Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — Q4 2017 Earnings Presentation

56 slides from Thai Union Group Public's earnings presentation, Feb 21, 2018

  1. Slide 1: 4Q17 Results Presentation

    4Q17 Results Presentation 21 February 2018 Page 1

  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 Key Highlights Recent Developments 4Q17 Financial Results Business Outlook Page 3

  4. Slide 4: Agenda

    Agenda Key Highlights Recent Developments 4Q17 Financial Results Business Outlook Page 4

  5. Slide 5: CEO quote on operational excellence and shareholder growth

    “With keen focuses on operation excellence, efficient execution, and innovation, we are committed to deliver sustainable and profitable growth for Thai Union Group shareholders.” Thiraphong Chansiri President and Chief Executive Officer Page 5

  6. Slide 6: 2017: Exceed THB 6.0bn net income, record top line and dividend growth of 5%

    2017: Exceed THB 6.0bn net income, record top line and dividend growth of 5% 2017 2016 YoY Chg % of 2017 sales Sales (THB bn) 136.5 134.4 +1.6% (+3.9% excl. FX) GP 18.1 19.9 -9.0% 13.3% OP 4.7 6.8 -30.8% 3.5% NP 6.0 5.3 +14.6% 4.4% DPS (THB/share) 0.66 0.63 +4.8% 53.3% (Payout ratio) Remark: Operati

  7. Slide 7: 4Q17: Solid net profit growth while operating performance remained soft

    4Q17: Solid net profit growth while operating performance remained soft  Solid organic sales growth. 4Q17 sales YoY Chg % of sales continued to improve YoY driven mainly by a product repricing from increased raw material prices 35,105 Sales (THB mn) +4.1% (+6.6% excl. FX)  Rising raw material pric

  8. Slide 8: 2017 Net profit up 14.6% YoY, record 2017 sales

    2017 Net profit up 14.6% YoY, record 2017 sales Financial Summary1 2017 Net Profit (THB million) up 14.6% YoY to Total Sales 2017 2016 136,535 134,375 +1.6% THB 6,021million 2017 18,141 Gross Profit -9.0% Q1’12 2016 19,927 Share price movement Q1’11 20162 20172 Operating 2017 4,711 (Jan- Dec 16 ) (J

  9. Slide 9: 4Q17: Continued overall net profit stability, continued growth

    4Q17: Continued overall net profit stability, continued growth Total sales (THB mn) GPM NPM 20.0% 60,000 17.3% Raw material prices rising 16.9% 18.0% 16.0% 15.9% 50,000 14.2% 16.0% 13.8% 14.1% 13.8% 13.4% 13.4% 13.2% 12.8% 14.0% 40,000 32,602 33,333 34,401 35,050 33,715 34,818 35,185 35,105 12.0% 30

  10. Slide 10: Agenda

    Agenda Key Highlights Recent Developments 4Q17 Financial Results Business Outlook Page 10

  11. Slide 11: Recent developments

    Recent developments Awards Recognitions: New Product: Dec 2017: TU won Investor Relations Awards from IR Magazines South East Asia 2017, receiving Best in Sector; Consumer staple, alongside with another ten Thai listed companies Fisho Alaska Salmon Innovation: Nov 2017: Thai Union awarded Outstandin

  12. Slide 12: Recent developments: Sustainability

    Recent developments Sustainability: Dec 2017 Thai Union and Nestlé have launched a demonstration boat to promote human rights of workers in the Thai fishing industry. The boat is the first of its kind in Thailand. Dec 2017: TU received Jan 2018: Thai Union’s Global Director for Sustainable 2017 Best

  13. Slide 13: 2017 dividend payment grew along with net profits

    2017 dividend payment grew along with net profits Final dividend for the period: 1 Jul 17 to 31 Dec 17 DPS THB 0.34 Book closing date 7 March 2018 Payment date 23 April 2018 +9.0% p.a. THB/Share +5% YoY 0.70 59.9% 0.60 56.7% 53.5% 57.2% 52.3% 50.1% 50.4% 50.6%50.7% 50.0% 51.3% 50.5% 0.50 0.40 29.4%

