Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — FY2022 Earnings Presentation
60 slides from Thai Union Group Public's earnings presentation, Feb 21, 2023
Slide 1: Analyst Meeting for FY22 Results
Analyst Meeting for FY22 Results Thai Union Group PCL. February 21, 2023
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: 2022 Key Highlights
2022 Key Highlights Slide 3 FY22 Analyst Meeting
Slide 4: CEO message on 2022 performance
“ 2022 Global economy was confronting with forth several unforeseen challenges, however, Thai Union performance remained strong with newly recorded sales of THB 156bn. Our flagship PetCare business “ITC” was listed on the SET as the largest ever IPO under the food and beverage category. ” Thiraphong
Slide 5: 4Q22: Continue to grow over high base, quarterly high OP
4Q22: Continue to grow over the high base last year, recorded quarterly high OP despite impact from USD depreciation THB mn Sales Gross Profit Operating Profit Net Profit 39,613 6,868 2,384 1,238 Maintained high sales, Record high quarterly NP dropped from Healthy GPM at 17.3% +2.9% YoY operating pr
Slide 6: 2022: Record-high sales and gross profit, debt ratio improved
2022: Record-high sales and gross profit, debt ratio dramatically improved, mostly thanks to capital raised from ITC IPO 2022 sales growth Financial Summary1 10.3% YoY to +10.3% (THB million) THB 155,586mn 155,586 141,048 +5.8% 2021 2022 Share price movement2 27,206 25,727 2022 YTD2023 -13.7% (Jan –
Slide 7: Adjusted net profit excluding non-cash items
Excluding non-cash items from RL preferred share adjustment and a German factory closure, TU delivered strong net profit of THB 8.2bn Adjusted Net Profit THB mn +900 +195 8,233 8,000 7,138 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2022 Reported NP RL's preferred shares fair Rügen Fisch restructuri
Slide 8: 2H22 final dividend of THB 0.44/share
With robust net profit, TU announced 2H22 final dividend of THB 0.44/share, with highly attractive yield at 5.4%* THB/Share Final dividend for the period: 1.00 July 1 to December 30, 2022 0.90 DPS THB 0.44 0.80 0.70 Ex-Dividend Date March 3, 2023 60% 59%60% 58%57% 57% 57% 57% Record Date March 7, 20
Slide 9: On track towards 2025 targets (1/2)
Feb ’23: We are on track towards our 2025 targets (1/2) Commitments for 2025 Current Status Progress review Lagging On track Achieved ▪ EBITDA* in 2022 was ~USD 370mn in 2022 (vs. ~USD 470mn in 2021), mainly impacted from FX translation ~USD 41mn, RL’s share of losses 1 Group EBITDA of USD 450-550mn
Slide 10: On track towards 2025 targets (2/2)
Feb ‘23: We are on track towards our 2025 targets (2/2) Commitments for 2025 Current Status Progress review Lagging On track Achieved ▪ PetCare exceeded target growth rate for last few years Building new value-enhancing Grow Pet Care and Feed businesses at around 3x 7 GDP growth p.a. ▪ Feed facing i
Slide 11: i-Tail Corporation (ITC) successfully listed in SET
i-Tail Corporation (ITC) was successfully listed in SET Our flagship PetCare business • Thai Union’s consolidated accounts, recorded an increase of cash and non-controlling interests (B/S) by THB 21bn, which caused the ND/E ratio significantly dropped from 0.99X to 0.54X • Thai Union will remain the
Slide 12: Equity shares in three listed companies
Thai Union now owns equity shares in three different listed companies with total market value around THB 81bn Share price No. of Shares Market Value % Holding by Value to TU (THB)* (Shares) (M. Baht) TU (M. Baht) THB 31.50 3,000,000,000 94,500 77.82% 73,540 INR 162.20 136,245,630 22,099 24.21% 5,350
Slide 13: New minority investments/JV and portfolio rationalization
