Thai Union thrives amid bad news

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OUTLOOK
Thai Union thrives amid bad news
PIchaya Changsorn
The Nation


Thiraphong

BANGKOK: -- DESPITE all the bad news surrounding the Thai fishery industry, Thai Union Group has achieved a record level of free cash flow and higher profitability this year - and is forecasting brighter prospects for 2016.

President and chief executive Thiraphong Chansiri said the world's largest producer of canned tuna expected its sales to grow by 15-20 per cent in baht terms next year, thanks to an expected 5-10 per cent rise in raw-material prices, supportive exchange rates, and solid growth plans for both domestic and overseas subsidiaries.

"We should be able to maintain the high margin we have achieved in the second half of this year," he said.

Furthermore, the group is expected to reap benefits from many strategies that it initiated earlier.

These include: its global innovations initiative; its expansion to emerging markets, especially in the Middle East, where it has recently formed a joint venture with Savola Group, a major player in the region; a resumption of normal production volume in the Thai shrimp industry, which has been severely hit by disease; and Thai Union's foray into the marine-ingredients industry.

"Next year, we will see a clearer picture in regard to the direction of our US businesses. M&A [merger and acquisition] will continue to be our key strategy," he explained.

The US Department of Justice (DoJ) is expected to make a final decision on December 18 in its anti-trust investigation of Thai Union's proposed US$1.5-billion (Bt53.7 billion) acquisition of Bumble Bee Foods, a US packaged-seafood company that controls about 25 per cent of the US market. Thai Union would have to sell the seafood business of its US subsidiary, Chicken of the Sea, if it is going to acquire Bumble Bee Foods.

Chicken of The Sea commands a 17-per-cent share of the US seafood market.

Thiraphong said Thai Union, which earlier had to shelve a capital-raising plan after the announcement of the DoJ's anti-trust investigation, might not need to raise capital at this time since it now had more cash flow as a result of improved operations, while it would receive the proceeds from the divestiture of Chicken of the Sea's seafood business.

"Our financial position is strong. Our debt-to-equity ratio had come down from 0.85 times at the end of 2014 to 0.4 times at the end of the third quarter, and the downward trend is to continue," he said.

"Our free cash flow is also at a new high: during the first nine months of this year, our ebitda [earnings before interest, tax, depreciation and amortisation] totalled Bt13 billion, the highest level ever. In past years, our ebitda had been just over Bt10 billion for a full year," he added.

Meanwhile, capital expenditure by the group is expected to remain low, at about Bt3.5 billion next year.

Thai Union expects to further increase its share of existing markets in Europe and to expand to new European markets next year, thanks to a further integration of its European units acquired in recent years.

Although the group will miss its target of achieving $5 billion in overall revenue this year, due to the delay of its US acquisition plan, Thiraphong said he was confident it could achieve its longer-term goal of having annual sales of $8 billion by 2020. Thai Union targets its new marine-ingredients business contributing 10 per cent of global group profits in as soon as five years, up from zero at present.

These products include fish extracts, fish oil and other high-margin products that are linked to the nutrition and cosmetics industries.

Meanwhile, the macroeconomic situation is expected to have no impact on Thai Union at any of its major business units worldwide, thanks to the nature of its products, he stressed.

"While this year, there seems to have been many problems, our business fundamentals are still strong with ebitda at all-time high and a continued downward debt-to-equity ratio. This reflects our strength and resilience to external turbulence. So if this year has been a challenge, next year should be quite bright for us," said the chief executive.

Source: http://www.nationmultimedia.com/business/Thai-Union-thrives-amid-bad-news-30273651.html


-- The Nation 2015-11-25

[shirtless]

Prospects for the fishing industry is bleak anyway you spin it, apart from slave labor aspect , the Ocean is being turned into a radioactive cesspit thanks ti Japan Fukushima disaster.

[harada]

I don't think that the ball has started rolling yet.

[Srikcir]

The fishing industry's profitability may also have been helped by Prayut's government's with Bt250+ million in cash handouts to assist with UII compliance.

On the other hand Union profits may be impacted by an EU ban on Thai non-processed seafood worth around $320 million last year. Maybe that's the motivation to buy Bumble Bee.