  14. Slide 14: IR Thai Union Line@ Official Account

    IR Thai Union Line@ Official Account NEW WAY TO COMMUNICATE WITH THAI UNION INVESTOR RELATIONS What can you find on this line account? • Official announcements • Official news releases • Investor Relations Activities • Information updates • Others Scan QR code or search for @irthaiunion to join us t

  15. Slide 15: Agenda

    Agenda Key Highlights Recent Developments 4Q17 Financial Results  TU’s Consolidated Results  Results by Business Unit Business Outlook Page 15

  16. Slide 16: CFO quote on cash return and shareholder wealth

    “We are determined to grow cash return and shareholder wealth. Cash is king.” Joerg Ayrle Group Chief Financial Officer Page 16

  17. Slide 17: The key take away for 4Q17 results

    The key take away for 4Q17 results • Sales at 35.1bn, slightly below TU’s record in 3Q17 (35.2bn) representing +4.1% growth, mainly coming from Thai operations Strong top line growth • At constant exchange rates, sales would have increased by 6.6% vs. last year • GPM dilution experienced in Petcare,

  18. Slide 18: 4Q17: Profitability profile intact amid challenging environment

    4Q17: Profitability profile intact amid challenging environment  Amid the average quarterly tuna prices over the past 12 months , TU’s profitability remain resilient  Income contribution from other income and prudent FX and tax management support net profit margin Total Sales (THB mn) 2,200 2,010

  19. Slide 19: Tuna prices started to decline toward end-4Q17

    Tuna prices started to decline toward end-4Q17 3,000 4Q17 3Q17 2,033 2,500 2Q17 2,010 1Q17 1,763 2,300 2Q16 4Q16 1,633 2,100 1,503 3Q16 1,508 1,950 1,980 2,000 1Q16 1,433 2,000 1,900 1,257 1,800 1,700 1,700 1,690 1,700 1,600 1,610 1,625 1,550 1,500 1,500 1,500 1,450 1,450 1,500 1,400 1,400 1,400 1,1

  20. Slide 20: 2017 Another consecutive record sales year

    2017 Another consecutive record sales year Sales +4.1% YoY (+6.6% excluding FX impact) THB mn -0.2% QoQ  4Q17 sales grew by 4.1% YoY to THB 35,105mn. Sales in US dollar term was the up 6.6% YoY, 33,715 34,818 35,185 35,105 driven by: 31,427  Ambient seafood sales delivered solid growth despite Tha

  21. Slide 21: 4Q17 good sales growth, slowed by the FX impact

    4Q17 good sales growth, slowed by the FX impact Revenue growth component (THB million) +4.1% YoY +1.6% YoY +1,606 -1,978 +1,441 -781 -349 +371 +854 -1,108 136,535 +2,104 134,375 +10% -13% -3% +3% +9% -4% -3% +189 -756 +5% +245 +426 -73 +5% -80 +128 +4% -91 35,105 +1,402 -6% +10% -3% +4% +5% -7% -1%

  22. Slide 22: Strong growth in emerging market and Thailand

    Strong growth in emerging market and Thailand Sales Breakdown by Geographic  2017 Sales contribution in key markets marginally 100% shifted in favor of domestic and emerging market, 14% 13% 14% 13% 15% due partly to strong penetration effort in the 80% 8% 7% 6% 6% 6% 7% 7% 8% 8% 10% Others* emergin

  23. Slide 23: Gross margin under pressure from high raw material prices

    Gross margin under pressure from high raw material prices 30.0% 28.0% Gross Profit -1.0% YoY 26.0%  4Q17 Gross profit of THB 4,484mn, slightly THB mn -3.7 QoQ declined YoY, despite further margin compression 24.0% as the tuna price remain high through much of 22.0% 4Q17 and the impact of high price

  24. Slide 24: Operating profit: Strong cost control continued

    Operating profit: Strong cost control continued 15.0% Operating Profit 13.0% -28.3% YoY THB mn -32.9% QoQ 11.0%  4Q17 Operating profit of THB 885mn, down 28.3% YoY, driven by weak profitability from rising raw 9.0% material prices and a number of business restructuring expenses. 1,627 7.0% 1,319 

