Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2020 Earnings Presentation
58 slides from Thai Union Group Public's earnings presentation, Nov 5, 2020
Slide 1: Analyst Meeting for 3Q20 Results
Analyst Meeting for 3Q20 Results Thai Union Group PCL. November 5, 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: 3Q20 Key Highlights
3Q20 Key Highlights Slide 3 Analyst Meeting for 3Q20 Results
Slide 4: CEO quote on COVID-19 and business continuity
“ While COVID-19 is still a challenge to all businesses, Thai Union continues 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 3
Slide 5: 3Q20: First time ever above THB 2bn quarterly net profit
3Q20: First time ever above THB 2bn quarterly net profit, strong top line growth, frozen business back on track THB mn Sales Gross Profit Operating Profit Net Profit 34,784 6,327 1,998 2,056 Top line improved from GPM of 18.2%, Growing SG&A in light of Record quarterly net growing sales volume YoY u
Slide 6: 9M20: Record 9M net profit, debt ratio below 1x
9M20: Record 9M net profit, 9M20 reported profit up 74%, Debt ratio remained below 1x +5.9% 9M20 Reported net profit Financial Summary1 Up 74% YoY to (THB million) 98,938 +17.4% 93,421 THB 4,789 million 9M19 9M20 17,395 +43.3% Share price movement 14,822 +6.4% +73.6% +15.1% 20192 20202 (Jan – Dec 19
Slide 7: 3Q20: 9.3% revenue growth, stepping up quarterly gross margin
3Q20: 9.3% revenue growth, stepping up quarterly gross margin Total sales (THB mn) GPM NPM 60,000 18.2% 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 32,214 31,838 32,854 31,103 33,051 34,7
Slide 8: Key Developments
Key Developments Slide 8 Analyst Meeting for 3Q20 Results
Slide 9: Thriving in the new normal, all key businesses back to growth
Thriving in the new normal, all key businesses back to growth Updated Ambient business continues to be the prime beneficiary • Ambient business saw strong sales push in all key markets during 3Q20 • We continue to see increased consumption for canned seafood from last year Placeholder for graphic Fr
Slide 10: Awards and Recognitions
Awards and Recognitions We are proud to have our efforts recognized by leading institutions around the world Thai Union was recognized in multiple categories at the 10th Asian Excellence Awards 2020: • Asia’s Best CEO: Mr. Thiraphong Chansiri, CEO • Asia’s Best CFO: Mr. Joerg Ayrle, Group CFO • Asia
Slide 11: Awards and Recognitions
Awards and Recognitions We are proud to have our sustainability efforts recognized by leading institutions around the world Thai Union received SDG Impact Award for its global initiatives to deliver against UN SDGs and industry-leading standards at Responsible Business Awards 2020 in UK. Thai Union
Slide 12: Continued focus on food-tech startups to drive innovation
Continued focus on food-tech startups to drive innovation • Four new investments in food-tech startups through Thai Union venture fund • Alchemy Foodtech, Manna Foods and HydroNeo, which are graduates from SPACE-F Placeholder for graphic • Singapore-based alternative protein fund, VisVires New Prote
Slide 13: Introducing Thai Union Plant-Based Seafood and Meat
Introducing… Thai Union Plant-Based Seafood and Meat • At Thai Union, we are building an ecosystem to nurture food-tech startups and to drive innovation in food industry Placeholder for graphic • We have invested into Manna Foods, Visvires New Protein, and Flying Spark, (paste graphic, crops to H19.
Slide 14: Committed to healthy and tasty alternative protein products
Thai Union is committed to bringing healthy and tasty alternative protein products to consumers Suitable for consumers that are looking for alternatives in their diet Alternative proteins strengthen Thai Union’s sustainability vision Alternative protein seafood have a lower environmental impact than
Slide 15: Extensive distribution network across multiple channels in Thailand
With an extensive distribution network, we deliver innovative products through multiple channels in Thailand Our Brands Foodservice Private-label Slide 15 Analyst Meeting for 3Q20 Results
Slide 16: Financial Results: 3Q20 - Consolidated
Financial Results: 3Q20 - Consolidated Slide 16 Analyst Meeting for 3Q20 Results
Slide 17: Group CFO quote on cash preservation
“Cash preservation and crisis management makes us think in minutes, rather than quarters. ” Joerg Ayrle Group CFO Slide 17 Analyst Meeting for 3Q20 Results
Slide 18: 3Q20: Key Takeaways
3Q20: Key Takeaways • 9.3% sales growth YoY, driven by ambient business in US and Thailand, and Strong top line strong recovery in frozen seafood business. growth • Growth was partly supported by FX. Excl. FX, sales growth was 6.4% YoY. Record • GPM remained at record high level of 18.2%, vs 15.9% d
Slide 19: Tuna prices remained within our expectations
Tuna prices remained within our expectations 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 3Q20 1,200 1,763 1Q19 1Q20 1,633 1,577 1,667 3Q18 4Q18 1,500 1,300 1,467 1,408 1,453 2Q19 3Q19 1,442 2Q20 1,000 1,267 1,217 1,217 4Q19 800 950
Slide 20: Sales growth driven by expansion in all key businesses
Sales growth driven by expansion in all key businesses Sales +6.4% YoY • 3Q20 sales improved 9.3% YoY, or a 6.4% THB mn +9.3% YoY Before currency impacts growth if excluding FX impact, driven by: +5.2% QoQ 34,784 • Sales growth driven mainly by ambient seafood 31,838 32,854 31,103 33,051 sales (+12.
