Samut Sakhon, Thailand-based Thai Union reported an increase in sales and profits in the second quarter of 2024 thanks to continued recovery in demand for a variety of its core product categories, according to the company’s latest results report released 7 August.
Thai Union’s sales in Q2 2024 rose to THB 35.3 billion (USD 990 million, EUR 907 million, which was up 3.6 percent year over year and 6.2 percent quarter over quarter. The company attributed these gains to a recovery in sales of its three core categories: ambient, petcare, and value-added products.
Its sales of ambient seafood increased 1.4 percent year over year to THB 17.4 billion (USD 487.8 million, EUR 446.6 million), fueled by robust demand in the U.S., Canada, and the Middle East.
Petcare sales soared 40.6 percent compared to a year earlier, reaching THB 4.5 billion (USD 125 million, EUR 114.5 million) thanks to a growth in demand in the U.S. and Europe.
Despite a decrease in sales volume, Thai Union’s value-added products also saw a year-over-year sales increase of 15.5 percent to THB 2.6 billion (USD 73.2 million, EUR 67 million) due to higher selling prices.
One of the only categories that struggled in the quarter was Thai Union’s frozen sales, which declined by 5.7 percent year over year to THB 10.8 billion (USD 304.3 million, EUR 278.6 million), driven by lower demand impacted by a rightsizing strategy in the U.S.
“The ongoing recovery of our ambient, petcare and value-added businesses resulted in a strong performance during the second quarter,” Thai Union CEO Thiraphong Chansiri said. “Maintaining the solid momentum from the first quarter was particularly pleasing, and I’m confident that after successfully navigating the challenges we faced in 2023, we are on the path toward sustainable growth.”
The recovery in sales of ambient, petcare, and value-added products also helped drive the company’s net profit, which totaled THB 1.2 billion (USD 34.2 million, EUR 31.3 million) in the quarter, up 14.2 percent from its adjusted net profit in Q2 2023. The Q2 profits from last year excluded the share of loss and tax credit from restaurant chain Red Lobster, which declared bankruptcy on 20 May.
Thai Union’s Q2 2024 gross profit surged 13.7 percent year over year to THB 6.5 billion (USD 183.4 million, EUR 168 million), with its gross profit margin (GPM) rising to 18.5 percent in the second quarter from 16.9 percent in the same period last year. The GPM in the quarter reached the second-highest mark in the company’s history and was the highest level in the past 12 quarters.
Thai Union's operating profit showed Q2 growth of 10.6 percent year over year to THB 1.96 billion (USD 55.2 million, EUR 50.5 million), which the company said was just slightly below its “satisfactory level” of THB 2 billion (USD 56 million, EUR 51.4 million).
Notably, Thai Union’s share of profit from its associates and joint ventures jumped 237 percent to THB 179 million (USD 5 million, EUR 4.6 million) during April to June of this year, with the share of profit from Avanti Group in India, which is a joint venture between Thai Union and R&B Food Supply, accounting for 75 percent of the total.
The increase in Thai Union’s share of profit from its associates and joint ventures was also largely due to its exit from the Red Lobster seafood restaurant chain in the U.S.
Thai Union originally 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 stake. 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.
Thai Union posted a loss of THB 17.2 billion (USD 482.9 million, EUR 442 million) in Q4 2023, which included a write-off of its investment in Red Lobster.
Its Red Lobster woes are not over, however, as the bankrupt chain announced it was investigating the Thai food group’s “undue influence” on its shrimp-purchasing decisions. Thai Union, for its part, denies the claims and alleges that the chain owes it nearly USD 4 million (EUR 3.7 million) in demand forecast discrepancies.
In H1 2024 overall, Thai Union saw its sales rise 2.7 percent year over year to THB 68.5 billion (USD 1.92 billion, EUR 1.76 billion). Its gross profit surged by 15.1 percent year over year to THB 12.3 billion (USD 344.7 million, EUR 315.6 million), while its GPM increased to 17.9 percent, up from 16 percent in the first six months of 2023.
The company’s net profit over January to June also grew 30.6 percent year over year to THB 2.4 billion (USD 66.6 million, EUR 61 million).
Additionally, Thai Union announced it has completed a share-buyback program in the first half of 2024, repurchasing a total of 200 million shares in a process that ended late July. This was Thai Union’s third share-buyback program, aimed at rewarding shareholders by returning surplus capital and enhancing earnings per share.
The company also said it commenced operation at a new cold storage facility for tuna in Ghana, with a capacity of 8,000 metric tons (MT), on 18 July. The project aims to reduce costs associated with external renting of storage space, lowering dependence on supplies and promoting energy savings.
