Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — Q1 2016 Earnings Presentation

58 slides from Thai Union Group Public's earnings presentation, May 19, 2016

  1. Slide 1: 1Q16 Result Presentation

    1Q16 Result Presentation May 2016 Page 0

  2. 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

  3. Slide 3: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  1Q16 Financial Results Page 2

  4. Slide 4: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  1Q16 Financial Results Page 3

  5. Slide 5: More than 39 years of seafood processing experience

    More than 39 years of seafood processing experience Strategic Acquired Expanded to Rebranding: Expanded to Set up Expanded to Entered a JV Founded partnership third largest frozen Entered to Expanded Renaming shrimp feed pet food shrimp with Savola Thai Union with canned seafood tuna fishing in capa

  6. Slide 6: Group Structure

    Group Structure Subsidiary companies 99.66% 99.55% 51.00% 90.00% 100.00% 20.00%8 100.00%3 100.00%4 Thai Union Manufacturing Songkla Canning PCL. Thai Union Seafood T-Holding Co., Ltd. Thai Union Europe LDH (La Doria) Etablissement Paul Pioneer Food Co., Ltd. Co., Ltd. Paulet SAS Cannery Limited 90.5

  7. Slide 7: A seafood-focused company

    A seafood-focused company 1Q16 Sales breakdown THB 31,257mn 1 Tuna Shrimp and related business1 2 Frozen Private shrimp 3 4 5 6 label Sardine & Salmon Pet care Value-added & 48% Mackerel other products2 Shrimp feed 71% Brand 52% 16% 66% 70% 29% 0% 84% 98% 100% 30% 2% 34% % Sales 38% 23% 3% 9% 9% 7%

  8. Slide 8: #1 Global leader in a consumer staple business

    #1 Global leader in a consumer staple business TU is the world’s largest canned tuna producer, with the processing volume 18% of world production. World Canned Tuna Annual Production1 1.67 million tons Others 82% TU 18% Source: 1Fishstat Plus (FAO) 2010, based on finished product production Page 7

  9. Slide 9: Global market leading brand portfolio

    Global market leading brand portfolio #1 #1 #1 •#1 canned seafood brand •#1 canned •#1 premium in the UK, Ireland and the seafood brands in canned sardine Netherlands France brand in France #1 #1 #1 •#1 premium canned •#1 canned tuna brand •# 1 frozen seafood sardine brand in US, in Thailand importe

  10. Slide 10: Owner of leading brands in major markets across 4 continents

    Owner of leading brands in major markets across 4 continents 1Q16 Revenue from branded business : THB 13,507mn Europe USA Asia Chicken Patit King Chicken Rugen Brand Mareblu Parmentier John of the sea Others* Navire Oscar of the sea Fisch West frozen food Australia Sales 1Q16 Remark: *Others represe

  11. Slide 11: Fully integrated global supply chain in canned tuna…

    Fully integrated global supply chain in canned tuna… Raw material flow Work-in-process and finished good flow Raw material sources Europe Production base Fishing fleet USA Thailand Ghana Seychelles West Pacific Ocean Atlantic ocean Vietnam Papua New Guinea Indian ocean TU’s 7 own fleets Raw Material

  12. Slide 12: … and frozen shrimp business

    … and frozen shrimp business Production base TU’s export markets Chicken of the Sea Frozen Europe Food (COSFF) COSFF’s sourcing Asia COSFF’s distribution China Japan USA Thailand India Vietnam Pacific ocean Atlantic ocean Latin America Oceania Indian ocean Raw Material Acquisition Production Marketi

  13. Slide 13: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 10 Mar 2016 Share price (09 May 2016) : THB 21.50 Historical price : Chansiri Family 52-week high THB 23.00 20.2% 52-week low THB 15.80 No. of paid up shares : 4,771.82mn Niruttinanon Family 6.9% Par

  14. Slide 14: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  1Q16 Financial Results Page 13

  15. Slide 15: Recent Developments: USD Bond offering

    Recent Developments 11 Apr 16: Thai Union setting a new benchmark with the first “MUAY THAI” USD Bond offering Name: The U.S. Dollar Denominated Debentures of Thai Union Group PCL No. 1/2559 Due B.E. 2569 Name (Thai): หุนกู ้ ้สกุลเงินเหรียญสหรัฐของ บริษัท ไทยยูเนี่ยน กรุ๊ป จำกัด (มหำชน) ครัง้ ที่ 1

