Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q1 2023 Earnings Presentation
51 slides from Thai Union Group Public's earnings presentation, May 3, 2023
Slide 1: Analyst Meeting for 1Q23 Results
Analyst Meeting for 1Q23 Results Thai Union Group PCL. May 3, 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: 1Q23 Key Highlights
1Q23 Key Highlights
Slide 4: 1Q23 expected to be the softest quarter of the year
“ 1Q23 is expected to be the softest quarter of the year explained by high sale baseline in 1Q22, high inventory level at our customers and logistic normalization. However, we have already seen signs of improvement in 2Q23 and expect to be back to growth in 2H23. ” Thiraphong Chansiri President and
Slide 5: 1Q23: As expected, soft operating performance
1Q23: As expected, soft operating performance due to high baseline in 1Q22, soft demand and logistic normalization. Positive news on SG&A and RL share of profit THB mn Sales Gross Profit Operating Profit Net Profit 32,652 4,917 796 1,022 Sales Lower OP NP dropped from Impacted by soft demand and Sof
Slide 6: 1Q23 Net profit dropped YoY from two non-comparable items
1Q23 Net profit dropped YoY, mainly from two non-comparable items last year Comparable Net Profit THB mn -21.8% YoY 1,746 2,000 -318 +79 -200 1,500 1,307 1,022 1,000 500 0 1Q22 Reported NP RL's Other Income Tax credit from RL's i-Tail dilution impact 1Q22 Comparable NP 1Q23 NP Other Income 1Q22 Repo
Slide 7: Mid-March Share Buyback Program
Thai Union has started Mid-March Share Buyback Program to increase market confidence and trust Program Summary Announcement Date 16 December 2022 Repurchase Date 3 Jan – 30 Jun 2023 Main purposes 1. To ensure the excess liquidity is for the utmost benefit 2. To increase ROE and EPS 3. Build trust Th
Slide 8: New and innovative product launches
New and innovative product launches Growing our “Healthy Living” portfolio and higher-margin branded business Vegan Tuna launched under John West in the Netherlands SEALECT Tuna’s first brand ambassador in 30 years • 2 SKUs launched: Tomato and basil & Dash of oil • SEALECT announced Gypsy Keerati •
Slide 9: SPACE-F batch and CVC collaboration
SPACE-F Batch 4 launched in March 2023 and growing collaboration with CVC At Thai Union, we continue support outstanding FoodTech entrepreneurs to build strong and sustainable businesses that create positive impact to the world: • SPACE-F kick started Batch IV in March 2023 SPACE-F • 20 startups (10
Slide 10: Protecting the environment and supporting local communities
Committed to protecting the environment and supporting local communities, as part of “Healthy Living, Healthy Oceans” At Seafood Expo North America, Thai Union leads call for Restoration of Endangered Species, and highlighted that we are sourcing from vessels that are implementing best practices to
Slide 11: New commitments towards SeaChange 2030
Introducing new commitments towards 2030 SeaChange® in June Upgrading from own operations to cover upstream and downstream Objectives of SeaChange 2030 Building on Existing 2025 Commitments RESPONSIBLE TUNA 100% of Tuna from MSC or FIPs with suppliers demonstrating • Continue Thai Union’s leadership
Slide 12: We are proud of the recognition we continue to receive
We are proud of the recognition we continue to receive Multiple awards from GLOBAL BANKING & FINANCE AWARDS® and Finance Derivative in 1Q23 The Next 100 Global Awards 2023 – Seafood Innovation Best Group CEO Asia 2023: Business Leadership Awards for Best Group CEO Asia 2023 Mr. Thiraphong Chansiri,
Slide 13: 1Q23 Financial Results - Consolidated
1Q23 Financial Results - Consolidated
Slide 14: CFO quote on balance sheet
“ Our balance sheet is now in excellent condition with ND/E of 0.57 times as of 1Q23, much below our target of 1.0-1.1 times. As a result, we are now considering to re-activate the M&A process. ” Ludovic Garnier, Group CFO Slide 14 1Q23 Analyst Meeting