We continued in 2022 our dynamic investment journey with new minority investments/ JV and portfolio rationalization Minority investment Our joint-ventures Global portfolio management Continue to turnaround or divest loss- making business to optimize our manufacturing footprint and enhance • TU, R&B
Slide 14: CVC: new investments in start-ups
CVC: we performed 2 new high-quality investments in start-ups Investment areas of Food-tech Start-up New Food-tech start-up investment Alternative Protein Plant-based, algae, insect, mycoprotein, bacterial protein and lab-grown/cultured meat • France’s producer of algae- • A medical biotechnology ba
Slide 15: Industry leader on sustainability
We continue to be an industry leader on sustainability, and focus on “Healthy Living, Healthy Oceans” ▪ Entered a partnership with Sustainable Fisheries ▪ Conducted the first ever at-sea audit Partnership (SFP) to further improve transparency in to assess working conditions and Thai Union’s supply c
Slide 16: #1 globally on Dow Jones Sustainability Index 2022
#1 globally on the Dow Jones Our 2022 performance Sustainability Index 2022 in the Food Products Industry Environmental Social 3 Dimensions 30 Criterias Our Score: 137 Questions Our Score: 92/100 91/100 1,000+ Datapoints Governance & Economic Our Score: 77/100 Listed Rank Rank The DJSI is the world
Slide 17: Protecting the environment and supporting communities
Committed to protecting the environment and supporting local communities John West Foods has become an Official Gold Thai Union collaborated with the Scholars Partner of the British Paralympic Association as of Sustenance Foundation (SOS) to the ‘Protein Partner’, to support athletes with Thai Union
Slide 18: Recognized by leading institutions
We are proud to continue to be recognized for our efforts by leading institutions around the world Key highlight awards Best CEO Best CFO Corporate Management and (Top 3, sell side) (Top 2, sell side & Top 3,combined) Innovation Excellence Award Institutional Investor Awards 2022 Institutional Inves
Slide 19: Upgrading to positive from JCR and A from MSCI
Upgrading to “positive” from JCR and to “A” from MSCI Company rating: A- Company rating: A Upgraded from stable to positive Upgraded from BBB in October 2022 Data as of 18 November 2022 o The committee maintained an A- rating and upgraded and from stable to positive as we are o MSCI upgrade the Comp
Slide 20: 4Q22 Financial Results
Placeholder for graphic 4Q22 Financial Results (paste graphic, crops to H19.05*W10.5) - Consolidated (add TU logo) Slide 20
Slide 21: CFO message on inflation and FX
“ High inflation and FX volatility will remain in 2023, however, the pressures from freight costs and the shortage of containers have seen a significant improvement in 4Q22. Additionally, cash flows focus and especially inventory control will be key ” Ludovic Garnier, Group CFO Slide 21 FY22 Analyst
Slide 22: High topline, GPM dropped in 4Q22
Remained high topline from the high base last year, GPM dropped in 4Q22 from Frozen & Chilled margin contraction Total sales (THB mn) GPM NPM 19.0% 18.2% 18.2% 18.0% 17.7% 18.0% 18.2% 17.5% 17.4%* 18.2% 20.0% 60,000 16.7% 17.3% 15.9% 16.1% 16.2% 18.0% 15.8% 14.9% 14.9% 14.0% 16.0% 50,000 40,756 39,6
Slide 23: Freight cost and transit time normalizing
Freight cost and transit time are normalizing, while global headline inflation is expected to remain high in 2023 Logistics: Close to the pre-covid level Our solutions to strengthen Macro economic overview Price impact to TU: ~THB -1.3bn in 2022 (Q4 the focus on cash flows and positive ~320mn), sign
Slide 24: Seafood raw material prices remain high but manageable