  16. Slide 16: Recent Developments: Global Innovation Incubator

    Recent Developments 31 Mar 16: Expansion of Thai Union’s Global Innovation Incubator (Gii) Thai Union Group has a collaboration agreement with the Faculty of Science, Mahidol University to inaugurate the first state-of-the- art innovation Incubator. The Global Innovation Incubator or Gii is regarded

  17. Slide 17: Recent Developments: FinanceAsia awards

    Recent Developments 29 Mar 16: Thai Union Group has been awarded multiple ranks by FinanceAsia From a total of 129 portfolio managers and buy-side analysts with mandates on listed companies in Asia, Thai Union Group has received overwhelmingly positive results and have won the first place in five ca

  18. Slide 18: Recent Developments: Combat unfair labor practices

    Recent Developments 25 Mar 16: Thai Union welcomes international initiative to combat unfair labor practices in the fishing industry Those present for the launch of the initiative included Thai Union executive Mrs. Attapan Masrungson and Global Director for Sustainable Development, Dr. Darian McBain

  19. Slide 19: Recent Developments: Acquiring 40% of Avanti Frozen Foods

    Recent Developments 23 Mar 16: Thai Union acquiring 40% of Avanti Frozen Foods Thai Union has entered into a joint venture agreement to acquire a 40% equity stake of Avanti Feeds Limited’s wholly owned shrimp processing unit Avanti Frozen Foods Private Limited India. The stake will be worth INR 1,25

  20. Slide 20: Recent Developments: Sustainable business forum

    Recent Developments 17 Mar 16: Thai Union joined sustainable business forum to encourage civil society engagement Thai Union has been collaborating with groups such as Project Issara; Migrant Workers Rights Network (MWRN) and the Labor Promotion Network (LPN) to help improve labor conditions for Tha

  21. Slide 21: Recent Developments: MoU with Cooperative Promotion Department

    Recent Developments 15 Mar 16: Thai Union signed MoU with Cooperative Promotion Department, Fishery Cooperatives Federation of Thailand in support of the Government Civil State Policy (From left to right) - Mr. Thiraphong Chansiri, President & CEO, Thai Union; Dr. Vinaroj Supsongsuk, Director Genera

  22. Slide 22: Recent Developments: Supplier Code of Conduct

    Recent Developments 2 Mar 16: Thai Union hosted suppliers to explain Code of Conduct Thai Union held a special event for suppliers in Bangkok to inform them about the Company’s strict Code of Conduct to ensure understanding and compliance. Approximately 600 suppliers to Thai Union were invited. Thai

  23. Slide 23: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  1Q16 Financial Results Page 22

  24. Slide 24: 1Q16: Solid operational performance

    1Q16: Solid operational performance YoY Chg % of sales • 1Q16 sales growth was driven by strong tuna sales growth and consolidation of Rugen Fisch 31,257 Sales (THB mn) +9.3% • Gross and operating profit growth was resulted from: • Strong brand recognition in our European 4,848 GP +22.9% 15.5% busin

  25. Slide 25: Operating profits of THB 1,454mn, up 55% YoY

    Operating profits of THB 1,454mn, up 55% YoY Financial Summary1 1Q16 Operating Profit (THB million) up 54.6% YoY to Total Sales 1Q16 1Q15 31,257 28,606 +9.3% THB 1,454million 1Q16 4,848 Gross Profit +22.9% Share price movement Q1’12 1Q15 3,945 Q1’11 20152 20162 Operating 1Q16 1,454 (Jan- Dec 15 ) (J

  26. Slide 26: 1Q16: Improving sales and gross profit margin

    1Q16: Improving sales and gross profit margin Total sales (THB mn) GPM NPM 17.2% 17.3% 50,000 16.9% 18.0% 16.1% 15.7% 45,000 14.9% 16.0% 13.9% 13.8% 40,000 15.5%14.0% 32,602 33,333 35,000 30,258 30,423.26 32,772 30,642 31,257 12.0% 30,000 27,948 28,606 10.0% 25,000 7.0% 8.0% 20,000 5.3% 5.0% 4.6% 5.