Slide 15: SG&A decreased by 12.1% YoY
SG&A decreased by 12.1% YoY, thanks to significant freight cost improvement and logistic normalization 1Q23 Key Takeaways • Red Lobster’s performance turned to profit as expected RL Turned • Red Lobster recorded shares of profit of THB 121mn in 1Q23 vs. shares of loss To Profit of THB 243mn last yea
Slide 16: Freight cost and transit time lower than pre-covid level
Freight cost and transit time were lower than the pre-covid level, while core inflation remained high Logistics: Freight price impact turned positive Macro economic overview Freight cost (USD) Ocean transit time (days) The impact of freight price Thailand to US Thailand to US • Headline inflation in
Slide 17: Fish prices higher than expected
Fish prices started the year higher than our expectations and are expected to remain at high level in 2Q23 2,500 Tuna (Skipjack) (USD/ton) Salmon (NOK/kg) 2,300 Temporary rose in 1Q23 due to lower 110 2,100 catching 1,900 90 1Q23 1,700 2Q22 104 1Q23 70 1,500 1Q22 1,820 97 4Q21 1,717 3Q22 4Q22 1Q22 1
Slide 18: Tuna price increase and temporary Ambient GPM decrease
Increase in the tuna prices, resulting in a temporary decrease in Ambient GPM because of time lag (USD/ton) 2,700 30.0% Peak at 2,300 2,500 USD/ton on Oct 17 22.4% 23.3% 22.7%21.7% 22.9% 25.0% 21.5% 22.0% 21.2% 19.6% 20.1%20.2% 20.7% 18.9% 18.6% 18.7%19.4% 19.5% 2,300 18.4% 17.7% 16.5%17.1% 16.9% 17
Slide 19: Healthy level of tuna supply
Healthy level of tuna supply, especially skipjack specie Global summary of tuna catches and stocks Catches by Species 2023 Global Tuna Catching has Stabilized since early 2000s Albacore, Bluefin, • Average global catching of tuna during 2017-2021 Bigeye, 4% 1% were around 5.08 million metric tons 8%
Slide 20: THB appreciating against key currencies
THB has been appreciating QoQ against all key currencies since the beginning of the year 50.0 38.0 USD/THB 49.0 GBP/THB 37.0 48.0 47.0 36.0 46.0 35.0 3Q22 45.0 34.0 36.4 44.0 43.0 33.0 4Q21 2Q22 42.0 3Q21 4Q21 1Q22 32.0 34.4 41.0 45.0 2Q22 33.4 1Q23 40.0 2Q21 45.4 44.4 43.2 3Q22 4Q22 31.0 3Q21 1Q22
Slide 21: Red Lobster performance turned to profit
Red Lobster performance turned to profit, thanks to seasonality and Lobsterfest success; it will require confirmation over next few quarters THB mn 1Q23 4Q22 3Q22 2Q22 1Q22 FY share of profit/loss 2022 2021* 2020 2019 (THB mn) Share of profit/loss Operations -1,207 -178 -1,187 -142 121 -344 -339 -28
Slide 22: Confirm RL full year performance guidance
We confirm RL full year performance guidance and continue to focus on the business turnaround Share of profit US interest rates raised twice early this year by 2023E 2022 2021 2020 (THB mn) 0.50%, to a new range of 4.75%-5% as expected Operations* -600 -1,207 -178 -1,187 • Over the last year, the Fe
Slide 23: Net working capital slightly increased
1Q23 Net working capital slightly increased due to seasonality and lower sales ROE INV Days Net Debt to EBITDA 139 144 139 145 132 5.17 5.26 15.4% 14.8% 13.8% 4.50 4.07 Target 11.1%* 3.67** 3.67*** 9.8% 4.0-4.5 48,649 52,528 56,319 52,622 52,948 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22
Slide 24: Net debt slightly increased to THB 50bn
1Q23 Net debt slightly increased to THB 50bn from active financing activities ND/E 0.54x Income tax paid and other investing ND/E 0.57x Free Cash Flow THB -194mn Kd* = 3.40% & financing activities Kd* = 3.48% THB mn 775 50,184 1,416 484 47,328 966 89 2,072 7 -100 -398 -2,454 Net Debt EBITDA Change i
Slide 25: High portion of fixed-rate loan
Kept a high portion of fixed-rate loan during this period of interest rate hikes Interest-bearing debts of THB 61.8bn By Currency By Maturity By Interest Rate Short-term loan* 16% 18% JPY 8.5% 8.3% EUR 0.8% Current portion 4% 10% 0.5% of long-term USD 14.9% 14.5% debt & finance Float, 28% lease 80%
Slide 26: 1Q23 Business Performance
jx 1923 Business Performance