Seafood raw material prices remained at high level, but still within a manageable range 2,500 Tuna (Skipjack) (USD/ton) Salmon (NOK/kg) 2,300 110 2,100 1,900 90 1,700 2Q22 70 1,500 1Q22 97 4Q21 1,717 3Q22 4Q22 1Q22 3Q22 4Q22 2Q19 1,300 1,617 2Q22 1,667 1,660 50 1Q19 1Q20 78 73 73 1Q19 3Q20 2Q21 3Q21
Slide 25: USD dynamic in 2022, depreciating against THB
USD is extremely dynamic throughout 2022, which depreciating quickly against THB end of last year USD depreciated quickly against THB 50.0 38.0 49.0 GBP/THB 37.0 USD/THB 48.0 47.0 36.0 46.0 35.0 3Q22 45.0 34.0 36.4 44.0 4Q22 43.0 33.0 4Q21 2Q22 36.4 42.0 3Q21 4Q21 1Q22 32.0 34.4 41.0 45.0 2Q22 33.4
Slide 26: FX management and hedging
FX management: We always hedge based on anticipated sales a few months ahead & the designated forward rate trends are about 3-4 months behind the spot rate 37 A Enter to FWD contracts (in mTHB) 4Q22 2022 B Net yet designated to sales C Sales incurred 35 Sales 40,435 157,644 33 Positive Sales adjustm
Slide 27: Red Lobster performance remains challenging
Red Lobster performance remains challenging from extreme inflationary environment and the low season FY share of profit/loss THB mn 4Q22 3Q22 2Q22 1Q22 4Q21 2022 2021* 2020 2019 (THB mn) Share of profit/loss Operations -1,207 -178 -1,187 -142 -344 -339 -281 -243 -147 Lease accounting adj. -422 -638
Slide 28: 2023 Red Lobster short-term initiatives
2023 Red Lobster Short-Term Initiatives Highlights Amid inflation and soft guest count in the U.S. Revamped Activate Productivity Down Prime Costs organizational structure • Price increases to battle • Efficient cost model by • The new Senior cost inflation lower % of food cost Leadership Team, • Ne
Slide 29: Four major CAPEX projects completed in 2023
Four major CAPEX projects will be completed in 2023 Culinary business Ingredients business PetCare business Ambient tuna business Key Ready-to-eat, Protein hydrolysate Wet pet food Ambient tuna cold Products dimsum and bakery and collagen peptide and treat storage Increased by 18.7% ~11,500 sq.m Tot
Slide 30: Capital raising of THB 21bn from IPO
Capital raising by THB 21bn from IPO transaction Excellent ND/EBITDA and ND/E ratio, much lower than target ROE INV Days Net Debt to EBITDA 139 144 139 133 132 16.1% 15.4% 5.17 5.26 14.8% 4.50 13.8% Target 11.1%* 3.67*** 3.67** 4.0-4.5 46,636 48,649 52,528 56,319 52,622 4.11 4Q21 1Q22 2Q22 3Q22 4Q22
Slide 31: Very strong balance sheet with lower debt
2022: Very strong balance sheet, with lower debt and higher equity, driven by ITC spin-off and strong EBITDA ND/E 0.99x Income tax paid and other investing & financing ND/E 0.54x Free Cash Flow THB 1,792mn Kd** = 2.62% activities Kd** = 3.40% THB mn 4,399 61,318 2,284 5,039 940 -234 7,179 372 -1,497
Slide 32: Short-term debt decreased, manageable interest rate risk
Short-term debt substantially decreased, resulting in manageable risk from interest rate hike Interest-bearing debts of THB 60.3bn By Currency By Maturity By Interest Rate 1.4% JPY EUR 1.5% Short-term loan 14% 16% 8.5% Short-term loan* 12.6% Current portion 4% decreased significantly USD 0.5% from
Slide 33: 2022 Business Performance
2022 Business Performance
Slide 34: PetCare sales contribution grew from 10% to 14%
Substantial growth in PetCare sales contribution from 10% to 14% Total FY22 sales: THB 155,586mn Categories Business 43% 36% 14% 7% Ambient Seafood Frozen and Chilled PetCare Value Added & Others* THB 66,510mn THB 56,964mn THB 21,693mn THB 10,420mn Sales Split 1% 13% 38% Brand 45% 55% OEM 62% 99% 87
Slide 35: Consistent sales growth with GPM in line with guidance
Consistent sales growth post-pandemic with GPM in line with guidance, thanks to strong core businesses and diversification Sales (THB bn) 2020 2021 2022 2020 2021 2022 +17.5% +6.0% 155.6 +14.8% 70,000 66.5 141.0 62.7* 132.4 60,000 59.0 58.4** 57.0 50,000 49.6 40,000 +76.7% 30,000 +33.7% 21.7 12.3 14