  25. Slide 25: FX hedging impact adjustment

    FX hedging impact adjustment* 30.0% Adjusted Gross Profit THB mn 28.0% +7.4% YoY -4.8% QoQ 26.0%  With Baht significantly appreciating against key -2.5% YoY 19,985 19,019 24.0% foreign currencies, the company has incurred a significant FX impact during 2017. Should the 22.0% hedge accounting been a

  26. Slide 26: EBITDA up 40% in 4Q17 supported by FX management

    EBITDA up 40% in 4Q17 supported by FX management 28.0% EBITDA +40% YoY THB mn -1.3% QoQ 23.0%  Despite a weak operating profit, TU reported 4Q17 EBITDA of THB 2,951mn, up 40% YoY but 18.0% down 1.3% QoQ. The increase was driven mostly 2,899 2,874 2,990 2,951 by prudent FX management.  2017 EBITDA

  27. Slide 27: 2017 Record profits, despite challenging environment

    2017 Record profits, despite challenging environment 14.0% Net Profit +55.6% YoY THB mn 12.0% -19.2% QoQ  Despite the challenging operating environment, 10.0% 4Q17 net profit of THB 1,404mn, up 55.6% YoY 8.0%  The net profit improvement was driven by: 1,737 1,469 1,404  Increased other income fro

  28. Slide 28: Normalized net profit was at THB1,338mn

    Normalized net profit was at THB1,338mn 20.0% Normalized 18.0% Net Profit -6.0% YoY THB mn 16.0%  Excluding the one-off quarter-end items, 4Q17 -15.9% QoQ 14.0% normalized net profit was at THB 1,338mn, 12.0% representing 6.0% decline YoY 10.0%  One-off positive items during 4Q17 of THB 104mn 1,59

  29. Slide 29: EPS: Solid growth despite operational headwinds

    EPS: Solid growth despite operational headwinds EPS* +55.6% YoY THB -19.2% QoQ  4Q17 EPS was at THB 0.29, up 55.6% YoY, despite challenging operational headwinds 0.37 0.31 0.29 0.29 0.19 4Q16 1Q17 2Q17 3Q17 4Q17 +14.6% YoY 1.26 1.07 1.10 0.98 0.60 2012 2013 2014 2016 2017 Remark: *EPS in this slide

  30. Slide 30: 2017 free cash flow remain positive

    2017 free cash flow remain positive Quarterly Free Cash Flow THB mn  Despite rising raw material prices, 2017 Free cash flow (FCF) remain positive at THB 3.0bn, due 1,751 mainly to profitable operation, stringent working capital control and prudent capex spending 1,049 280 10 -142 4Q16 1Q17 2Q17 3Q

  31. Slide 31: Securing long-term funding

    Securing long-term funding Interest-bearing debts of THB 67,297mn By Currency By Maturity EUR 1.0% 1.0% USD 23% 1.3% 2018 0.9% Short-term 2% Loan 56% 2019 Current Portion of Long- 2020 THB 97.7% 98.1% term Debt 5% 2% & finance lease 2021 39% 76% onwards Long-term 42% Debt 2016 2017 2016 2017 Long-te

  32. Slide 32: 2017: Debt profile affected by lower than planned EBITDA

    2017: Debt profile affected by lower than planned EBITDA, NWC increase and Capex, commitment to strong dividend policy Unit: THB mn ND/E 1.37x Free Cash Flow* THB 2,384 mn Income tax paid and other investing & financing activities ND/E 1.38x Kd = 2.74% Kd = 3.21% Adjusted ND/E= 1.13x*** +3,399 -566

  33. Slide 33: Debt remains under control, improved ROE

    Debt remains under control, improved ROE ROE1 INV Days Debt to EBITDA 13.7% 5.85x 5.92x 131 124 126 4.25x 12.2% 118 3.40x 11.9% 11.8% FY14 FY15* FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Net WC3 ND/E4 ROCE2 12.5% 129 12.0% 1.37x 1.38x 10.6% 123 8.9% 114 0.85x 0.76x 113 44,438 41,070 42,926 4

