Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q2 2024 Earnings Presentation
57 slides from Thai Union Group Public's earnings presentation, Aug 8, 2024
Slide 1: Q2 24 Analyst Meeting
Q2 24 Analyst Meeting Thai Union Group PCL. August 8, 2024 Q2 24 Analyst Meeting Investor Relations Department
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: Q2 24 Key highlights and key developments
Q2 24 Key highlights and key developments Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 4: CEO message on Strategy 2030
“Thai Union remains fully focused on delivering growth, innovation and sustainability. I am confident that as we continue to implement our Strategy 2030, it will position us not only for long-term growth but support our vision to become the world’s leading marine health and nutrition company”. Thira
Slide 5: Robust financial growth across all key metrics
Robust financial growth across all key metrics 1H 24 sales rose by 2.7% YoY to Financial Summary 1H 23 1H 24 (THB mn) THB 68,503 mn +2.7% YoY 68,503 Share price movement* 66,709 +15.1% YoY 2023 YTD 2024 12,277 (Jan - Dec 23) (Jan - Aug 7, 24) 10,664 +23.9% YoY -10.7% -2.7% 6,502 +36.1% YoY 5,247 +15
Slide 6: Q2 24: profitability improved significantly, GPM second-best ever
Q2 24: Despite moderate sales growth, profitability improved significantly. GPM was the second-best level ever and reached highest level in 12 quarters. Sales Gross Profit Operating Profit Net Profit* 35,283 6,535 1,965 1,219 THB mn THB mn THB mn THB mn 18.5% 5.6% 3.5% GPM OPM NPM +3.6% YoY +13.
Slide 7: Q2 24 net profit bridge
Q2 24 net profit: higher operating profit, other income and strong share of profit led to 14% growth in net profit. Bridge Net Profit (THB mn) +18.5% YoY +14.2% YoY +126 -70 -108 +126 -126 1,219 +15 1,029 +172 -134 1,067 +189 Q2 23 Discontinued Red Lobster Q2 23 Operating FX gain/loss Other Share of
Slide 8: 1H 24 Interim Dividend of THB 0.31 per share
Rewarding shareholders with a 1H 24 Interim Dividend of THB 0.31 per share Dividend per share (DPS) and Payout Ratio Interim Dividend for the period: January 1 to June 30, 2024 DPS: THB 0.31 per share 60% 59% 57% 59% 58% 57% 57% 57% 57% Ex-Dividend Date August 21, 2024 52% 0.95 50% 0.84 Record Date:
Slide 9: John West ECOTWIST
JOHN WEST ECOTWIST® A breakthrough innovation from Thai Union in Europe John West launched its revolutionary ECOTWIST® packaging in the UK in June 24, making it the first country in Europe to feature this sustainable, user-friendly, and low-waste solution. ECOTWIST®: The game changer through innovat
Slide 10: Boosting brand support through marketing campaigns
Boosting brand support through marketing campaigns to regain volume in 2024 Pittsburg Airport Advertising Petit Navire Marinated Tuna tour John West’s marketing campaign Mareblu’s in-store and online and Celebrity Endorsement for new product launched campaign Parmentier’s Ads at Paris Metro, TV, dig
Slide 11: Sales growth through new products launched across all markets
Encouraging sales growth through new products launched across all markets Chicken of the Sea food service has secured bids from The Frozen business continues to launch new products several restaurant chains and developed new products in for OEM and Food Service markets. collaboration with them. • Eb
Slide 12: ITC first inclusion in SET50 and recognition
ITC has achieved its first inclusion in the SET50, alongside our ongoing successes and recognition both locally and globally i-Tail was included in the SET50 Index for Thai Union has been listed on the the first time since its IPO in December FTSE4Good Emerging Index part of the 2022, being the only