Slide 36: Ambient seafood: record quarterly sales
Ambient seafood: Record quarterly sales with healthy GPM Sales (THB mn) +18.3% Quantity (tons) -6.2%* +12.8% YoY -0.9% YoY +0.6% QoQ +3.4% QoQ 16,912 16,985 17,086 93,652 90,347 14,440 * 15,149 15,527 88,595 91,967 84,948 87,827 Brand 52% 57% 57% 51% Brand 42% 43% 42% 45% 41% 53% 55% 46% Private 48%
Slide 37: 2022 Ambient seafood: strong demand
2022 Ambient seafood: Continued strong demand amid concern of global recession Continued to launch innovative products to serve the strong Ambient Seafood demand for canned seafood and sustainability globally Sales (THB mn) and Gross Profit Margin (%) 19.4% 21.1% 21.4% 21.3% 25% • Positive from sell
Slide 38: Frozen & chilled seafood: GPM recovered from 3Q22
Frozen & chilled seafood: GPM significantly recovered from 3Q22 but slightly dropped YoY from market price normalization in the U.S. Quantity (tons) Sales (THB mn) +5.2% -13.1% YoY -5.6% -2.5% QoQ -10.0% YoY -11.3% QoQ 16,628 14,820 13,738 13,790 13,900 14,453 38% 69,236 72,637 71,086 73,704 36% 39%
Slide 39: 2022 Frozen & chilled seafood: topline normalization
2022 Frozen & chilled seafood: topline normalization after exceptional 2021 performance and profitability hurt by market price volatility in the U.S. Frozen & chilled Seafood Growing our business through innovative Sales (THB mn) and Gross Profit Margin (%) and value-added products, market 11.8% exp
Slide 40: PetCare: record quarterly volumes
PetCare: Record quarterly volumes with significant sales growth from last year Sales (THB mn) Quantity (tons) +46.3% +65.8% +34.1% YoY +31.8% YoY -10.3% QoQ -2.4% QoQ 6,210 38,405 37,485 5,442 5,568 34,776 4,153 4,472 1% 0% 25,621 28,432 29,645 1% 0% 3,357 1% 1% Brand 1% 1% Brand 0% 1% 1% 0% 99% 99%
Slide 41: 2022 PetCare: record high sales
2022 PetCare: Record high sales from strong momentum PetCare PetCare: Investing into capacity expansion & production Sales (THB mn) and Gross Profit Margin (%) efficiency 35% 25.6% 24.3% 26.3% 30% • Announce new sales office in China to expand market 19.5% 20.1% presence in China and Netherlands wit
Slide 42: Value-added & others: record quarterly volumes
Value-added & others: Record quarterly sale volumes from mix business changes with a healthy margin Sales (THB mn) Quantity (tons) +7.1% +29.8% +14.8% YoY -2.5% YoY -8.6% QoQ +2.2% QoQ 2,691 2,741 49,787 49,169 48,320 52,184 53,313 2,571 2,483 2,505 Brand 46,448 1,929 13% 11% 14% 14% 12% 9% 5% 6% 6%
Slide 43: 2022 Value-added & others: record sales, 28% GPM
2022 Value-added & others: Record high sales with attractive 28% GPM Value-added & others Packaging and printing continued to be a key driver Sales (THB mn) and Gross Profit Margin (%) • Leverage our production & scale, focus 28.5% 29.4% 28.0% 35% 23.7% 30% on export products within Thai Union 19.5%
Slide 44: Driving growth in value-enhancing business
Driving growth in our value-enhancing business We are growing the category with new, innovative products The transition from tuna oil refinery to No. 1 collagen* for 3 consecutive Driving future innovation by omega-3 oil refinery quarters (Q2-Q4 22) building an Alternative Protein ecosystem ▪ Our re
Slide 45: 2023 Outlook
2023 Outlook
Slide 46: 2023 guidance and outlook by business
Targeting further growth in 2023 with improved profitability and record high capex. Softer 1Q expected, balanced with growing following quarters 2023 Guidance** ▪ Further price increase, covering high material costs Sales 5-6% YoY growth* ▪ OEM: Sales in wide ranges (including AP), innovation Ambien
Slide 47: Thank You!