  34. Slide 34: Agenda

    Agenda Key Highlights Recent Developments 4Q17 Financial Results  TU’s Consolidated Results  Results by Business Unit Business Outlook Page 34

  35. Slide 35: Key operating impact: Raw material prices begin to consolidate in 4Q17

    Key operating impact: Raw material prices begin to consolidate in 4Q17 Raw material prices Continuous rise over 2017 but softening towards Y/E  Tuna price closed at USD 1,550/ton in January. In 4Q17, average price was at USD 2,033/ton (+34.8% YoY, +1.2% QoQ)  Shrimp price closed at THB 180/kg in J

  36. Slide 36: Key operating impact: Exchange rate

    Key operating impact: Exchange rate USD/THB EUR/THB Continuous depreciation in 2017  USD/THB closed at 31.89 in January. In 4Q17, average USD/THB was at 32.95 (-6.9% YoY, -1.3% QoQ) Brexit vote Almost stable since Brexit vote  EUR/THB closed at 38.87 in January. In 4Q17, average EUR/THB was at 38.

  37. Slide 37: Thai Union's global footprint

    Thai Union’s global footprint Page 37

  38. Slide 38: 3 strategic business segments

    3 strategic business segments Total 2017 sales: THB 136,535 mn Frozen, chilled seafood PetCare, value added and Ambient seafood Sales: THB 61,145 mn and related others Sales: THB 57,315 mn Sales: THB 18,074 mn Shrimp & related Tuna business PetCare business1 Ambient & Pouch Frozen, chilled & Value-a

  39. Slide 39: Ambient Seafood: Product price adjustment taking foothold

    Ambient Seafood Product price adjustment taking foothold Sales (THB million) Quantity (Tons) +7.3% YoY +0.1% YoY +0.1% YoY -3.0% YoY -6.1% QoQ -4.6% QoQ 61,077 400,000.00 399,000.00 398,000.00 397,000.00 396,000.00 375, 364, 68,000.00 67,000.00 66,000.00 61,145 395,000.00 394,000.00 393,000.00 392,0

  40. Slide 40: Frozen, chilled seafood and related: Resilient business outlook

    Frozen, chilled seafood and related Resilient business outlook Sales (THB million) Quantity (Tons) +2.4% YoY +2.7% YoY -0.2% YoY +3.8% YoY +6.2% QoQ -3.9% QoQ 58,000.00 55,832 57,315 250,000.00 249,000.00 248,000.00 247,000.00 246,000.00 245,000.00 239,156 248, 57,000.00 56,000.00 244,000.00 243,000

  41. Slide 41: PetCare, value-added and others: PetCare profitability under pressure

    PetCare, value-added and others PetCare profitability under pressure Sales (THB Million) Quantity (Tons) 0.04% YoY +3.5% YoY +8.2% YoY +8.2% YoY -0.7% QoQ +3.7% QoQ 19,000.00 18,0 160,000.00 159,000.00 158,000.00 157,000.00 156,000.00 155,000.00 154,000.00 153,000.00 152,000.00 151,000.00 150,000.00

  42. Slide 42: Global Presence

    Global Presence 40% 32% U.S. And Europe Canada 10 Thailand % 19% Others Page 42

  43. Slide 43: US & Canada, Sales growth hinder by currency

    US & Canada, Sales growth hinder by currency Sales:THB -2.0% YoY -2.4% YoY 55,580 54,465 +2.2% QoQ 14,393 13,190 13,467 13,753 14,054 4Q16 1Q17 2Q17 3Q17 4Q17 2016 2017  2017 US and Canada sales was at THB54.5bn, down by 2.0% YoY. In US dollar term, the sales actually grew by 2.2% YoY to USD 1.6bn.

