Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — Q3 2016 Earnings Presentation

51 slides from Thai Union Group Public's earnings presentation, Nov 8, 2016

  1. Slide 1: 3Q16 Results Presentation

    3Q16 Results Presentation November 2016 Page 1

  2. Slide 2: Disclaimer

    Disclaimer The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance. These views are base

  3. Slide 3: Agenda

    Agenda  Key Highlights  Recent Developments  3Q16 Financial Results Page 3

  4. Slide 4: Agenda

    Agenda  Key Highlights  Recent Developments  3Q16 Financial Results Page 4

  5. Slide 5: Committed to USD 8.0bn revenue target by 2020

    “Through organic growth, innovation and M&A efforts, we are committed to the USD 8.0bn revenue target by 2020.” Thiraphong Chansiri President and Chief Executive Officer Page 5

  6. Slide 6: 3Q16: A billion-dollar quarter

    3Q16: A billion-dollar quarter YoY Chg % of sales  Record quarterly sales. 3Q16 sales growth 35,128 Sales (THB mn) +7.7% driven by consolidation of Ruegen Fisch and Chez Nous, as well as product repricing from increased raw material prices  Higher raw material prices. Gross profit 4,937 GP - 12.4%

  7. Slide 7: 9M16 Sales of THB 100.8bn, up 9.8% YoY

    9M16 Sales of THB 100.8bn, up 9.8% YoY Financial Summary1 9M16 Net Profit (THB million) down 4.2% YoY to Total Sales 9M16 9M15 100,825 91,850 +9.8% THB 4,352million 9M16 15,214 Gross Profit +3.0% Share price movement Q1’12 9M15 14,771 Q1’11 20152 20162 Operating 9M16 5,388 (Jan- Dec 15 ) (Jan- Nov 4

  8. Slide 8: 3Q16: Record quarterly sales – Solid bottom line

    3Q16: Record quarterly sales – Solid bottom line Total sales (THB mn) GPM NPM 60,000 20.0% 17.2% 17.3% 16.9% 18.0% 16.1% 15.7% 50,000 14.9% 15.5% 15.8% 16.0% 13.9% 13.8% 14.1% 14.0% 40,000 32,602 33,333 31,257 34,441 35,128 12.0% 30,258 30,423 32,772 30,642 30,000 27,948 28,606 10.0% 7.0% 8.0% 20,00

  9. Slide 9: Agenda

    Agenda  Key Highlights  Recent Developments  3Q16 Financial Results Page 9

  10. Slide 10: Recent developments

    Recent developments Recognition 26 Oct 16: TU has been ranked as Excellent CG Scoring (5-Star) from 30 Aug 16: TU received the ESG100 Sep 16: TU’s group CFO 12 Sep 16: TU has been named Corporate Governance Report of Thai award (Environmental, Social and received Finance Monthly to the Dow Jones Sus

  11. Slide 11: Excellent CG Scoring

    Excellent CG Scoring ( ) Oct 16: TU ranked as Excellent CG Scoring by Corporate Governance Report of Thai Listed Companies 2016 (CGR) Assessment criteria: 2015 vs. 2016 results Criteria Weight (%) Categories Symbol 2015 2016 2015 2016 2559 55 80 Rights of Shareholders 32 32 15 (9%) (13%) Equitable T

  12. Slide 12: Sustainability Update

    Sustainability Update Oct 16: TU has been shortlisted for Thomson Reuters Foundation's inaugural Stop Slavery Award Shortlisted for the STOP SLAVERY AWARD by Thomson Reuters Foundation, alongside:  The Stop Slavery Award was launched by the Thomson Reuters Foundation, to recognises companies that h

  13. Slide 13: Strategic investment in Red Lobster

    Strategic investment in Red Lobster Oct 16: TU announced strategic investment in Red Lobster, the world largest seafood restaurant Excellent reception of TU from RL's Board and employees, current trading ahead of plans  Excellent reception of TU as part of the Red Lobster board Company name: Red Lo