Slide 13: Striving for SeaChange 2030
Striving for SeaChange® 2030 – “Healthy Living, Healthy Oceans” Scan to download the report The Aquaculture Stewardship Thai Union has received the Thai Union published John West’s partnership with Council (ASC) has announced “PMUC Country 1st Awards” for 2023 sustainability report ParalympicsGB see
Slide 14: Q2 24 Financial performance
Q2 24 Financial performance Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 15: CFO commentary on Q2 24
“Q2 24 showcased accelerated sales growth and a robust GPM increase to the highest level in 12 quarters, driven by the continued momentum in Ambient and the strong performance of PetCare and Value-added categories despite supply chain challenges. Free Cash Flow generation at highest level in 16 quar
Slide 16: Q2 24 highlights: QoQ sales growth and GPM increase
Q2 24 highlights: accelerated QoQ sales growth and a robust increase QoQ in GPM led by Ambient and PetCare, resulting in a substantial rise in profitability Ongoing sales growth momentum driven by 3 core categories, offset by the shortfall in Frozen category Sales grew by 3.6% YoY, driven by a growt
Slide 17: Positive momentum from core operations improvement
Demonstrating positive momentum from core operations improvement 19.0% 18.5% 18.2% 18.2% 18.0% 18.0% 18.2% 17.5% 18.2% 18.4% 17.7% 16.9% 17.3% 17.8% 16.9% 17.3% 16.2% 6.5% GPM 5.9% 5.8% 6.2% 15.1% 5.2% 5.4% 5.0% 4.4% 4.8% 4.2% 4.0% 4.2% 3.3% 3.1% 3.1% 3.5% 3.5% NPM 2.3% 38,501 38,946 40,756 39,613 3
Slide 18: Sales growth momentum and highest GPM in 12 quarters
Ongoing sales growth momentum and the highest GPM in 12 quarters Sales (THB mn) +3.6% YoY +6.2% QoQ Q2 24 sales grew 3.6% YoY, driven by: ✓ Favorable FX (Q2 24 USD/ THB: 36.7 vs. Q2 23 USD/THB 34.5). 35,529 35,283 34,057 33,915 33,220 ✓ Higher selling prices and the recovery of demand from U.S., Eur
Slide 19: Healthier operating profit led to net profit growth
Healthier operating profit led to significant growth in Q2 24 net profit Operating profit (THB mn) Operating profit was back to strong level reaching approximately THB 2bn, 5.2% 6.4% 6.0% 5.6% 4.6% significantly YoY and QoQ, mainly from: ✓ The upsurge in gross profit. +10.6% YoY ✓ However, SG&A incr
Slide 20: Thai Baht depreciation against key currencies
The Thai Baht continued to depreciate against all key currencies YoY, with USD/THB reaching its peak since 2020 USD/THB Quarterly avg. EUR/THB Quarterly avg. Avg. in Q2 24: 1 USD / 36.71 THB (+6.5% YoY, +2.9% QoQ) Monthly avg. Avg. in Q2 24: 1 EUR / 39.52 THB (+5.4% YoY, +2.1% QoQ) Monthly avg. Q2 2
Slide 21: FX volatility generated FX losses
FX volatility generated significant FX losses compared to the last quarter which are partially offset in our selling prices and improving GPM We recorded two lines from FX impact: Unit: THB mn Q1 24 Q2 24 1 In Net sales line Avg. spot rate vs. Designated FWD rate (THB/USD) 38.0 Sales 33,541 35,590 •
Slide 22: Tuna, salmon and shrimp price trends
As expected, tuna prices reversed their trend with a QoQ increase after a sharp decline, while salmon prices saw a slight increase. In contrast, shrimp prices decreased QoQ. Tuna (Skipjack; USD/ton) Shrimp (60pcs/kg; THB/kg) Quarterly avg. Quarterly avg. Monthly avg. Q2 23 Monthly avg. Shrimp prices
Slide 23: Freight prices continue to rebound