Slide 21: Growth driven by ambient seafood and PetCare
Growth driven by ambient seafood and PetCare businesses, Thai Baht depreciation was favorable Revenue growth component THB mn +9.3% YoY +666 34,784 +237 +185 +314 +7% +739 +2% +1,216 -75 +10% -61 +98 -126 +21 -269 +12% -3% -8% +48% -2% +2% -16% +46% 31,838 +6.4% YoY +11% Before currency impacts Tuna
Slide 22: Revenue structure well-diversified
Revenue structure well-diversified Sales Breakdown by Geographic • 9M20 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 27% and 7% 8% 8% 9% 11% 12% 10% Domestic respectively from growing demand
Slide 23: 3Q20 excellent quarterly gross profit
3Q20 excellent quarterly gross profit Gross Profit THB mn • 3Q20 gross profit was the record quarterly +24.6% YoY 30.0% level, margin remained at quarterly record +5.0% QoQ 28.0% 26.0% level from 2Q20 at 18.2%, thanks to: 6,027 6,327 24.0% • Improved higher-margin ambient business 5,077 5,288 5,040
Slide 24: Strong operating profit, up 32% YoY
Strong operating profit, up 32% YoY, back to investment for growth Operating Profit* • 3Q20 Operating profit was up 31.8% YoY to THB mn +31.8% YoY 20.0% THB 1,998mn -15.2% QoQ 18.0% • 3Q20 SG&A to sales ratio was at 12.4%. This 16.0% is partly due to the Company’s continued 2,356 14.0% investment in
Slide 25: 3Q20 EBITDA from strong core operation
3Q20 EBITDA from strong core operation supported by affiliate business recovery EBITDA* •3Q20 EBITDA at THB3.9bn, an increase of 22% THB mn +22.0% YoY 28.0% YoY, due to: +15.9% QoQ • 3Q20 share of profit was at THB 258mn (vs THB 23.0% 579m share of loss during 2Q20). This was 3,883 mainly due to Red
Slide 26: 3Q20 net profit at record level, up 50% YoY
3Q20 net profit at record level, up 50% YoY Net Profit • 3Q20 reported net profit was THB 2,056mn, 14.0% THB mn +49.7% YoY up 50% YoY 12.0% +19.8% QoQ • This was mainly due to strong core operations 10.0% 2,056 and reduced losses in Red Lobster • Thai Union also recorded positive non- 8.0% 1,716 1,3
Slide 27: 3Q20 Adjusted net profit
3Q20 Adjusted net profit posted no difference from normalized basis Adjusted Net Profit THB mn 20.0% • Excluding one-off negative item during 2Q19 +64.2% YoY 18.0% amounted THB 199mn (TU Canada provision +31.4% QoQ 16.0% goodwill write-down, THB183mn, and tax related 14.0% 2,255 to the transaction,
Slide 28: EPS: 3Q20 reported EPS was up 44.2% YoY
EPS: 3Q20 reported EPS was up 44.2% YoY Earning per Share (EPS)* • According to the consolidated financial THB +44.2% YoY statement, 3Q20 EPS was at THB 0.42, up +20.6% QoQ 44.2% YoY, along with the reported net profit growth trajectory. 0.42 • However, excluding the one-off US legal fees 0.34 from
Slide 29: Fully committed in Red Lobster turnaround
We remain fully committed in Red Lobster and in turning around the business post pandemic Red Lobster has proven to be complimentary to our portfolio of seafood-oriented assets Achieved supply chain efficiencies through Thai Placeholder for graphic Union’s stake in the company (paste graphic, crops
Slide 30: 3Q20: Lower losses in Red Lobster
3Q20: Lower losses in Red Lobster THB mn 3Q20 2Q20 1Q20 4Q19 3Q19 • Despite the pandemic, total financial impact from Red Lobster investment has become net profit Share of accretive in 3Q20, thanks to strong cost cutting plan, -54 -702 -111 -243 -34 profit new off-premise growth initiatives, and man
Slide 31: Ultimate shareholding in Red Lobster remains unchanged
Our ultimate shareholding in Red Lobster remains unchanged Current shareholding structure New shareholding structure • Thai Union’s shareholding: • Thai Union becomes largest shareholder, continues to own 49% diluted equity and record 25% share of profit • 25% common equity stake on diluted basis •
Slide 32: COVID-19 has driven Red Lobster to reimagine its business model
