Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — FY2020 Earnings Presentation
63 slides from Thai Union Group Public's earnings presentation, Feb 23, 2021
Slide 1: Analyst Meeting for FY2020 Results
Analyst Meeting for FY2020 Results Thai Union Group PCL. February 23, 2021
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: 4Q20 Key Highlights
4Q20 Key Highlights Slide 3 Analyst Meeting for FY2020 Results
Slide 4: CEO message on health and safety
“Thai Union continues to focus on the health and safety of our employees, customers, and supply ecosystem, so that we can ensure the continuity of our business in order to deliver trusted, safe and quality products to consumers around the world. Thiraphong Chansiri President and CEO ” Slide 4 Analys
Slide 5: 4Q20: Strong net profit growth of 38% YoY
4Q20: Strong net profit growth of 38% YoY, with solid operating profit driven by Ambient seafood and PetCare business THB mn Sales Gross Profit Operating Profit Net Profit 33,464 6,023 1,938 1,457 Top line improved from GPM of 18.0%, Growing SG&A in light of High quarterly net profit, growing sales
Slide 6: 2020: Annual net profit above THB 6bn for the first time
2020: Annual net profit above THB 6bn for the first time ever, up 64%. Strong EBITDA and debt ratio remained below 1x 2020 Reported net profit Financial Summary1 +4.9% Up 64% YoY to (THB million) +16.4% 132,402 126,275 THB 6,246 million 2019 2020 23,418 Share price movement +7.7% +38.6% 20,110 20202
Slide 7: Strong topline growth in 2020, record gross margin
Strong topline growth in 2020, record gross margin for three consecutive quarters Total sales (THB mn) GPM NPM 60,000 18.2% 18.2% 18.0% 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 32,214 31,838
Slide 8: Recent Developments
Recent Developments Slide 8 Analyst Meeting for FY2020 Results
Slide 9: Continued recovery in all key businesses
Keeping up with the new normal, continued recovery in all key businesses Ambient seafood is the Frozen business shows PetCare, value-added prime beneficiary mixed signs of recovery continued to deliver solid expansion of 8% YoY • Continued sales push • Demand for frozen • Demand for PetCare in all k
Slide 10: COVID-19 response, global operations uninterrupted
Thanks to stringent measures and prompt action on COVID-19, our global operations remain uninterrupted • Thai Union has managed the COVID-19 situation well around the world • All of our plants remain open and operational in Thailand • We have not seen any business shutdown • First round of vaccinati
Slide 11: Slide 11 Analyst Meeting for FY2020 Results
Slide 11 Analyst Meeting for FY2020 Results
Slide 12: Conclusion of the US antitrust litigation
Conclusion of the US antitrust litigation • Chicken of the Sea (COSI) has reached agreement to settle final cases with final plaintiff and two class actions. • Final plaintiff settlement will be subject to negotiation of final agreement. • All settlements will require court approval. Placeholder for
Slide 13: Successfully issued sustainability-linked term loan
Successfully issued sustainability-linked term loan • Successful debut of THB 12bn (equivalent) sustainability-linked term loan, completed in Feb 2021 • 1st ever sustainability “syndication loan” in Thailand: 5 banks at THB 6.5bn, 1.6x oversubscribed • 1st time financing from Japan: Strong demand wi
Slide 14: Expanding into a new category of innovative products
Expanding into a new category of innovative products • Thai Union Ingredients (TUI) and Inter Pharma established Interpharma-ZEAvita in January 2021 • Health and wellbeing supplement products in Thailand • TUI and ThaiBev established Food and Beverage United in October 2020 • To develop nutritious f
Slide 15: Launching two new ways of consuming seafood