Freight prices continue to rebound during the past 2 quarters but still far away from the COVID level. We keep monitoring the situation. Logistics Impact on TU Freight cost (USD) Ocean transit time (days) • TU was able to reduce the freight cost expenses in our SG&A by Thailand to the U.S. Thailand
Slide 24: Improving profitability, inventory management and leverage
Improving profitability with better inventory management, as well as net debt to EBITDA now below 4 times ratio and stable net debt to equity ROE* Inventory Days Net Debt to EBITDA* 172 167 164 162 157 9.0% 8.7% 4.71x 8.1% 4.34x 4.19x 7.1% 7.3% 4.02x 3.78x 53,632 52,766 50,482 48,577 47,364 Target 3
Slide 25: 1H 24 net debt and free cash flow
1H 24: net debt slightly decreased to THB 51,370mn, thanks to strong FCF generation of THB 5,383mn. Net Debt/ Equity (ND/E) remained healthy at 0.82x. ND/E 0.78x Income tax paid and ND/E 0.82x Free Cash Flow THB +5,383mn Kd* = 3.59% other investing & financing activities Kd* = 3.81% (THB mn) Debt De
Slide 26: Intercompany loan with ITC to refinance at TU level
Plan to set up intercompany loan with ITC, aiming to refinance at TU level As of 30 June 2024 ST Loans SLLs SLBs Bonds Perp. (Unit: THB bn) Borrowing from ITC 14.7 Benefit Win-win benefit for both parties. 12.0 5.7 10.7 Benefit for TU: More favorable borrowing rate 9.0 9.5 compared to financial inst
Slide 27: High portion of fixed-rate loans
Maintained a high portion of fixed-rate loan during the period of interest rate hikes (THB mn) By Currency By Maturity By Interest Rate 67,988 67,988 65,592 65,592 7.5% 12.6% 0.3% 7.8% 0.3% 13.7% 17.9% 11.2% 18.5% 6.1% THB 12.6bn bonds, Float classified in short- 18.5% 23% term as of 4Q 23 for which
Slide 28: Blue Finance sustainability KPIs
Blue Finance: nearly achieved all tested 2023 sustainability KPIs/targets, triggering approximately USD 1.1mn benefit on interest saving for FY2024 Sustainable Finance Target: On Long-term Financing 2020 2022 2025E 2030E (USD 1.4bn or THB 45bn) Traditional Finance Blue Finance #1 Blue Finance #2 Iss
Slide 29: Third share buyback program completed
We completed our third share buyback program in 2024, and reduced 6.6% of TU number of shares from programs 1 & 2, which benefits to EPS Year 2020 2021 2022 2023 2024 2025 Month 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 … 12 1 2 3 … 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 1
Slide 30: Q2 24 Business performance
Q2 24 Business performance Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 31: Sales by category and channel
More than 50% of sales contributed by Ambient while PetCare rose to over 12% Total 1H 24 sales: THB 68,503 mn Ambient Frozen PetCare Value-added THB 34,532mn THB 20,460mn THB 8,411mn THB 5,100mn 50.4% (48.5% LY) 29.9% (34.7% LY) 12.3% (10.0% LY) 7.4% (6.8% LY) Sales breakdown by channel (THB mn) 1H
Slide 32: Q2 24 Ambient
Q2 24 Ambient: GPM recovered QoQ, driven by declining raw material costs Sales (THB mn) and GPM (%) YoY and QoQ analysis: 19.9% 20.4% 18.9% • In Q2 24, Ambient sales slightly increased by 1.4% YoY, primarily 17.4% driven by a 3.1% YoY increase in volumes, with Private label 16.6% customers contribut
Slide 33: 1H 24 Ambient
1H 24 Ambient: regaining topline growth momentum, despite temporary drop in GPM explained by falling tuna prices over past 3 quarters Sales (THB mn) and GPM (%) Business update: 21.1% 21.4% 21.3% Improving productivity and cost efficiency 19.4% 19.0% 19.1% 17.8% • A new cold storage for tuna in Ghan
Slide 34: Tuna price increase and Ambient GPM recovery
