Samut Sakhon, Thailand-based seafood producer Thai Union reported a year-over-year rise in profits in the first quarter of 2024, with the company attributing the spike to demand recovery across its core product categories, according to its latest results report released 8 May.
The company’s Q1 2024 net profits rose to nearly THB 1.2 billion (USD 31.2 million, EUR 29 million), up 12.9 percent year over year. When compared to Q1 2023’s adjusted net profit, which excludes the share of profit and tax benefits it accrued from its investment in the Red Lobster seafood restaurant chain, Thai Union’s Q1 2024 net profit total represents a nearly 54 percent increase.
Thai Union’s Q1 2024 gross profit soared to THB 5.7 billion (USD 155.2 million, EUR 144.4 million), up 16.8 percent year over year, accompanied by a robust rise in gross profit margin (GPM) to 17.3 percent, compared to 15.1 percent in the year-ago period.
Likewise, Thai Union’s overall sales increased by 1.7 percent in the period compared to the same period in 2023, totaling THB 33.2 billion (USD 897.2 million, EUR 835 million), driven by improved performances across all business segments.
Strong rebounds in demand played out across the core categories of Thai Union’s production, such as ambient, petcare, and value-added products, rising even despite lower foreign exchange gains, reduced share of profit, higher costs, and increased interest expenses, the company said.
“Thai Union Group’s focus on our core business of ambient, frozen, and petcare has been instrumental in returning our business to growth,” Thai Union CEO Thiraphong Chansiri said. “Our group demonstrated great resilience during 2023 when we faced a challenging operating environment, and after seeing initial signs of a recovery in our performance in the final quarter of last year, I’m pleased to see that we have now emerged even stronger.”
Thai Union's sales of ambient seafood – which includes shelf-stable items such as canned tuna, sardines, salmon, mackerel, and herring sold through retail channels and, sometimes, wholesalers – grew 12 percent in volume and 12.7 percent year over year in value to THB 17.2 billion (USD 463.6 million, EUR 431.5 million). This total marked a record high sales contribution from the ambient category and came on the back of heightened demand across all regions, especially in the Middle East, Europe, and the U.S., the company said.
Thai Union’s petcare sales climbed 13.2 percent year over year to nearly THB 4 billion (USD 106.9 million, EUR 99.5 million) due to higher sales from its premium mix as well as price adjustments.
Sales in the value-added category climbed 10.8 percent to THB 2.5 billion (USD 67.3 million, EUR 62.6 million) compared to the first quarter of 2023, driven by an improved product mix.
Thai Union's financial situation was also impacted by a write-off of its investment in the struggling Red Lobster restaurant chain in late 2023. Thai Union upped its investment in Red Lobster in 2020, taking a larger stake in the chain as part of a consortium that bought out Golden Gate Capital’s remaining equity. However, in January 2024, after several consecutive periods of poor performance, Thai Union announced it aimed to pursue an exit from its strategic partnership and minority investment in Red Lobster Master Holdings, which it has held since 2016. Chansiri said in March he isn’t expecting to earn much from the sale of Red Lobster.
Thai Union posted a loss of THB 17.2 billion (USD 464.8 million, EUR 432.6 million) in the fourth quarter of 2023, culminating in its write-off of its investment in Red Lobster, which resulted in a one-time impairment charge of THB 18.5 billion (USD 530 million, 481 million) that applied to its Q4 2023 financial report
One of Thai Union's few categories that struggled in Q1 2024 was frozen seafood, the sales of which declined 17.7 percent year over year to THB 9.6 billion (USD 259.9 million, EUR 241.9 million) due to subdued demand in the U.S., especially for shrimp and crabmeat products. The implementation of a rightsizing strategy in the U.S. that has been ongoing since the second quarter of 2023 also contributed to this drop.
Thai Union’s overall sales in the U.S. and Canada made up 38.6 percent of its total revenue, followed by 29.6 percent from Europe, 10.9 percent from Thailand, and 20.9 percent from other regions.
Also in Q1 2024, Thai Union launched a shrimp decarbonization initiative in partnership with global environmental organization The Nature Conservancy and Ahold Delhaize USA, with the aim of decreasing greenhouse gas emissions across its shrimp supply chain. Other sustainability achievements included an announcement that Thai Union Feedmill became the first feedmill in Asia to be awarded Aquaculture Stewardship Council Feed certification, along with the introduction of its zero-wastewater discharge project at a fish plant in Thailand.
Elsewhere, earlier this year, Thai Union implemented its third share-buyback program to enhance earnings per share and reward shareholders by returning surplus capital. The program, capped at THB 3.6 billion (USD 97.3 million, EUR 90.5 million), or 200 million shares, had already led to the repurchasing of 86 million shares by the end of March 2024. Thai Union intends to persist with share repurchases throughout the remainder of the program’s duration, the company said.