  14. Slide 14: New products under Petit Navire

    New products under Petit Navire Sep 16: TU launched a range of chilled smoked products under Petit Navire brand  New development with processing knowhow of MerAlliance  A range of chilled smoked products in France, under brand Petit Navire  Including salmon, cod, and tuna Page 14

  15. Slide 15: Sustainability Update

    Sustainability Update Sep 16: TU has been named to Dow Jones Sustainability Index for the third consecutive year  Selected to DJSI Emerging Markets for the third year running  SeaChange® drives Materiality Score to Industry Best-in-Class with strong improvement in Business Codes of Conduct and Lab

  16. Slide 16: Agenda

    Agenda  Key Highlights  Recent Developments  3Q16 Financial Results  TU’s Consolidated Results  Results by Business Unit Page 16

  17. Slide 17: Despite challenging operating environment, committed to solid growth

    “Despite challenging operating environment, we remain committed to deliver solid growth and enhance our shareholders’ value.” Joerg Ayrle Group Chief Financial Officer Page 17

  18. Slide 18: The key effects on our 3Q results

    The key effects on our 3Q results • Strong growth +7.7% A billion dollar quarter • Strong organic (2%) and acquisitions (5.8%) • Salmon prices somewhat more stable but strong Moderate salmon recovery but competitive pressure still negative margin • Negative gross margin • Unexpected high Tuna RM pri

  19. Slide 19: 3Q16 A billion dollar sales quarter

    3Q16 A billion dollar sales quarter Sales +7.7% YoY THB mn +2.0% QoQ  3Q16 sales grew by 7.7% YoY to THB 35,128mn (up 3.3% YoY in dollar term to USD 1.0bn), driven 34,441 35,128 by: 32,602 33,333 31,257  M&A-driven growth by recent consolidation of Rugen Fisch that boosted sardine and mackerel and

  20. Slide 20: 9M16 reported solid growth 9.8% YoY

    9M16 reported solid growth 9.8% YoY Revenue growth component (THB million) +7.7% YoY +9.8% YoY +1,766 100,825 +2,510 +264 +7% +840 +860 +8% +2,600 +2% +484 35,128 +14% +644 -754 +889 +11% -759 91,850 +6% +141 +199 +6% -2% +4% +47% 32,602 -1,271 +916 +654 +5% +9% +18% +50% -11% +7% +4.3% YoY +5.1% Yo

  21. Slide 21: Growing branded sales and geographic breakdown

    Growing branded sales and geographic breakdown Sales Breakdown by Geographic  Higher sales contribution from the European 100% markets, driven by strong performance of our 15% 14% 13% 14% 13% existing branded product and consolidation 80% 9% 8% 7% 6% 6% 7% 7% 8% 8% Others* of recent acquisitions 10

  22. Slide 22: Gross margin impacted by raw material price volatility

    Gross margin impacted by raw material price volatility 30.0% 28.0% Gross Profit -12.4% YoY 26.0% THB mn -9.0% QoQ 24.0%  3Q16 Gross profit of THB 4,937mn, down 12.4% YoY, driven mostly by raw material prices 5,634 22.0% 5,428 volatility 4,730 4,848 4,937 20.0%  3Q16 margin was at 14.1%, down 322bp

  23. Slide 23: Operating profit: Focusing on cost control

    Operating profit: Focusing on cost control 15.0% Operating Profit 13.0% -20.4% YoY THB mn -9.2% QoQ 11.0%  3Q16 Operating profit of THB 1,872mn, down 2,352 20.4% YoY, driven by a decline in gross margin. 9.0% 2,062  3Q16 SG&A to sales ratio was 8.7%, driven partly 1,891 1,872 7.0% by the one-off i