  27. Slide 27: Agenda

    Agenda  Company Overview  Recent Developments  Key Highlights  1Q16 Financial Results Page 26

  28. Slide 28: 2016 Sales growth in key business segments

    2016 Sales growth in key business segments Sales +9.3% YoY THB mn -6.2% QoQ  1Q16 sales grew by 9.3% YoY to THB 31,257mn (down 0.6% YoY in dollar term to USD 871mn), 32,602 33,333 31,257 driven by: 28,606 30,642  Tuna sales improved 6.4% YoY and 7.4% QoQ, mainly driven by strong brand recognition

  29. Slide 29: Most key businesses showing YoY organic growth

    Most key businesses showing YoY organic growth Revenue growth component (THB million) -6.2% QoQ +9.3% YoY +511 33,333 +5% -3,075 +868 -577 31,257 +526 31,257 -3 +556 +285 -640 +1,022 -28% -17% 0% +4% +361 -108 +7% +48% +290 -16% +5% +810 28,606 +166 -418 +20% -3% +10% +12% +2% -5% +44% +3.9% YoY Bef

  30. Slide 30: Growing branded sales and geographic breakdown

    Growing branded sales and geographic breakdown Sales Breakdown by Geographic  Higher sales contribution from the European 100% markets, driven by strong performance of our 15% 14% 13% 14% 13% existing brands 80% 9% 8% 7% 6% 6% 7% 7% 8% 8% Others* 10%  While US sales contribution dropped, it contin

  31. Slide 31: Gross margin expansion drivers

    Strong brand presence, profitability-focus and low raw material prices driving gross margin expansion 30.0% Gross Profit +22.9% YoY THB mn +2.5% QoQ 25.0%  1Q16 Gross profits of THB 4,848, up 22.9% YoY, driven by strong profit margin improvement in 5,634 tuna, shrimp and pet care business 5,192 4,8

  32. Slide 32: Operating profits: Investing in SG&A for growth

    Operating profits: Investing in SG&A for growth 15.0% Operating Profit 13.0% +54.6% YoY THB mn +15.0% QoQ 11.0%  1Q16 Operating profits of THB 1,454mn, up 55% YoY, driven by the solid improvement in gross 2,200 2,352 9.0% margin. 1,454 7.0%  The SG&A to sales ratio of 10.9%, up a marginal 7.2% 7.2

  33. Slide 33: EBITDA down 6.6% from an absence of FX gains

    EBITDA down 6.6% from an absence of FX gains 28.0% EBITDA -6.6% YoY THB mn +17.2% QoQ 23.0%  1Q16 EBITDA of THB 2,755mn, down 6.6% YoY, mainly driven by an absence of FX gains during 3,297 18.0% 1Q15 (FX gain of THB 1,125mn in 1Q15 vs. a FX 2,951 2,928 gains of THB 264mn in 1Q16) 2,755 2,351 13.0%

  34. Slide 34: Net profits: Excluding FX, adjusted net profits up 146% YoY

    Net profits: Excluding FX, adjusted net profits up 146% YoY 14.0% Net Profit -19.0% YoY THB mn 12.0% +62.4% QoQ 10.0%  1Q16 net profit of THB 1,231mn, down 19% YoY, particularly due to an absence of significant FX 8.0% gains during 1Q15. 1,519 1,626 1,412 6.0%  Excluding all FX impacts, 1Q16 adjus

  35. Slide 35: Normalized net profits of THB 1,082mn

    Normalized net profits of THB 1,082mn 20.0% Normalized 18.0% -27.0% YoY Net Profit 16.0% THB mn -33.0% QoQ 14.0%  Excluding the one-off quarter-end items, 1Q16 normalized net profits was at THB 1,082mn, down 12.0% 27% YoY. 10.0% 1,614 1,481 1,508 1,531 8.0%  One-off items during 1Q16 of THB 149mn

  36. Slide 36: EPS: 1Q16 4-quarter trailing EPS of THB 1.06

    EPS: 1Q16 4-quarter trailing EPS of THB 1.06 EPS -19.0% YoY THB +62.4% QoQ  1Q16 EPS was at THB 0.26, down 19% YoY  The 1Q16 four-quarter trailing EPS was at THB 0.34 1.06, down 11.4% YoY, along with net profit 0.32 0.30 0.26 movement 0.16 1Q15 2Q15 3Q15 4Q15 1Q16 1.07 1.11 0.98 0.60 0.32 0.26 201