Slide 27: Category mix: Ambient sales contribution increased
Category mix: Ambient sales contribution increased to the expense of Petcare category Total 1Q23 sales: THB 32,652mn Categories Business 46% 36% 11% 7% Ambient Seafood Frozen and Chilled PetCare Value Added & Others THB 15,225mn THB 11,684mn THB 3,495mn THB 2,248mn Sales Split 13% 44% 39% Brand 100%
Slide 28: Soft sales performance in 1Q23
Soft sale performance in 1Q23 explained by high 1Q22 baseline, soft demand and falling freight revenue 2021 2022 1Q 2021 2022 1Q Sales (THB bn) 1Q23 1Q21 1Q22 1Q23 1Q21 1Q22 10.3% +12.8% 155.6 70,000 66.5 -2.5% 141.0 60,000 59.0 58.4 57.0* 50,000 40,000 +48.0% -10.0% 30,000 -1.9% -15.3% YoY YoY 21.7
Slide 29: Ambient seafood: temporary volume drop YoY
Ambient seafood: Temporary volume drop YoY, explained by customer destocking and high fish price, offset by price increase Sales (THB mn) +12.1% Quantity (tons) -10.7% -1.9% YoY -16.3% YoY -10.9% QoQ -12.3% QoQ 16,912 16,985 17,086 91,967 15,527 15,225 86,197 90,347 84,948 87,827 13,580 76,988 Brand
Slide 30: Ambient seafood: expect 2Q23 to improve
Ambient seafood: Expect 2Q23 performance to improve from the softest 1Q and normalize in 2H23 Continued to launch innovative products to serve the Demand resilient amid a weak global economy strong demand for canned seafood and sustainability globally • Continue expanding our “Healthy Living” portfo
Slide 31: Frozen & chilled seafood: remains challenging
Frozen & chilled seafood: Remains challenging from the deterioration of the Global Economy Quantity (tons) Sales (THB mn) -3.2% -3.7% -15.3% YoY -19.2% QoQ -5.3% YoY -7.0% QoQ 13,790 13,900 14,820 14,453 12,076 11,684 71,086 73,704 36% 63,081 64,146 65,352 60,768 42% 38% 39% Brand 38% 39% Brand 76%
Slide 32: Frozen & chilled seafood: value-added products and expansion
Frozen & chilled seafood: Focusing on innovative and value- added products, market expansion, and cost efficiency 1 2 3 4 Able to adjust the Increase the proportion Become seafood leading Efficient sourcing, selling price, of value-added brand and growing our manufacturing, and following raw materia
Slide 33: PetCare: temporary soft demand from destocking
PetCare: Temporary soft demand from inventory destocking at our customers end, mostly in the U.S. and Europe Sales (THB mn) Quantity (tons) -10.0% +0.9% -21.9% YoY -20.5% YoY -37.2% QoQ -37.1% QoQ 6,210 38,405 37,485 5,442 5,568 34,776 4,472 0% 0% 26,171 29,645 1% 0% 3,464 1% 3,495 1% 23,562 Brand 1
Slide 34: PetCare: geographic expansion and new partners
PetCare: Geographic expansion to new or high-growth markets and collaboration with new partners Target to achieve 5.8% of revenue from China by 2025 Target to achieve 23.0% of revenue from Europe by 2025 growth Markets New or High- • Announced 10-years exclusive partnership with Nan Jing • Completed
Slide 35: Value-added & others: gross margin above 27%
Value-added & others: gross profit margin remained solid above 27% Sales (THB mn) Quantity (tons) +2.7% +12.1% -2.3% YoY -9.5% YoY -10.3% QoQ -9.9% QoQ 2,483 2,691 2,741 2,505 52,184 53,313 2,248 Brand 46,787 49,169 48,320 48,032 2,005 11% 14% 14% 12% 5% 6% 6% 5% 3% Brand 13% 9% 14% Private 89% 86%
Slide 36: Value-added & others: growing sales contribution
Value-added & others: Focusing on sales contribution growth with attractive GPM Growing Value-Added to uplifting margins • 99.5% progress of new protein hydrolysate and collagen peptide plant, Future of Culinary, serving customers which is starting with Thailand and globally in 3Q23 surrounding mark
Slide 37: 2023 Outlook
2023 Outlook
Slide 38: Adjusted 2023 guidance
Adjusted 2023 guidance Sales 3 – 4% YoY growth* Gross profit margin ~ 17.5 – 18.0% SG&A to sales ~ 11.0 – 12.0% Placeholder for graphic Effective interest rate Increase 0.5 – 1.0% (paste graphic, crops to H19.05*W10.5) (add TU logo) CAPEX ~ THB 6.0 – 6.5bn Dividend policy At least 50% dividend payou
Slide 39: Thank You!