COVID-19 has driven Red Lobster to reimagine its business model • All outlets are open for off-premise (ToGo, curbside pickup, and delivery) • 94% restaurants open for dining halls with social distancing measures (approx. 50% guest capacity) • Key initiatives during the pandemic Placeholder for grap
Slide 33: 3Q20: Solid free cash flow
3Q20: Solid free cash flow on strong profitability and efficient working capital management Quarterly Free Cash Flow • During 3Q20, TU cash flow remain highly THB mn 5,609 favorable thanks to strong operation profitability and efficient working capital 3,621 management. 2,511 • Amid growing inventor
Slide 34: 9M20: THB 2.5bn net debt reduction
9M20: THB 2.5bn net debt reduction from strong cash flow generation THB mn ND/E 1.07x Income tax paid and other investing & financing ND/E 0.97x Free Cash Flow THB 9,198 mn Kd = 3.27% activities Kd = 3.03% 55,215 817 52,692 2,670 1,519 1,184 628 2,867 -69 -9,866 -824 -239 -1,210 Change in Change in
Slide 35: Approaching pre-financing of maturing bonds
We are approaching pre-financing of maturing bonds Interest-bearing debts of THB 58,554mn By Currency By Maturity 1.3% 1.2% EUR USD 0.0% Short-term loan 19% 23% Current portion 6% of long-term 12% 2021 debt & finance 2022 THB 98.7% 98.8% lease Long-term debt 75% 65% 2023 onwards 2019 3Q20 2019 3Q20
Slide 36: Debt ratio target achieved, improved NWC management
Debt ratio target achieved, improved NWC management ROE INV Days Net Debt to EBITDA 13.5% 127 128 11.9% 122 120 123 12.8% 12.3% 5.38 11.5% 4.59 4.64 4.32 4.17 Target 36,951 36,873 35,720 34,696 37,758 4.0-4.5 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 INV (THB mn) INV
Slide 37: Financial Results: 3Q20 - Business Units
Financial Results: 3Q20 – Business Units Slide 37 Analyst Meeting for 3Q20 Results
Slide 38: Tuna and shrimp prices stable, salmon at lowest since 2016
Tuna and shrimp prices remained stable, salmon dropped to lowest level since 2016 2,500 Tuna (USD/ton) Salmon (NOK/kg) 2,300 90 Continued downward trend to Fluctuation in the range 85 2,100 lowest level since 2016 of 1,300 – 1,700 USD/ton 80 1,900 75 1,700 4Q17 70 1,500 3Q17 2,033 65 2,010 60 1,300
Slide 39: Thai Baht weakened against all key currencies YoY
Thai Baht weakened against all key currencies YoY 38.0 48.0 37.0 USD/THB 47.0 GBP/THB USD gained strength 46.0 36.0 GBP strengthened against THB since 45.0 35.0 2019 year-end against THB since 2019 44.0 year-end 34.0 43.0 33.0 42.0 32.0 1Q17 41.0 31.0 35.1 2Q17 3Q17 4Q17 40.0 1Q17 2Q17 3Q17 4Q17 1Q1
Slide 40: 3 strategic business segments
3 strategic business segments Total 9M20 sales: THB 98,938 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 48,284 mn Sales: THB 35,868 mn Sales: THB 14,786 mn Sales Split Sales Split Sales Split 42% 15% 49% 6% 58% 37% 36% 63% 94% Brand Brand Brand P
Slide 41: Ambient seafood: Continued to deliver a strong growth
Ambient seafood: Continued to deliver a strong growth Sales (THB million) Quantity (tons) +8.7% YoY +12.4% YoY -2.9% QoQ -0.8% QoQ 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 109,000.00 108,000.00 107,000.00 106,000.00 105,
Slide 42: Frozen, chilled seafood and related: Back to growth
Frozen, chilled seafood and related: Back to growth Sales (THB million) Quantity (tons) +4.7% YoY -2.5% YoY +15.7% QoQ +16.2% QoQ 14,691 12,768 13,370 10,944 11,554 73,084 74,436 71,224 Brand 36% 61,284 36% 37% 61,179 38% 34% Brand 71% 68% 72% Private 73% 71% label 64% 64% 66% 63% 62% Private label
Slide 43: PetCare, value-added and others: Strong growth
PetCare, value-added and others: Strong growth with a focus on higher margin businesses Sales (THB million) Quantity (tons) +12.0% YoY +8.9% YoY +1.0% QoQ +2.3% QoQ 5,103 5,155 68,874 74,452 73,322 75,019 Brand 4,604 4,896 4,528 62,852 6% 6% 6% Brand 5% 5% 6% 8% 8% 5% 5% Private Private 92% 94% 94%
