Samut Sakhon, Thailand-based Thai Union posted an all-time-high gross profit margin (GPM) and a surge in net profit in Q3 2024 two quarters after it exited the beleaguered U.S. restaurant chain Red Lobster, according to its latest results report.
Thai Union invested millions into Red Lobster in 2016 and then was part of a consortium that acquired it outright in 2020, aiming to find synergies on supply and marketing. After Red Lobster posted years of consecutive losses, the company announced in January 2024 that it would divest from its minority share in Red Lobster and take a one-time non-cash impairment charge of THB 18.5 billion (USD 538.6 million, 503 million) in Q4 2023.
With Red Lobster no longer impacting its finances, Thai Union achieved a record-high GPM of 19.5 percent in Q3 2024, up from 18.4 percent a year earlier, thanks to significant growth in demand and a decline in raw material costs. Thai Union’s net profit grew to THB 1.4 billion (USD 40.7 million, EUR 38 million) in Q3 2024, up 4.4 percent year-on-year. If transformation costs are excluded, the company’s net profit could rise 21.8 percent year-on-year to THB 1.634 billion (USD 47.4 million, EUR 44.3 million), it said. Its net profit between January and September reached THB 3.772 billion (USD 110 million, EUR 102.5 million), up 15.8 percent year-on-year, while its GPM rose to 18.5 percent, up from 16.8 percent in the same period in 2023, Thai Union said.
The company’s gross profit over July-September also grew 9 percent year over year to THB 6.793 billion (USD 197.7 million, EUR 184.5 million), mainly thanks to improved demand across regions and a decrease in raw material prices.
The record margin and increased profits were largely driven by the Thai Union’s pet care segment, which reached a GPM of 30.6 percent in Q3 2024, up from 19.4 percent in Q3 2023, fueled by rising demand and higher share of premium products. Thai Union’s pet care sales surged to THB 4.435 billion (USD 129.3 million, EUR 120.7 million), 15.4 percent higher than the same period last year, mainly thanks to sales of its premium products and an increase in sales volumes from the company’s major markets in Europe and the U.S.
The GPM of its ambient seafood segment remained high at 20.1 percent thanks to rising sales volumes and falling raw material costs in the company’s inventory, but was slightly lower than the GPM of 20.4 percent in the same period last year due to lower tuna prices.
The company’s sales of ambient seafood between July and September amounted to THB 17.9 billion (USD 521.1 million, EUR 486.6 million), a year-on-year increase of 13.1 percent due to stronger demand from the U.S., Canada, and the Middle East.
Its sales of value-added products also saw a slight 1.3 percent increase year over year amounting to THB 2.7 billion (USD 78.6 million, EUR 73.4 million), primarily attributable to higher sales in packaging and value-added businesses driven by portfolio expansion to new customers.
"Thai Union's sustained strength in our ambient, pet care, and value-added categories led to a solid third-quarter performance," Thai Union CEO Thiraphong Chansiri said. "Our focus remains on delivering sustainable growth, with Strategy 2030 serving as the cornerstone of our long-term ambitions. This strategic approach ensures we are well-positioned to continue delivering value and supports our vision of becoming the world's leading marine health and nutrition company."
In the first nine months, Thai Union posted year-on-year sales growth of 2.7 percent at THB 103.343 billion (USD 3 billion, EUR 2.81 billion), with increases in ambient, pet care, and value-added businesses.
The GPMs of both Thai Union’s frozen business category and value-added segment dropped year-on-year, but improved compared to Q2.
The lack of losses caused by Red Lobster also boosted Thai Union’s share of profits from its associates and joint ventures for the quarter, which totaled THB 275 million (USD 8 million, EUR 7.5 million), primarily from Avanti Group and Lucky Union Foods.
Thai Union’s achieved an improved gross profit margin, net profit, and gross profit as the company’s sales revenue grew in the quarter. Revenue increased to THB 34.8 billion (USD 1.01 billion, EUR 946 million), representing a year-over-year increase of 2.7 percent and partially driven by a 10.4 percent jump in sales volume. The sales growth in the quarter stemmed from improved performance in its three core categories, including ambient seafood, pet care, and value-added products, the company said.
Thai Union’s frozen business shrank by 15.2 percent year over year to THB 9.836 billion (USD 286.4 million, EUR 267.4 million) in Q3 2024 largely due to weaker demand in the U.S. However, the feed sub-category within its frozen business grew 6.4 percent year-on-year to THB 1.4 billion (USD 40.1 million, EUR 38 million), owing to stronger demand for shrimp feed from Indonesia market.
Geographically, the U.S. and Canada made up 38.3 percent of Thai Union’s total sales in Q3, followed by Europe with 29.3 percent, Thailand with 11.5 percent, and other regions with 20.9 percent.
