Thai Union’s Q3 sales down on baht appreciation, falling material prices
Seafood giant Thai Union reported sales of THB 31.838 billion (USD 1.05 billion, EUR 944 million) in the third quarter of this year, falling 6.8 percent year-on-year due mainly to a significant appreciation of Thai baht against key currencies and a decline in raw material prices.
The U.S. dollar lost 6.9 percent year-on-year, while the euro and British pound devalued 11 percent and 12 percent against the baht, respectively, during the quarter.
The average price of tuna between July and September went down 17 percent from a year ago to USD 1,217 (EUR 1,091) per ton, Thai Union said. Shrimp price also decreased – by 9.5 percent year-on-year to THB 143 (USD 4.73, EUR 4.24) per kilogram – according to the company.
Thai Union’s sales volume in the quarter rose 3.8 percent year-on-year as frozen and chilled seafood and other business segments saw a growth in sales volume.
"Consumers continue to respond positively to our expanding product line-up, which helped lift our sales volumes during the third quarter," said Thai Union CEO Thiraphong Chansiri. "However, volatile currency markets created challenging market conditions for Thai exports and put pressure on our bottom line.”
He added that Thai Union remains firmly focused on product diversification for its long-term growth. The company is also committed to continuous improvements, Chansiri said, as well as the streamlining of its operations to help limit pressure on its margins.
The company’s gross profit in the quarter fell 6.1 percent to THB 5.077 billion (USD 167.9 million, EUR 150.5 million) from weak sales. Meanwhile, its net profit in the quarter was THB 1.37 billion (USD 45.3 million, EUR 40.6 million), sliding 20.6 percent from the same period last year.
From January to September, Thai Union reported sales of THB 93.42 billion (USD 3.09 billion, EUR 2.77 billion), down 4 percent year-on-year driven partly by the baht appreciation against key trading currencies and by falling raw material prices.
The company earned gross profit of THB 14.82 billion (USD 490.2 million, EUR 439.4 million) in the first nine months, up 9.5 percent year-on-year. Its net profit during January through September also edged up 4.8 percent from a year earlier, to THB 4.16 billion (USD 137.6 million, EUR 123.4 million), with profitability improvement against currency volatility.
Between January and September, North America contributed 38 percent of total sales for Thai Union, followed by Europe at 31 percent, the Thai domestic market at 13 percent, and other markets at 18 percent.
The first nine months showed the company’s branded sales mix at 42 percent, compared to 41 percent during 2018, and private label sales contributing the remaining 58 percent.
Thai Union said its ambient seafood sales in the third quarter were THB 14.46 billion (USD 478.5 million, EUR 428.9 million). The section's sales declined from the previous year largely due to falling tuna prices and the Thai baht's appreciation against key trading currencies.
Thai Union’s frozen and chilled seafood business sales volume increased 15.2 percent to 73,084 metric tons in the third quarter. However, due to the falling shrimp price, the segment's sales were THB 12.76 billion (USD 422.3 million, EUR 378.6 million), down 2 percent year-on-year amid an improving gross margin.
Its PetCare and value-added product sales increased 6.3 percent to THB 4.6 billion (USD 152.1 million, EUR 136.4 million) from the third quarter of this year, with sales volume growth of 2.6 percent.
Last month, Thai Union declared that its business will not be impacted after the United States Trade Representative (USTR) announced that it was rescinding some trade preferences for Thailand.
Thai Union also said on 31 October its United Kingdom-based subsidiary John West Foods has been cleared of doing business directly connected to illegal, unreported, and unregulated fishing (IUU), with which it had previously been charged.
Thai Union stated it continues to invest in innovation. The company recently created a venture fund with an initial commitment of USD 30 million (EUR 26.9 million). The first investment was announced into Flying Spark, an alternative protein producer. Another program that endorses startups is SPACE-F, the first global FoodTech in Thailand. After the launch of a partnership with the National Innovation Agency and Mahidol University's Science Faculty, the SPACE-F program has recruited 24 startup incubators and accelerators worldwide, said Thai Union.
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