  24. Slide 24: EBITDA decline from weaker gross margin

    EBITDA decline from weaker gross margin 28.0% EBITDA -11.5% YoY THB mn -8.3% QoQ 23.0%  3Q16 EBITDA of THB 2,917mn, down 11.5% YoY, mainly driven by lower gross profit margin during 3,297 18.0% the quarter 3,181 2,755 2,917  9M16 EBITDA was at THB 8,853mn, down 3.5% 2,351 13.0% YoY, due to much lo

  25. Slide 25: Net profit: Holding up in the difficult quarter

    Net profit: Holding up in the difficult quarter 14.0% Net Profit -1.9% YoY THB mn 12.0% +4.4% QoQ  3Q16 net profit of THB 1,594mn, down 1.9%. 10.0% While we see net margin improvement quarter-on- 8.0% quarter to 4.5%, the weaker profitability YoY was mainly driven by: 1,626 1,527 1,594 1,231 6.0% 

  26. Slide 26: Normalized net profit of THB 1,384mn

    Normalized net profit of THB 1,384mn 20.0% Normalized 18.0% Net Profit -9.6% YoY THB mn 16.0%  Excluding the one-off quarter-end items, 3Q16 -4.3% QoQ 14.0% normalized net profit was at THB 1,384mn, down 12.0% 9.6% YoY. 10.0%  One-off items during 3Q16 of THB 210mn 1,531 1,614 comprised of: 1,446

  27. Slide 27: EPS: keeps momentum despite headwinds

    EPS: keeps momentum despite headwinds EPS -2.9% YoY THB +3.1% QoQ  3Q16 EPS was at THB 0.33, down 2.9% YoY, but up 3.1% QoQ  9M16 EPS was at THB 0.91, down 4.2% YoY, 0.34 0.33 from THB 0.95 last year 0.32 0.26 0.16 3Q15 4Q15 1Q16 2Q16 3Q16 -4.2% YoY 1.07 1.09 0.98 0.95 0.91 0.60 2012 2013 2014 201

  28. Slide 28: Positive 9M FCF from profitable operation

    Positive 9M FCF from profitable operation Quarterly Free Cash Flow THB mn  3Q16 Free cash flow (FCF) was slightly negative 5,469 at THB 192mn, as inventories increased and 4,483 CAPEX increased from completion of projects  9M16 free cash flow remain positive of THB 4.3bn, driven by profitable oper

  29. Slide 29: Moving toward THB & long-term debt profile

    Moving toward THB & long-term debt profile Interest-bearing debts of THB 44,342mn By Currency By Maturity 1.2% EUR 1.2% 2018 Short-term USD 21.5% Loan 35% 49% 2017 Current Portion 8% of Long- 77.3% 98.8% term Debt 10% 2019 2% 2020 THB & finance onwards lease 57% Long-term 41% 42% Debt 2015 3Q16 2015

  30. Slide 30: 9M16: Gearing up ahead of the major acquisition

    9M16: Gearing up ahead of the major acquisition Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.76x THB 7,136 mn ND/E 0.92x Kd = 3.73% Kd 9M = 3.04% Free Cash Flow THB 4,262 mn +4,159 42,941 +3,354 36,363 -8,853 +715 +2,612 +2,874 +1,271 +8 +809 -371 Net Debt EBITDA Change

  31. Slide 31: Continued improved working capital management

    Continued improved working capital management ROE1 INV Days Debt to EBITDA 4.17 3.80 14.2% 13.8% 14.8% 3.18 11.0% 2.77 3.02 114 110 116 106 108 6.6% 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 ROCE2 Net WC3 ND/E4 0.92x 0.76x 0.74x 13.7% 13.0% 0.64x 0.69x 11.1% 10.7% 11

  32. Slide 32: Agenda

    Agenda  Key Highlights  Recent Developments  3Q16 Financial Results  TU’s Consolidated Results  Results by Business Unit Page 32

  33. Slide 33: Transparency and timely disclosure are keys to investor trust

    “Corporate performance can fluctuate, to us, transparency, consistent and timely disclosure are keys to investor trust, particularly in times of uncertainty.” Wai Yat Paco Lee General Manager, Investor Relations and Corporate Investment Page 33

