Chicken of the Sea’s settlements with a majority of plaintiffs in their lawsuits over allegations of fixing the prices of canned tuna in the United States cost parent firm Thai Union THB 1.4 billion (USD 45.6 million, EUR 40.8 million), the company’s second-quarter earnings report revealed.
Bangkok, Thailand-based Thai Union saw nearly all of its net profit in the quarter – THB 1.5 billion (USD 49.2 million, EUR 44 million) – canceled out by the cost of the settlements.
“We share this updated litigation status as Chicken of the Sea has now appropriately provided for any financial impact,” Thai Union Chief Financial Officer Joerg Ayrle said in a press release.
Thai Union is the world’s largest producer of shelf-stable tuna products, with annual sales exceeding THB 133.3 billion (USD 4.3 billion, EUR 3.9 billion). Its seafood brands include Chicken of the Sea, John West, Petit Navire, Parmentier, Mareblu, King Oscar, SEALECT, Qfresh, Marvo, and Rügen Fisch.
The company reported a 13.1 percent increase in gross profit and a 16.7 percent increase in gross profit margin in Q2, with gross profits reaching THB 5.4 billion (USD 175.7 million, EUR 157.2 million). The company said improved performances from the frozen seafood, pet care, and value-added product businesses pushed its earnings before earnings before interest, tax, depreciation, and amortization (EBITDA) up 15.4 percent compared to Q2 of 2018. However, its consolidated sales declined 4.6 percent year-on-year to THB 32.2 billion (USD 1.1 billion, EUR 937.5 million), which the company blamed on the appreciation of Thai baht, the depreciation of the euro and other European currencies, and lower raw material prices.
“Profitability remains a key focus for us at Thai Union, and the overall performance in the second quarter was pleasing, particularly in a challenging operating environment,” Thai Union CEO Thiraphong Chansiri said. “As we look ahead, Thai Union will continue to see new innovative products developed and launched into market, which will provide us with new revenue streams as we work to build a business with sustainable growth.”
Thai Union said it sold THB 14 billion (USD 455.5 million, EUR 407.6 million) worth of ambient seafood in Q2, down 14.3 percent year-on-year, and THB 13.4 billion (USD 436 million, EUR 390.1 million) worth of frozen and chilled seafood, up 3.6 percent year-on-year. Its pet care and value-added product sales increased 6.7 percent to THB 4.8 billion (USD 156.2 million, EUR 139.7 million) from the second quarter of 2018, with sales volume growth of 5.9 percent, the company said.
In the first half of 2019, North America contributed 39 percent of Thai Union’s total sales, Europe accounted for 29 percent of sales, the Thai domestic market followed next at 12 percent, and other markets contributed 19 percent of the compay’s total sales.
Also in Q2, Thai Union opened its expanded Global Innovation Center in Bangkok, which is now more than 5,000 square meters in size. The facility houses more than 160 scientists and researchers working in product development, innovation, and improving company performance.
Photo courtesy of Thai Union