Increase in Tuna prices in Q2 24, resulting in a recovery of Ambient GPM 22.4% 23.3% 22.7% 21.7% 22.9% 21.5% 20.2%22.0% 21.2% 19.9% 20.4% 18.4% 19.6% 17.7% 17.1% 16.9% 17.6% 18.9% 18.6% 19.4% 17.4% 16.6% 18.9% 20.1% 20.7% 19.5% 16.5% 16.7% 18.0% 18.7% 18.0% 15.6% 14.0% 14.0% ~USD 700 drop Peak at Q3
Slide 35: Q2 24 Frozen
Q2 24 Frozen: strong QoQ rebound in sales and volumes, with improved YoY GPM Sales (THB mn) and GPM (%) YoY and QoQ analysis: 14.4% • In Q2 24, Frozen sales increased by 12.7% QoQ, primarily driven by 12.9% 9.6% 11.8% 10.7% price increases and a 5.4% QoQ increase in volumes from both Branded and Pri
Slide 36: 1H 24 Frozen
1H 24 Frozen: topline remained challenging due to soft demand in key markets and US Frozen rationalization, but GPM improved as planned Sales (THB mn) and GPM (%) Business update: 11.8% 11.3% 11.2% Completion of the U.S. Frozen business rationalization 10.2% 9.7% 7.7% 8.8% • Despite the scale down o
Slide 37: Q2 24 PetCare
Q2 24 PetCare: strong volume/sales momentum with all-time high quarterly GPM Sales (THB mn) and GPM (%) 31.3% YoY and QoQ analysis: 25.7% 20.2% 23.4% • In Q2 24, PetCare sales grew exceptionally by 40.6% YoY, driven 19.4% primarily by a 21.2% YoY higher volume, thanks to increased demand in European
Slide 38: 1H 24 PetCare
1H 24 PetCare: sales growth and GPM exceeded the target guidance for FY24, leading to the revised up on the key performance metrics Sales (THB mn) and GPM (%) Business update: 28.7% 25.6% 24.3% 26.3% Investing into capacity expansion and strategic partnership 20.5% • New factory in Samut Sakhon (ITC
Slide 39: Q2 24 Value-added
Q2 24 Value-added: strong sales growth YoY, thanks to value-added product and ingredient with a healthy GPM Sales (THB mn) and GPM (%) YoY and QoQ analysis: 25.7% 28.9% 29.5% • Q2 24 Value-added sales increased significantly by 15.5% YoY, 26.2% 26.5% mainly driven by higher selling prices, despite a
Slide 40: 1H 24 Value-added
1H 24 Value-added: continued to be the high growth potential category Sales (THB mn) and GPM (%) Business update: 28.5% 29.4% 28.0% 28.0% 27.1% 26.5% Growth Value-added to uplift margins 23.7% • Culinary plant – officially started the operation in July 2024 with a CAGR +6.5% YoY 38% capacity increas
Slide 41: Outlook
Outlook Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 42: 2024 guidance: revised up full-year guidelines
2024 guidance: Revised up the full-year guidelines Sales growth + 4 - 5% YoY (Prior target: + 3 - 4% YoY) Gross profit margin ~18.0 - 18.5% (Prior target: ~ 17 - 18%) SG&A to sales ~12.0 - 12.5% (Prior target: ~ 11 - 12%) Effective interest rate Increase 0 - 0.5% CAPEX ~ THB 4.0 - 4.5bn Dividend pol
Slide 43: Q&A
Q&A Q&A Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 44: Appendix
Appendix Q2 24 Q2 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 45: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders As of March 4, 2024 Bloomberg / Reuters TU TB / TU.BK Chansiri Family 19.5% Share price (August 7, 2024) THB 14.40 Historical closing price Thai NVDR Others 7.5% 52-week high THB 15.90 49.7% Niruttinanon Family 52-week low TH
Slide 46: Five major CAPEX projects
Five major CAPEX projects Ambient category PetCare category Value-added category Ambient tuna Pet food ASRS warehouse Culinary business Ingredients business Key Ambient tuna Wet pet food Automation Storage & Ready-to-eat, Protein hydrolysate Products cold storage in Ghana and treat Retrieval System
Slide 47: Thai Union footprint