  44. Slide 44: Europe: Stable growth despite challenges

    Europe: Stable growth despite challenges Sales:THB -1.2% YoY +1.6% YoY -7.9% QoQ 43,722 43,185 11,949 11,183 10,134 9,758 10,295 4Q16 1Q17 2Q17 3Q17 4Q17 2016 2017  2017 European sales was at THB43.2bn, down by 1.2% YoY. In US dollar term, the sales actually grew by 2.9% YoY to USD 1.3bn.  Rising

  45. Slide 45: Thailand: Strong growth through new product launches

    Thailand: Strong growth through new product launches Sales:THB +17.3% YoY +17.7% YoY 13,010 -22.6% QoQ 11,088 4,317 3,342 2,839 2,803 2,549 4Q16 1Q17 2Q17 3Q17 4Q17 2016 2017  2017 Thailand sales was at THB13.0bn, up by 17.3% YoY.  Sales are driven by tuna product repricing to reflect the high tun

  46. Slide 46: EM and Rest of the world: New market penetration

    EM and Rest of the world: New market penetration Sales:THB +8.0% YoY +20.5% YoY 25,875 +25.0% QoQ 23,954 7,414 6,153 6,598 5,931 5,932 4Q16 1Q17 2Q17 3Q17 4Q17 2016 2017  2017 Emerging markets sales of THB 25.9bn, up 8.0% YoY.  The initiatives to sell frozen products into China through both own br

  47. Slide 47: 2017 Segment Profitability

    2017 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 61,145 15.5% 9,462 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 57,315 9.2% 5,297 THB 18,141 million related *Shrimp & related busin

  48. Slide 48: Agenda

    Agenda Key Highlights Recent Developments 4Q17 Financial Results Business Outlook Page 48

  49. Slide 49: 2018 Guidance

    2018 Guidance FY 2018 Sales +5% YoY GPM Below 15% SG&A Below 10% Effective interest rate No material change from 2017 Effective tax rate 15% CAPEX Approx. THB 4.8bn Dividend policy At least 50% dividend payout Page 49

  50. Slide 50: Appendix

    ia Thai Page $0 ® Union

  51. Slide 51: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 29 December 2017 Share price (20 Jan 2018) : THB 20.40 Historical price : Chansiri Family 52-week high THB 22.70 21.0% 52-week low THB 17.70 No. of paid up shares : 4,771.82mn Niruttinanon Par value

  52. Slide 52: 4Q17 Income Statement

    4Q17 Income Statement Consolidated 4Q17/ 4Q17/ % % % (Unit: THB mn) 4Q17 4Q16** 3Q17 4Q16 3Q17 to sales to sales to sales Change Change Sales 35,105 100% 33,715 100% 35,185 100% 4.1% -0.2% Cost of sales (30,621) -87.2% (29,184) -86.6% (30,528) -86.8% 4.9% 0.3% Gross profit 4,484 12.8% 4,531 13.4% 4,

  53. Slide 53: 2017 Income Statement

    2017 Income Statement 2017/ % % (Unit: THB mn) 2017 2016** 2016 to sales to sales Change Sales 136,535 100% 134,375 100% 1.6% Cost of sales (118,395) -86.7% (114,448) -85.2% 3.4% Gross profit 18,141 13.3% 19,927 14.8% -9.0% SG&A expenses (13,429) -9.8% (13,122) -9.8% 2.3% FX gain (loss) 1,256 0.9% 8

  54. Slide 54: Statement of Financial Position as of 31 December 2017

    Statement of Financial Position as of 31 December 2017 % to total % to total (Unit: THB mn) 2017 2016 Change assets assets Cash and cash equivalents* 878 0.6% 976 0.7% -10.0% Trade and other receivables - net 16,344 11.2% 16,412 11.5% -0.4% Inventories - net 43,360 29.6% 39,626 27.8% 9.4% Other curr

  55. Slide 55: 2017 Statement of Cash Flow

    2017 Statement of Cash Flow Consolidated (Unit: THB mn) 2017 2016 Change Profit before income tax 6,393 6,443 (49) Adjustments for depreciation & amortisation expenses 2,761 2,983 (222) Other adjustments 1,383 1,660 (276) Changes in operating assets and liabilities (2,862) (1,609) (1,253) Cash flows

  56. Slide 56: Thank you

    Thank you Corporate website: http://www.thaiuniongroup.com IR website: http://www.thaiuniongroup.com/en/investor.ashx E-mail: [email protected] Tel:56+66 2298 0024 Page

Thai Union Group Public Company — Q4 2017 Earnings Presentation on 6ix