Placeholder for graphic (paste graphic, crops to H19.05*W10.5) Thank You! (add TU logo)
Slide 40: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of March 7, 2023 Share price (April 28, 2023) THB 13.80 Others, 49.68% Historical closing price 52-week high THB 19.10 Chansiri 52-week low THB 13.10 Family, No. of paid-up shares 4,771.8mn
Slide 41: Investment in five listed companies
Thai Union’s investment in five listed companies with a total market value above Thai Union’s market capital Share price No. of Shares Market Capital % Holding by Value to TU (THB)* (M. Shares) (M. Baht) TU (M. Baht) THB 20.50 3,000 61,500 77.82% 47,859 INR 151.98 136 20,669 24.21% 5,004 THB 8.50 50
Slide 42: 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 43: Sales growth by region and business
Strong sales growth from all regions Sales Breakdown by Geographic • 1Q23 lower sales contribution from all 100% regions, mainly the U.S. and EM & rest of the 15% 15% 15% 14% 13% 14% 13% Others 80% 6% 6% 6% 5% 5% 6% 6% Japan world 9% 11% 12% 10% 10% 11% 12% Domestic • The U.S., Europe, and Thailand
Slide 44: Geographic diversity: 1Q23 Sales
Geographic diversity: 1Q23 Sales United States and Canada Europe 43% 26% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 19% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 12% Slide 44 1Q23 Analyst Meeting
Slide 45: US & Canada: slow demand
US & Canada: Slow demand of frozen & chilled and PetCare as customers carry high inventory Sales THB mn +1.1% -14.0% YoY -17.9% QoQ 18,456 17,135 16,357 16,540 13,911 14,071 1Q21 1Q22 2Q22 3Q22 4Q22 1Q23 1Q23 North America sales decreased 14.0% YoY • Sales dropped mainly from frozen & chilled seafoo
Slide 46: Europe: impacted by strong Baht
Europe: Impacted by strong Baht against GBP and EUR and temporally lower volume in Germany and France Sales THB mn +1.8% -4.0% YoY -20.3% QoQ 10,723 10,628 10,711 8,387 8,899 8,542 1Q21 1Q22 2Q22 3Q22 4Q22 1Q23 1Q23 EU sales decreased 4.0% YoY • Sales dropped mainly from lower volume, particularly i
Slide 47: Thailand: softer demand
Thailand: Softer demand mainly from packaging and ambient Sales THB mn +4.3% -3.6% YoY -11.6% QoQ 3,923 3,957 4,244 4,280 3,783 3,628 1Q21 1Q22 2Q22 3Q22 4Q22 1Q23 1Q23 Thailand sales decreased 3.6% YoY • Domestic sales dropped mainly from packaging and ambient, partially offset by feed growth Slide
Slide 48: Emerging Markets and rest of the world
Emerging Markets (EM) and rest of the world: Sales dropped mainly from high based last year Sales THB mn +20.4% -11.8% YoY -16.4% QoQ 7,093 7,725 7,428 7,486 5,198 6,256 1Q21 1Q22 2Q22 3Q22 4Q22 1Q23 1Q23 EM and rest of world sales decreased 11.8% YoY • Sales decreased across categories from soft de
Slide 49: 1Q23 Free cash flow negative but improved
Although 1Q23 Free cash flow is negative, it has massively improved since last year Quarterly Free Cash Flow THB mn • Free cash flow in 1Q23 is negative, mainly from net working capital increase 3,862 from Europe operation • However, it has substantial improvement from 1Q22, thanks to freight cost a
Slide 50: 1Q23 Category profitability
1Q23 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 15,225 18.0 2,747 • Tuna • Sardine and mackerel (1Q22: 15,527) (1Q22 : 21.7%) (1Q22 : 3,377) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related1 11,684 7.9 928 • Lobster
Slide 51: 1Q23 Analyst Meeting
1Q23 Analyst Meeting Union