Launching two new ways of consuming “seafood” to consumers in Thailand Expanding alternative protein to modern trade and Sealect x After Yum launches new DIY canned tuna in foodservice under own brand OMG Meat Thailand • Innovative, plant-based seafood and meat • Sealect collaborated with After Yum
Slide 16: Investing in food-tech startups to drive innovation
We continue to invest in food-tech startups to drive innovation • At Thai Union, we are building an ecosystem to nurture food-tech startups and to drive innovation in food industry • Continued engagement in SPACE-F with Batch II startups • Through our corporate venture (CVC) fund, along with other i
Slide 17: Awards and Recognitions
Awards and Recognitions We are proud to have our efforts recognized by leading institutions around the world Thai Union was ranked No. 2 globally in 2020 Dow Jones Sustainability Indices (DJSI) on the Food Products Industry Index. This marks seventh consecutive year of being included in DJSI, driven
Slide 18: 2H20 final dividend of THB 0.40/share
With reported net profit recovery, TU announced 2H20 final dividend of THB 0.40/share, FY2020 dividend of THB 0.72/share THB/Share Final dividend for the period: 0.80 1 July to 31 December, 2020 0.70 60% 59%* 59% 57% DPS THB 0.40/share 0.60 57% 57% 53% 51% 51% 51% 50% 52% 50% 50% 50% 0.50 0.40 Recor
Slide 19: Financial Results: 4Q20 - Consolidated
Financial Results: 4Q20 - Consolidated Slide 19 Analyst Meeting for FY2020 Results
Slide 20: CFO quote on 2020
“ 2020 was an exceptional year. We delivered a solid performance, amid the COVID-19 pandemic, achieving strong sales and record net profit. ” Ludovic Garnier, Group CFO Slide 20 Analyst Meeting for FY2020 Results
Slide 21: 4Q20: Key Takeaways
4Q20: Key Takeaways • 1.9% sales growth YoY, driven by ambient business in US and Europe, and strong Soft top line sales contribution from PetCare and value added business. growth • Excl. FX, sales growth was -0.9% YoY due to challenges in the frozen business. • GPM continued at high level of 18.0%,
Slide 22: Tuna prices remained within our expectations
Tuna prices remained within our expectations 2,400 Tuna raw material price (USD/ton) 2,200 +14.6% YoY 2,000 FY2019 FY2020 1,800 1,209 1,385 1,600 3Q17 4Q17 1,400 2Q17 2,010 2,033 1Q17 1Q18 2Q18 3Q20 1,200 1,763 1Q19 1,633 1,577 1,667 3Q18 4Q18 1Q20 1,500 4Q20 1,467 1,408 1,453 2Q19 3Q19 1,442 2Q20 1
Slide 23: Sales growth driven by ambient seafood and PetCare
Sales growth driven by ambient seafood and PetCare business Sales -0.9% YoY • 4Q20 sales improved 1.9% YoY, driven by: THB mn +1.9% YoY Before currency impacts -3.8% QoQ • Sales growth driven mainly by ambient seafood 34,784 sales (+8.8% YoY) and volume (+6.9%) 32,854 31,103 33,051 33,464 growth, th
Slide 24: Q420 revenue growth component
Q420 revenue growth driven by FX, ambient seafood and PetCare businesses, partially offset by Frozen challenge Revenue growth component THB mn +1.9% YoY +39 -783 +773 33,464 +262 +104 32,854 +154 +11% +16% +516 -114 -174 +124 +12% -158 +2% -134 +9% -9% -8% +1% -7% -7% -7% +18% -0.9% YoY Before curre
Slide 25: Revenue structure well-diversified
Revenue structure well-diversified Sales Breakdown by Geographic • 2020 Sales contribution in the 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 11% and 9% 8% 8% 9% 11% 12% 10% Domestic respectively from growing dem
Slide 26: GPM remarkably stable at high level
GPM remarkably stable at high level over the last three quarters Gross Profit THB mn • 4Q20 gross profit remained in high quarterly +13.9% YoY level at 18.0% vs 16.1% in 4Q19, thanks to: 30.0% -4.8% QoQ • Improved higher-margin ambient business 28.0% 26.0% 6,027 6,327 6,023 24.0%sales mix, resulting
Slide 27: 4Q20 Robust operating profit, up 26% YoY
4Q20 Robust operating profit, up 26% YoY Operating Profit* • 4Q20 Operating profit was up 26.1% YoY to THB mn +26.1% YoY 20.0% THB 1,938mn -3.0% QoQ 18.0% • 4Q20 SG&A to sales ratio was at 12.2%, 16.0% increased from 11.4% in 4Q19. This is partly 2,356 due to FX and the Company’s continued 14.0% 1,9