Thai Union footprint: 1H 24 sales contribution 17 Production locations ~39% ~31% North America Europe 6 Asia • Indonesia • Vietnam • Pakistan • India • Thailand (2) 10 Europe & Africa • France • Poland • Germany (2) • Portugal • Ghana • Seychelles • Lithuania • Russia • Norway Pacific Ocean Pacific
Slide 48: Sales breakdown by geography and business segments
Sales breakdown by geography and business segments Sales breakdown by geography Sales breakdown by business segment 12.3% 11.8% 13.4% 12.2% 12.4% 13.4% Others* 5.3% 5.1% 5.8% 6.0% 6.0% 5.7% Japan 10.0% 10.3% 10.5% 11.5% 11.9% 10.5% Thailand Brand Brand 38.1% 36.8% 29.0% 28.3% 26.3% 29.6% 29.5% 31.0%
Slide 49: U.S. & Canada and Europe sales
The U.S. & Canada: Sales dramatically grew, mainly Europe: New high quarterly sales, led by PetCare and due to higher demand and a better recovery in Petcare Value-added category +11.3% YoY +2.7% YoY +10.1% +16.1% QoQ QoQ 14,822 14,130 11,118 11,414 13,775 10,692 12,699 12,833 9,937 9,829 Sales Sale
Slide 50: Thailand and Japan, EM and rest of world sales
Thailand: Sales significantly dropped across all Japan, Emerging Markets (EM) and the rest of the categories world: Sales growth, thanks to recovering demand in Middle East and China +0.7% YoY -13.1% YoY -11.9% QoQ +0.4% QoQ 6,951 4,166 3,956 6,075 6,247 6,236 6,120 3,779 3,606 3,619 Sales Sales Q2
Slide 51: Q2 24 Category profitability
Q2 24 Category profitability (Sales, GP, GPM) Business Category Sales Gross Profit Margin (THB mn) (THB mn) (%) Ambient • Tuna 17,376 3,282 18.9% • Sardine and mackerel (Q2 23: 17,136) (Q2 23: 3,418) (Q2 23: 19.9%) • Ambient and pouched salmon Frozen • Shrimp and related* 10,842 1,165 10.7% • Lobste
Slide 52: 1H 24 Category profitability
1H 24 Category profitability (Sales, GP, GPM) Business Category Sales Gross Profit Margin (THB mn) (THB mn) (%) Ambient • Tuna 34,532 6,138 17.8% • Sardine and mackerel (1H 23: 32,361) (1H 23: 6,165) (1H 23: 19.1%) • Ambient and pouched salmon Frozen • Shrimp and related* 20,460 2,300 11.2% • Lobste
Slide 53: Ambient: historical sales and GPM
Ambient: historical of sales and GPM A sharp drop Increasing in tuna price Recognizing Higher demand from Normalization effect from ~USD 700 High base for Ambient selling price low-cost lockdown and promotions 2020’s pantry loading during in 3 quarters together with higher to cover inventory & durin
Slide 54: Frozen: historical sales and GPM
Frozen: historical of sales and GPM Recovery Market price correction in U.S., Market prices normalization from strong high logistics and soft COVID-19 pandemic Rightsizing demand of costs, and higher demand in soft demand for Frozen food Frozen in the U.S. food service raw material key markets, and
Slide 55: Historical sales and GPM - PetCare
Historical of sales and GPM - PetCare Strong demand for pet food, Signs of High base for pet food and Inventory supported by COVID-19 recovery from Back to growth inventory build up destocking pandemic restocking GPM 30.1% 31.3% 26.9% 27.1% 27.1% 25.7% 24.3% 26.0% 26.1% 24.3% 25.1% 23.4% 21.9% 22.5%
Slide 56: Historical sales and GPM - Value-added
Historical of sales and GPM - Value-added Higher GPM >30%, Established Thai Union Lifescience Record quarterly Healthy GPM due Record high GPM mostly from higher Co., LTD (supplement) and sales with to our strategy to due to packaging GPM of packaging alternative protein in 2021 exceptional GPM focu
Slide 57: Thank You!
Thank You! Q2 24 Analyst Meeting Investor Relations Department