Thai Union Group reported higher sales and operating profit margin for its fiscal first quarter, despite the public relations fiasco and customer losses after the Associated Press reported the company’s third-party shrimp contractors engaged in forced labor.
Annual sales rose 9.3 percent to THB 31.3 billion (USD 887 million, EUR 781 million) for the global seafood supplier. Thai Union’s acquisition of Rügen Fisch contributed to the sales growth, as well the company’s emerging market strategy that has “begun to show positive results from its Middle East joint venture,” according to a statement from the company.
After a positive quarter, Thai Union is looking to make additional investments.
“Our financial position has improved, thanks to strong free cash flows … This means that we are ready for any new investment opportunity that could further support our growth strategy,” said Thiraphong Chansiri, president and CEO of Thai Union Group.
At the same time, Thai Union’s net profit plunged 19 percent to THB 1.2 billion (USD 35 million, EUR 30.7 million) compared to a year ago. This was the result of an absence of a sizeable foreign exchange gain of as much as THB 1.1 billion (USD 31.9 milion, EUR 28.1 million) which was reported last year, when compared with a foreign exchange gain of THB 264 million (USD 7.5 million, EUR 6.6 million) this quarter.
“Despite the seasonal low period, we have still managed to generate a 9.3 percent increase in sales for this quarter from a year ago,” Chansiri said. “This is another example of our resilience and ability to grow, despite challenges faced by both the global and Thai seafood industries. Volatile foreign exchange rates, tuna and shrimp prices and uncertain global economic conditions and sustainability issues faced by the country have not discouraged us from outperforming the industry.”
The company’s operating profit for the first quarter of 2016 jumped up 54.6 percent to THB 1.5 billion (USD 41.2 million, EUR 36.2 million) from THB 940 million a year ago. In addition, Thai Union’s quarterly gross profit margin improved significantly to 15.15 percent from 13.8 percent. The higher operating margin was primarily the result of low tuna and shrimp raw material costs and a weak Thai baht, according to the company.
“Other contributing factors included the continually improving pet care business, the strong branded ambient seafood business in Europe, as well as better overall margins in its U.S. subsidiaries,” Thai Union said.
Ambient, or shelf-stable, seafood products accounted for the majority of the company’s sales at 49 percent, followed by frozen, chilled and related seafood at 39 percent. Pet care, value-added and other products accounted for 12 percent of the company’s sales.
The tuna category still commanded the largest share of sales for Thai Union, accounting for 38 percent of its business. Shrimp and related business (26 percent) accounted for the second highest sales category, followed by salmon (9 percent); sardine and mackerel (9 percent), pet food (7 percent) and value-added and other products (11 percent).