Slide 28: 2020 record EBITDA at THB 13bn
2020 record EBITDA at THB 13bn, up 27% YoY on reported basis EBITDA* • 4Q20 EBITDA at THB3.1bn, an increase of 12% THB mn +12.0% YoY 28.0% YoY, thanks to: -20.4% QoQ • 4Q20 other income was THB 291mn, significantly 23.0% increased from THB 97mn last year, thanks to 3,883 lower impairment cost than 4
Slide 29: 2020 all time high net profit at THB 6.2bn
2020 All time high net profit at THB 6.2bn, up 64% YoY on reported basis Net Profit • 4Q20 reported net profit was THB 1,457mn, 14.0% THB mn +37.9% YoY up 37.9% YoY 12.0% -29.1% QoQ • This was mainly due to strong core business operations, mainly from ambient seafood and 10.0% 2,056 PetCare and valu
Slide 30: 4Q20 Adjusted net profit increased 30% YoY
4Q20 Adjusted net profit increased 30% YoY excluding one-off Adjusted Net Profit THB mn 20.0% • Excluding one-off negative item during 4Q20 +30.4% YoY 18.0% amounted THB 146mn from Russia (TUMD) fair -28.9% QoQ 16.0% value adjustment, the 4Q20 net profit was at 14.0% 2,255 THB 1.6bn up 30% YoY. 12.0
Slide 31: EPS: 4Q20 EPS was up 30.7% YoY
EPS: 4Q20 EPS was up 30.7% YoY Earning per Share (EPS)* • 4Q20 EPS was at THB 0.29, up 30.7% YoY, THB +30.7% YoY along with the reported net profit growth -30.2% QoQ trajectory. • However, excluding the one-off US antitrust 0.42 settlement costs from 2Q19 EPS, and excluding 0.34 the treasury shares
Slide 32: Net losses in Red Lobster
4Q20: Net losses in Red Lobster due to ongoing COVID-19 impact and seasonality THB mn 4Q20 3Q20 2Q20 1Q20 4Q19 • Situation remains challenging in the US for the entire restaurant industry Share of -321 -54 -702 -111 -243 • Despite the pandemic, Red Lobster has been profit operating around 78% dining
Slide 33: Solid free cash flow on strong profitability
4Q20: Solid free cash flow on strong profitability and efficient working capital management Quarterly Free Cash Flow • During 4Q20, TU cash flow remain highly THB mn 5,609 favorable thanks to strong operation profitability and efficient working capital 3,621 management. 2,585 • Amid growing inventor
Slide 34: THB 3bn net debt reduction
2020: THB 3bn net debt reduction from record EBITDA and net working capital and CAPEX under control THB mn ND/E 1.07x Income tax paid and other investing & financing ND/E 0.94x Free Cash Flow THB 10,375 mn Kd = 3.27% activities Kd = 2.91% 55,215 2,972 548 52,129 1,519 1,701 668 3,726 -119 -12,959 -3
Slide 35: Majority THB funding
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 58,415mn By Currency By Maturity 1.3% 1.5% EUR USD 0.0% Short-term loan 19% 23% Current portion 6% of long-term 14% debt & finance THB 98.7% 98.5% lease 2022 Long-term debt 75% 63% 2023 onwards 2019 2
Slide 36: Debt ratio target achieved, improved NWC management
Debt ratio target achieved, improved NWC management ROE INV Days Net Debt to EBITDA 128 13.5% 14.1% 122 120 123 125 4.64 4.59 4.32 11.9% 4.17 Target 12.3% 11.5% 4.0-4.5 36,873 35,720 34,696 37,758 38,546 4.02 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 INV (THB mn) INV
Slide 37: Financial Results: 4Q20 – Business Units
Financial Results: 4Q20 – Business Units Slide 37 Analyst Meeting for FY2020 Results
Slide 38: Tuna and shrimp prices favorable, salmon dropped
Tuna and shrimp prices remained favorable, salmon dropped to record low since 2015 Tuna (USD/ton) Salmon (NOK/kg) 2,500 90 2,300 Fluctuation in the range 85 Continued downward trend to 2,100 of 1,300 – 1,700 USD/ton 80 lowest level since 2016 1,900 75 70 1,700 4Q17 65 1,500 3Q172,033 60 2,010 2Q18 1
Slide 39: Thai Baht weakened against key currencies
Thai Baht weakened against all key currencies YoY 38.0 48.0 37.0 USD/THB 47.0 GBP/THB Continued downward 46.0 GBP remained stable 36.0 trend against THB since 45.0 against THB after 35.0 2Q20 gaining strength since 44.0 34.0 43.0 2H19 33.0 42.0 32.0 1Q17 41.0 2Q17 40.0 1Q17 2Q173Q17 4Q17 1Q182Q183Q1
