Thai Union profits spike, despite economic challenges
Thanks to its Red Lobster acquisition – as well as favorable foreign exchange rates – Thai Union Group’s net profits soared 19.3 percent to THB 1,469 million (USD 42.4 million, EUR 38.8 million) in the first quarter.
However, gross profits dropped 13.3 percent to THB 4,330 million (USD 125 million, EUR 114 milion), and gross profit margin fell from 16 percent in the first quarter of 2016 to 13.8 percent in the first quarter of 2017. “Higher raw material prices, particularly in the tuna and shrimp businesses, along with currency appreciation, contributed to the weaker margin,” Thai Union said in a statement.
The Bangkok, Thailand-based supplier also recently announced a USD 90 million (EUR 82 million) investment in sustainability initiatives, including an aggressive tuna sustainability program.
“We’re pleased with our strong profit growth, despite persistent challenges in raw material costs coupled with variable economic conditions in many markets,” said Thiraphong Chansiri, CEO of Thai Union Group.“Our strategic investment in Red Lobster is already delivering positive results, and we are working together on a number of operational initiatives that will further strengthen their performance.”
Thai Union’s frozen and chilled seafood sales also rose 5.6 percent to THB 12,914 million (USD 373 million, EUR 341 million), in the quarter, “despite continued sluggish demand in Europe for the ambient business,” Thai Union said.
The supplier’s consolidated sales rose only 0.7 percent in the first quarter to THB 31,427 million (USD 908 milion, EUR 830 million). However, PetCare and value-added product sales grew 17.4 percent to THB 4,444 million (USD 128 million, EUR 117 million), thanks to new product launches and continued market penetration improvement.
Sales contributions from Thai Union’s own brands remained stable at 42 percent in the first quarter. The remainder of the sales were attributed to the supplier’s private label and food services business.
The U.S. remained the largest market with 40.3 percent of total sales in the first quarter, followed by Europe at 31 percent, the Thai domestic market at 8.1 percent, Japan at 6.4 percent and other markets at 14.2 percent.
As part of the new tuna sustainability strategy, which aims to ensure 100 percent of its branded tuna is sustainably sourced – Thai Union is investing USD 90 million in sustainability initiatives.
The investment will be used, in part, to establish 11 new Fishery Improvement Projects (FIPs) around the world. Thai Union also donated USD 50,000 (EUR 45,752) for a FIP in Indonesia.
In partnership with the Clinton Climate Initiative, Thai Union also recently broke ground on a wastewater and biogas project at its Indian Ocean Tuna Seychelles facility. The project will cut carbon emissions and reduce energy costs, while generating clean electricity and cleaner wastewater, according to the company.