  37. Slide 37: Strong FCF driven by improved profitability and WC management

    Strong FCF driven by improved profitability and WC management Quarterly Free Cash Flow THB mn  1Q16 Free cash flow (FCF) was at THB 4,483 5,469 million, despite tuna raw material price rose to 4,550 4,483 USD1,600/ton in March 2016, up from 3,393 USD1,000/ton and USD1,010/ton in December and March

  38. Slide 38: 81% of debts are in Thai Baht

    81% of debts are in Thai Baht Interest-bearing debts of THB 34,994mn By Currency By Maturity 1.2% EUR 2.8% USD 21.5% 2017 Short-term 16.8% Loan 49% 44% Current Portion of Long- 11% 77.3% 2018 2020 80.9% term Debt 10% 2% THB onwards & finance lease 2019 Long-term 41% 42%45% Debt 2015 1Q16 2015 1Q16 L

  39. Slide 39: 1Q16 EBITDA: Sufficient internal cash flow to fund M&As

    1Q16 EBITDA: Sufficient internal cash flow to fund M&As Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.76x THB 5,167 mn ND/E 0.69x Kd = 3.73% Kd = 3.55% Free Cash Flow THB 4,483mn 36,363 -2,755 +342 34,032 +294 0 +1,517 -2,918 +685 +197 +102 +412 Net Debt EBITDA Change in

  40. Slide 40: Improved working capital management and lower debt ratios

    Improved working capital management and lower debt ratios ROE1 INV Days Debt to EBITDA 4.17 13.8% 14.2% 3.51 3.26 12.7% 131 3.18 11.0% 119 116 2.77 114 110 6.6% 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 ROCE2 Net WC3 ND/E4 133 0.76x 0.76x 13.7% 12.4% 12.1% 0.69x 11.1

  41. Slide 41: 3 strategic business segments

    3 strategic business segments Total 1Q16 sales: THB 31,257mn Frozen, chilled seafood Pet care, value added Ambient seafood Sales: THB 15,198mn and related and others Sales: THB 12,225mn Sales: THB 3,833mn Shrimp & related Tuna business Pet care business1 Ambient & Pouch Frozen, chilled & Value-added

  42. Slide 42: Ambient Seafood: Solid growth boosted by branded business

    Ambient Seafood Solid growth boosted by branded business Sales (THB million) Quantity (Tons) +8.3% YoY +4.7% YoY +7.2% QoQ +5.6% QoQ 20,000.00 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 19,000.00 15,621 15,307 114,000.00 113,000.00 112,000.00 111,000.00 110,000.00 96,116 90,35

  43. Slide 43: Frozen, chilled seafood and related: Enhanced profitability

    Frozen, chilled seafood and related Enhanced profitability Sales (THB million) Quantity (Tons) +12.7% YoY +28.2% YoY -19.0% QoQ -22.2% QoQ 20,000.00 90,000.00 89,000.00 88,000.00 19,000.00 87,000.00 86,000.00 85,000.00 84,000.00 83,000.00 82,000.00 18,000.00 17,000.00 15,099 81,000.00 80,000.00 79,0

  44. Slide 44: Pet care, value added and others: Pet Food recovery continued

    Pet care, value added and others Pet Food recovery continued Sales (THB Million) Quantity (Tons) +3.1% YoY +8.4% YoY -5.5% QoQ +2.6% QoQ 6,000.00 50,000.00 49,000.00 48,000.00 47,000.00 46,000.00 45,000.00 44,000.00 43,000.00 42,000.00 5,000.00 3,861 4,098 4,057 3,833 41,000.00 40,000.00 29,094 31,6

  45. Slide 45: 1Q16 Segment Profitability

    1Q16 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 15,198 18.5% 2,809 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 12,225 9.5% 1,163 THB 4,848 million related *Shrimp & related busine

