Thai Union’s profits hit new high despite drop in sales value
Despite a decline in sales, seafood giant Thai Union saw record-breaking profits last year.
Announcing its Q4 and year-end results on 17 February, Thai Union said its gross profit, for the first time, exceeded THB 20 billion (USD 640.6 million, EUR 591 million) in 2019, rising 6.4 percent year-on-year, largely driven by the improvement in gross profit in its three business segments comprising ambient seafood, frozen, and chilled seafood, and value-added.
The tuna giant’s earnings before interest, taxes, depreciation, and amortization (EBITDA) also rose 9.2 percent year-on-year to an all-time high of THB 12 billion (USD 384.4 million, EUR 354.6 million) in 2019.
“Thai Union continues to focus on profitability throughout our core operations, new value-enhancing businesses, and our existing strategic investments,” Thai Union CEO Thiraphong Chansiri said. “As this set of results closes out the last decade, we can be very proud of the work we have done and the progress we have made throughout the last 10 years. As we enter the new decade, I am confident that we will continue to lead on sustainability and innovation investment.”
The company’s 2019 sales, however, went down 5.3 percent to THB 126.3 billion (USD 4.04 billion, EUR 3.73 billion) due mainly to the appreciation of the baht against key trading currencies. The sales in the fourth quarter of 2019 also dropped 8.8 percent to THB 32.85 billion (USD 1.05 billion, EUR 970.8 million).
"Excluding FX [foreign exchange] impact, sales would have registered a decline of 3.7 percent, amid sales volume growth of 2.7 percent, due to key raw material prices decreased (average tuna price at USD 950 [EUR 876] per metric ton during the fourth quarter of 2019, down 33 percent year-on-year)," it said.
Sales of ambient, or shelf-stable, seafood products in the fourth quarter fell 11.5 percent year-on-year to THB 13.27 billion (USD 425 million, EUR 392 million), because of the appreciation of Thailand's currency, the baht, and lower tuna prices.
Sales of frozen and chilled seafood segment in the quarter also saw a decline of 6.1 percent to THB 14.69 billion (USD 470 million, EUR 434 million) while sales of pet care and value-added segment were 8.8 percent lower year-on-year to THB 4.8 billion (USD 153.7 million, EUR 141.8 million).
The United States generated 39.5 percent of total sales for Thai Union last year, up from 37.7 percent in 2018; followed by Europe with 27.8 percent, down from 30.4 percent in 2018; and Thailand with 12.4 percent, up from 10.5 percent in 2018.
Despite a sharp decline in 2019, the price of Thai Union’s skipjack tuna in January of this year surged 42.1 percent to USD 1,350 (EUR 1,246) per MT from USD 950 (EUR 876) per metric ton in the fourth quarter of last year. Prices of whiteleg shrimp in the month also went up 9 percent to THB 158 (USD 5.00, EUR 4.70) per kilogram, up 9 percent from the last quarter of 2019.
This year Thai Union targets to increase its sales by 3 to 5 percent from 2019, with a capital expenditure of THB 4.9 billion (USD 157 million, EUR 144.8 million).