tuna oil for infant formula
Leveraging our end-to-end supply chain to offer premium tuna oil suitable for infant formula and other high-end nutritional applications, Thai Union Marine Ingredients delivers the highest quality and safety to our customers from dock to door. eleye Supplement
Slide 58: Tuna by-product utilization
43 – 45% 9.8% 5% 5% white meat dark meat bone frame skin ✓ Ambient 5% (Canned) Tuna ✓ Premium Pet Food Ingredient ✓ Gelatin ✓ Nutraceutical Supplement front head ✓ Cosmeceutical Supplement ✓ Collagen Peptide ✓ Nutraceutical Supplement ✓ Functional Food Ingredient ✓ Collagen 2 - 4% ✓ Tuna Surimi ✓ Om
Slide 59: Investor relations contact
thaiunion.com investor.thaiunion.com +66 2298 0024 [email protected] Line ID: @irthaiunion