Slide 40: 3 strategic business segments
3 strategic business segments Total 2020 sales: THB 132,402 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 62,724 mn Sales: THB 49,605 mn Sales: THB 20,073 mn Sales Split Sales Split Sales Split 15% 47% 43% 6% 57% 37% 38% 63% 94% Brand Brand Brand
Slide 41: Ambient seafood: Continued to deliver strong growth
Ambient seafood: Continued to deliver strong growth +16.9% YoY Sales (THB million) Quantity (tons) +13.6% YoY 392,563 +8.8% YoY +6.9% YoY 335,924 -11.2% QoQ 62,724 -4.6% QoQ 55,221 46% 99,599 101,136 98,176 93,652 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.0
Slide 42: Frozen, chilled seafood and related
Frozen, chilled seafood and related: Recovering GPM, although topline challenged Sales (THB million) Quantity (tons) -6.5% YoY -5.4% YoY -7.0% YoY -5.4% YoY +2.8% QoQ -2.8% QoQ 52,424 49,605 277,886 262,924 14,691 13,370 13,738 74,436 61,179 69,236 Brand 36% 10,944 11,554 36% 37% 61,284 71,224 37% 3
Slide 43: PetCare, value-added and others
PetCare, value-added and others: Strong growth with record GPM in 4Q20 Sales (THB million) Quantity (tons) +7.7% YoY +2.8% YoY +8.0% YoY +1.3% YoY +2.6% QoQ 18,630 20,073 +0.5% QoQ 278,672 286,601 6% 5% 5% 4,896 5,103 5,155 5,287 10% 75,409 74,452 62,852 Brand 6% 4,528 6% 6% 5% Brand 73,322 75,019 8
Slide 44: Geographic diversity: Sales
Geographic diversity: Sales Europe United States and Canada 29% 43% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 18% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 10% Slide 44 Analyst Meeting for FY2020 Results
Slide 45: US & Canada: Sales growth remained amid pandemic
US & Canada: Sales growth remained amid pandemic Sales +11.2% YoY THB mn +7.9% YoY 57,422 -4.0% QoQ 60000 51,647 50000 15,471 14,851 13,769 13,175 13,925 40000 30000 20000 10000 0 4Q19 1Q20 2Q20 3Q20 4Q20 2019 2020 • 4Q20 North America sales increased by 7.9% YoY in Thai Baht term. • US ambient seaf
Slide 46: Europe: Strong sales growth continued
Europe: Strong sales growth continued delivering Sales 60000 THB mn +9.0% YoY +21.3% YoY 50000 -1.4% QoQ 38,361 40000 35,179 30000 9,417 9,430 9,827 9,688 7,986 20000 10000 0 4Q19 1Q20 2Q20 3Q20 4Q20 2019 2020 • 4Q20 EU sales growth of 21.3% was supported by currency effect and promo push • Thai Bah
Slide 47: Thailand: Affected by lower tourism activities
Thailand: Affected by lower tourism activities Sales THB mn 30000 -20.3% YoY 25000 -8.7% YoY -6.4% QoQ 14,575 20000 15000 13,304 4,039 3,460 3,437 3,187 3,219 10000 5000 0 4Q19 1Q20 2Q20 3Q20 4Q20 2019 2020 • 4Q20 Thailand sales were down 20.3% YoY. • Food service is the key business for domestic sa
Slide 48: Emerging Markets and rest of the world
Emerging Markets and rest of the world: Frozen seafood sales declined Sales THB mn -11.0% YoY 40000 -6.3% YoY 35000 -5.7% QoQ 30000 24,874 23,316 25000 20000 6,411 6,509 6,049 5,706 5,052 15000 10000 5000 0 4Q19 1Q20 2Q20 3Q20 4Q20 2019 2020 • 4Q20 sales experience some decline in frozen segment in
Slide 49: 4Q20 Segment profitability
4Q20 Segment profitability Business segment Sales Margin Gross profit THB mn % THB million Ambient seafood • Tuna, sardine and mackerel, ambient and 14,440 20.1 2,908 pouch salmon Frozen, chilled seafood and related 13,738 11.4 1,560 • Shrimp and related 1 , lobster, frozen, chilled and smoked salmo
Slide 50: 2021 Business Outlook
2021 Business Outlook “Thai Union delivered a solid performance in 2020, amid the global pandemic, with strong topline growth and record high profit margin. Demand for Thai Union’s products grew as consumers cooked more at home, spent more time with their pets, and shifted their eating habits toward
Slide 51: 2021 Guidance