Placeholder for graphic (paste graphic, crops to H19.05*W10.5) Thank You! (add TU logo)
Slide 48: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of December 30, 2022 Share price (Feb 17, 2023) THB 15.70 Others, Historical closing price 48.72% 52-week high THB 21.30 Chansiri 52-week low THB 15.20 Family, 20.26% No. of paid up shares 4
Slide 49: All time high sales
All time high sales, driven by higher selling prices and FX, especially PetCare and Ambient business Sales +18.4% • 4Q22 sales growth of 2.9% YoY, driven by: THB mn +0.8% YoY +2.9% YoY Before currency impacts -2.8% QoQ • PetCare sales grew exceptionally at 34% YoY, thanks to continued strong demand
Slide 50: 2022 net profit impacted by RL adjustment and restructuring
2022 net profit was impacted by RL preferred share adjustment and a Germany factory restructuring -15.0% Net Profit • 4Q22 reported net profit was at THB 1,238mn, THB mn -35.9% YoY down 35.9% YoY, mainly impact by: -51.1% QoQ 14.0% 12.0% • Higher RL’s share of loss from operations at 2,530 10.0% THB
Slide 51: Strong sales growth from all key regions
Strong sales growth from all key regions, led by Asia market, especially Thailand and Japan Sales Breakdown by Geographic • 2022 higher sales from all key regions, especially 100% the U.S., Thailand, Japan, and the rest of the world 13% 15% 15% 15% 14% 13% 14% Others 6% 5% 5% 6% Japan 80% 8% 6% 6% 1
Slide 52: New high 2022 gross profit with healthy margin
New high 2022 gross profit with a healthy margin Gross Profit 34,000 Operating Profit THB mn 27,206 THB mn 10,000 8,256 29,000 25,727 7,821 8,050 23,418 8,000 24,000 18,892 20,110 5,642 4,669 19,000 6,000 14,000 *New High* 4,000 9,000 +5.8% 2,000 -2.5% 4,000 YoY YoY - -1,000 2018 2019 2020 2021 2022
Slide 53: THB +3.8bn 4Q22 free cash flow
THB +3.8bn 4Q22 great free cash flow thanks to NWC improvement Quarterly Free Cash Flow THB mn • Free cash flow in 4Q22 is significantly positive, mainly from net working capital 3,862 substantial improvement, thanks to freight cost and transit time normalization, close to pre-covid level. 1,328 859
Slide 54: 2022: Record high sales in the U.S. and Thailand
2022: Record high sales in the U.S. and Thailand United States and Canada Europe 43% 26% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 20% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 11% Slide 54 FY22 Analyst Meeting
Slide 55: US & Canada: stable YoY
US & Canada: Stable YoY, mainly from frozen market normalization, offsetting by strong Sales Ambient and PetCare THB mn +15.4% -0.2% YoY -7.2% QoQ 17,177 18,456 17,135 16,357 16,540 14,851 4Q20 4Q21 1Q22 2Q22 3Q22 4Q22 4Q22 North America sales stable YoY • Stable quarterly sales in 4Q22, driven by s
Slide 56: Europe: sales stable YoY
Europe: Sales stable YoY, thanks to higher volume and price increase in key markets offset with Sales unfavorable FX THB mn +10.6% Flat YoY +0.8% QoQ 9,688 10,709 10,723 10,628 10,711 8,899 4Q20 4Q21 1Q22 2Q22 3Q22 4Q22 4Q22 European sales stable YoY • Sales stable YoY, driven by higher selling pric
Slide 57: Thailand: all-time high topline
Thailand: All-time high topline, driven by growth from ambient, PetCare, and value-added Sales THB mn +33.0% +4.4% YoY +0.8% QoQ 4,101 3,923 3,957 4,244 4,280 3,219 4Q20 4Q21 1Q22 2Q22 3Q22 4Q22 4Q22 Thailand sales increased 4% YoY • Domestic sales grew impressively with record-high quarterly sales
Slide 58: Emerging Markets and rest of world: strong growth
Emerging Markets (EM) and rest of the world: Strong growth in all key countries Sales THB mn +31.2% +14.9% YoY +0.8% QoQ 7,093 7,725 7,428 7,486 5,706 6,513 4Q20 4Q21 1Q22 2Q22 3Q22 4Q22 4Q22 EM and rest of world sales rose significantly 15% YoY • Sales increased from all key countries, mainly in th
Slide 59: 4Q22 revenue component
4Q22 revenue component: Ambient and PetCare remained strong momentum +18.4% THB mn +2.9% YoY +15.1% YoY +210 +1,510 +52 +47 +58% +1,094 +2% +6% +14% +9% +116 39,613 +11% +1,285 12, 000 -299 +233 +31% -3% +1,638 38,501 38,501 -1,206 +9% 10, 000 -13% -47 +454 -2% +711 33,464 -1,001 8,0 00 +2,128 -72%
Slide 60: 4Q22 Category profitability
4Q22 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood • Tuna 17,086 21.2 3,622 • Sardine and mackerel (4Q21: 15,149) (4Q21: 22.7) (4Q21: 3,444) • Ambient and pouched salmon • Ambient - Other seafoods1 Frozen and chilled seafood • Shrimp and related2