  46. Slide 46: 1Q16 Income Statement

    1Q16 Income Statement Consolidated 1Q16/ 1Q16/ % % % (Unit: Million THB) 1Q16 1Q15 4Q15 1Q15 4Q15 to sales to sales to sales Change Change Sales 31,257 100% 28,606 100% 33,333 100% 9.3% -6.2% Cost of sales (26,409) -84.5% (24,660) -86.2% (28,603) -85.8% 7.1% -7.7% Gross profit 4,848 15.5% 3,945 13.8

  47. Slide 47: Statement of Financial Position as of 31 Mar 2016

    Statement of Financial Position as of 31 Mar 2016 % to total % to total (Unit: Million THB) 1Q16 2015 Change assets assets Cash and cash equivalents* 962 0.9% 2,816 2.5% -65.8% Trade and other receivables 15,536 14.2% 16,554 14.9% -6.2% Inventories - net 33,063 30.3% 35,180 31.7% -6.0% Other current

  48. Slide 48: 1Q16 Statement of Cash Flow

    1Q16 Statement of Cash Flow Consolidated (Unit: Million THB) 1Q16 1Q15 Change Profit before income tax 1,725 1,894 (169) Adjustments for depreciation & amortisation expenses 702 646 56 Other adjustments 446 (730) 1,176 Changes in operating assets and liabilities 2,506 3,532 (1,026) Cash flows receip

  49. Slide 49: Appendix

    PN Thai Union Page 48 Q

  50. Slide 50: Brand share data

    Brand share data Thailand: SEALECT market share in Thailand (total ambient) (%) SEALECT Tuna market share in Thailand (%) USA: Chicken of the Sea market share in the USA (%) King Oscar market share in the USA (%) Source: AC Nielsen, IRI and Thai Union’s 2015 Annual Report Page 49

  51. Slide 51: Brand share data

    Brand share data Europe: John West market share in the UK (%) Petit Navire and Parmentier market share Mareblu market share in Italy (%) in France (%) King Oscar market share in Norway (%) Rugen Fisch and Hawesta market share of Herring in Germany (%) 27 73 Rugen Fisch and Hawesta Others Source: AC

  52. Slide 52: Sustainability update: Responses from Thai authority

    Sustainability update: Responses from Thai authority Increasing political pressure in the EU and the US Illegal, Unreported, Unregulated fishing Trafficking in Persons (TIP) Thailand pre-identified as non-cooperative country  Thailand downgraded to Tier 3 (lowest ranking) in “Yellow card” warning i

  53. Slide 53: Sustainability update: Progress update

    Sustainability update: Progress update Thailand’s Progress in Combatting IUU Fishing – Update January 2016 Restructuring of legal framework Statistics: Thailand’s progress in combatting IUU fishing • The Royal Ordinance on Fisheries B.E. 2558 (2015), effective since 14 November 2015, lays down vario

  54. Slide 54: Sustainability update: Thai Union's Sea Change program

    Sustainability update: Thai Union’s Sea Change program SEA CHANGE Our overarching objectives  The seas are sustainable now and for future generations through our work to improve fisheries  Our workers are SAFE, legally employed and empowered  The vessels we buy from are legal and operate responsi

  55. Slide 55: Sustainability update: Thai Union's Sea Change in a nutshell

    Sustainability update: Thai Union’s Sea Change in a nutshell SEA CHANGE In summary Sustainable seas, now and for Safe, legal and empowered Legal and licenced vessels, Objectives future generations workers operating responsibly Key Responsible Caring for our Marine conservation Safe and legal labor P

  56. Slide 56: Sustainability update: Event update

    Sustainability update: Event update Hiring migrant workers previously Promoting Workers Rights worked in peeling shades and Social Dialogue in Thai • With Thai Union’s commitment to Union Facilities ensure the full oversight of all • In cooperation with Migrant processing stages in the supply Worker

  57. Slide 57: Sustainability update: People and Community

    Sustainability update: People and Community Promote awareness on rights and Thai Union Volunteer: English education Teaching Program • In cooperation with Labor Rights • As a member of UN Global Network (LPN) , Thai Union Compact, Thai Union commits to organizes educational rights training promote “

  58. Slide 58: Thank you

    Thank you Corporate website: http://www.thaiuniongroup.com IR website: http://www.thaiuniongroup.com/en/investor.ashx E-mail: [email protected] Tel:57+66 2298 0024 Page

Thai Union Group Public Company — Q1 2016 Earnings Presentation on 6ix