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 3Q20 Results
Slide 45: US & Canada: All key businesses back to growth
US & Canada: All key businesses back to growth Sales +27.4% YoY THB mn +11.1% QoQ 14,418 15,471 13,175 13,925 12,143 3Q19 4Q19 1Q20 2Q20 3Q20 • 3Q20 North America sales increased by 27.4% YoY in Thai Baht term. • US ambient seafood business continued to deliver 22% growth YoY • US Frozen businesses
Slide 46: Europe: Delivering strong sales growth
Europe: Delivering strong sales growth Sales +7.2% YoY THB mn +4.2% QoQ 9,164 9,417 9,430 9,827 7,986 3Q19 4Q19 1Q20 2Q20 3Q20 • 3Q20 EU sales growth of 7% was supported by currency effect • Thai Baht depreciated significantly against EUR (-7.2%) and GBP (-6.8%) • Excluding the currency effect, Euro
Slide 47: Thailand: Affected by lower tourism activities
Thailand: Affected by lower tourism activities Sales THB mn -14.1% YoY +7.9% QoQ 4,003 4,039 3,460 3,437 3,187 3Q19 4Q19 1Q20 2Q20 3Q20 • 3Q20 Thailand sales was down 14.1% YoY. • Food service is the key business for domestic sales and was affected by lower tourism activities. • Increased sales to r
Slide 48: EM and rest of the world sales
EM and rest of the world: Frozen seafood sales decline partly offset by growing Ambient seafood-focused markets Sales THB mn -7.3% YoY -7.1% QoQ 6,529 6,411 6,509 6,049 5,052 3Q19 4Q19 1Q20 2Q20 3Q20 • 3Q20 sales experience some decline in frozen segment in the market such as China and Japan. Howeve
Slide 49: 3Q20 Segment profitability
3Q20 Segment profitability Business segment Sales Margin Gross profit THB mn % THB million Ambient seafood • Tuna, sardine and mackerel, ambient and 16,259 21.5 3,488 pouch salmon Frozen, chilled seafood and related 13,370 11.1 1,490 • Shrimp and related 1 , lobster, frozen, chilled and smoked salmo
Slide 50: 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. The overall volatility of the business environment remains. ” Slide 50 Analyst Meeting for 3Q20 Results
Slide 51: Q&A Session
Q&A Session
Slide 52: We want to hear from you!
We want to hear from you! We are running a survey on Thai Union’s new, plant-based seafood and meat products and would love to hear your feedback. To respond to the survey (2-5 min.), simply scan the QR code below. Slide 52 Analyst Meeting for 3Q20 Results
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Slide 54: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 September, 2020 Share price (3 November, 2020) THB 14.90 Historical price Others 47.2% 52-week high THB 16.00 Chansiri 52-week low Family THB 11.90 19.3% No. of paid up shares 4,771.8m
Slide 55: 3Q20 Income statement
3Q20 Income statement Consolidated 3Q20 3Q20 % % % (Unit: THB mn) 3Q20 3Q19 2Q20 3Q19 2Q20 to * sales to sales to sales Change Change Sales 34,784 100% 31,838 100% 33,051 100% 9.3% 5.2% Cost of sales (28,457) -81.8% (26,762) -84.1% (27,024) -81.8% 6.3% 5.3% Gross profit 6,327 18.2% 5,077 15.9% 6,027
Slide 56: Statement of Financial Position as of 30 September 2020
Statement of Financial Position as of 30 September 2020 % to total % to total (Unit: THB mn) 3Q20 2019 Change assets assets Cash and cash equivalents* 5,862 4.0% 4,689 3.3% 25.0% Trade and other receivables - net 14,344 9.9% 14,869 10.5% -3.5% Inventories - net 37,758 26.1% 36,873 26.0% 2.4% Other c
Slide 57: 3Q20 Statement of cash flow
3Q20 Statement of cash flow Consolidated (Unit: THB mn) 9M20 9M19 Change Profit before income tax 5,581 3,097 2,485 Adjustments for depreciation & amortisation expenses 2,942 2,717 225 Other adjustments 1,214 1,407 (194) Changes in operating assets and liabilities 2,403 (324) 2,726 Cash flows receip
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