2021 Guidance Sales 3-5% YoY growth Gross profit margin ~ 17% SG&A to sales ~ 11 – 12% Effective interest No material change Placeholder for graphic rate from 2020 (paste graphic, crops to H19.05*W16.93) (add TU logo) CAPEX ~ THB 6 – 6.5bn Dividend policy At least 50% dividend payout ratio Slide 51
Slide 52: Introducing Our 2025 Corporate Strategy
Introducing Our 2025 Corporate Strategy Slide 52 Analyst Meeting for FY2020 Results
Slide 53: Healthy Living, Healthy Oceans
Thai Union is one of the world's most trusted seafood leaders, delivering healthy and responsibly-sourced nutrition to our consumers globally, while creating long-term value for our stakeholders. Healthy Living, Healthy Oceans With our global business portfolio, we will focus on continued performanc
Slide 54: Strengthening our core business
Thai Union is focused on strengthening its core business to achieve sustainable, profitable growth • Stable, organic growth of 3% per year in our core Ambient and Frozen business • Over the next 5 years, USD 200-300mn Placeholder for graphic investment in productivity to achieve 3% Strengthening our
Slide 55: Expanding into new value-enhancing areas
We are expanding into new, attractive, value-enhancing areas to diversify and shift our portfolio • Invest USD 500mn into new and adjacent businesses over the 5 years • Grow Pet Care and Feed businesses at around 3x GDP growth p.a. Placeholder for graphic • Scale-up of our Ingredients and Building n
Slide 56: Leading the industry on sustainability
We are committed to “Healthy Living, Healthy Oceans” and will continue to lead the industry on sustainability • Expand our SeaChange® sustainability program to fight Climate Change • Commitment to move to sustainable packaging within 2025 Placeholder for graphic Leading the industry (paste graphic,
Slide 57: Driving synergies from strategic investments
We will continue to drive synergies and profit contributions from our strategic investments • We are fully committed to our shareholding in Avanti and plan to further expand our collaboration Placeholder for graphic • With our strategic investment in Red Continuing value- Lobster we continue to supp
Slide 58: Slide 58 Analyst Meeting for FY2020 Results
Slide 58 Analyst Meeting for FY2020 Results
Slide 59: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 31 December, 2020 Share price (19 February, 2021) THB 13.50 Historical price Others, 45.6% Chansiri 52-week high THB 16.00 Family, 52-week low THB 11.90 Social 19.3% No. of paid up shares
Slide 60: 4Q20 Income statement
4Q20 Income statement Consolidated 4Q20 4Q20 % % % (Unit: THB mn) 4Q20 4Q19 3Q20 4Q19 3Q20 to sales to sales to sales * Change Change Sales 33,464 100% 32,854 100% 34,784 100% 1.9% -3.8% Cost of sales (27,441) -82.0% (27,567) -83.9% (28,457) -81.8% -0.5% -3.6% Gross profit 6,023 18.0% 5,288 16.1% 6,
Slide 61: 2020 Income statement
2020 Income statement Consolidated 2020 % % (Unit: THB mn) 2020 2019* 2019 to sales to sales * Change Sales 132,402 100% 126,275 100% 4.9% Cost of sales (108,985) -82.3% (106,165) -84.1% 2.7% Gross profit 23,418 17.7% 20,110 15.9% 16.4% SG&A expenses (15,596) -11.8% (16,266) -12.9% -4.1% FX gain (lo
Slide 62: Statement of Financial Position as of 31 December 2020
Statement of Financial Position as of 31 December 2020 % to total % to total (Unit: THB mn) 2020 2019 Change assets assets Cash and cash equivalents* 6,286 4.3% 4,689 3.3% 34.1% Trade and other receivables - net 13,320 9.2% 14,869 10.5% -10.4% Inventories - net 38,546 26.7% 36,873 26.0% 4.5% Other c
Slide 63: 2020 Statement of cash flow
2020 Statement of cash flow Consolidated (Unit: THB mn) 2020 2019 Change Profit before income tax 7,233 3,097 4,136 Adjustments for depreciation & amortisation expenses 3,955 2,717 1,239 Other adjustments 2,490 1,407 1,082 Changes in operating assets and liabilities 423 (324) 746 Cash flows receipts