  34. Slide 34: Key operating impact: rising salmon price and high tuna price

    Key operating impact: rising salmon price and high tuna price remains a key challenge Raw material prices Skipjack tuna raw material prices (USD/ton)  In October, tuna price closed at USD 1,400/ton. In 3Q16, the 1,800 average price was at USD 1,433/ton (+0.2% YoY, -4.7% QoQ).  The average price fo

  35. Slide 35: Key operating impact: USD and EUR stable, GBP downwards pressure

    Key operating impact: USD and EUR stable, GBP continued downwards pressure Exchange rate USD/THB 38  In October, USD/THB closed at 35.05. In 3Q16, average USD/THB 36 35.05 was at 34.84 (-1.2% YoY, +4.2% QoQ). (Oct’16)  An average USD/THB for 9M16 was at 35.26 (+4.6% YoY). 34 32 30 Oct-13 Oct-14 Oc

  36. Slide 36: Thai Union's global footprint

    Thai Union’s global footprint Page 36

  37. Slide 37: 3 strategic business segments

    3 strategic business segments Total 9M16 sales: THB 100,825mn Frozen, chilled seafood PetCare, value added and Ambient seafood Sales: THB 47,192mn and related others Sales: THB 40,515mn Sales: THB 13,119mn Shrimp & related Tuna business PetCare business1 Ambient & Pouch Frozen, chilled & Value-added

  38. Slide 38: Ambient Seafood

    Ambient Seafood cS , Gatz art (9h 222 roorpaisr ance 1) comsnarion

  39. Slide 39: Ambient Seafood: Lapse demand after the record sales in 2Q16

    Ambient Seafood Lapse demand after the record sales in 2Q16 Sales (THB million) Quantity (Tons) -3.8% YoY -0.4% YoY -14.6% QoQ -12.9% QoQ 20,000.00 19,000.00 17,261 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 103,387 90,351 89,117 94,086 112,000.00 111,000

  40. Slide 40: Frozen, chilled seafood and related

    Frozen, chilled seafood and related Page 40

  41. Slide 41: Frozen, chilled seafood and related: Margin recovery underway

    Frozen, chilled seafood and related Margin recovery underway Sales (THB million) Quantity (Tons) +14.7% YoY +6.1% YoY +15.1% QoQ +11.3% QoQ 20,000.00 90,000.00 89,000.00 88,000.00 19,000.00 87,000.00 86,000.00 85,000.00 84,000.00 83,000.00 82,000.00 18,000.00 17,000.00 15,099 15,138 81,000.00 80,000

  42. Slide 42: PetCare, value-added and others

    PetCare, value-added and others Page 42

  43. Slide 43: PetCare, value-added and others: Focusing on value-added products

    PetCare, value-added and others Focusing on value-added products Sales (THB Million) Quantity (Tons) +28.3% YoY +36.9% YoY +30.5% QoQ +22.6% QoQ 6,000.00 5,257 50,000.00 49,000.00 48,000.00 47,000.00 46,000.00 42,493 45,000.00 44,000.00 43,000.00 5,000.00 4,098 4,057 3,833 4,028 16% 42,000.00 41,000

  44. Slide 44: 9M16 Segment Profitability

    9M16 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 47,192 17.9% 8,439 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 40,515 9.0% 3,631 THB 15,214 million related *Shrimp & related busin

  45. Slide 45: Appendix

    ia Thai Page 48 ® Union

  46. Slide 46: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 Sep 2016 Share price (04 Nov 2016) : THB 22.00 Historical price : Chansiri Family 52-week high THB 23.00 20.1% 52-week low THB 15.80 No. of paid up shares : 4,771.82mn Niruttinanon Others Family 6

  47. Slide 47: 3Q16 Income Statement

    3Q16 Income Statement Consolidated 3Q16/ 3Q16/ % % % (Unit: THB mn) 3Q16 3Q15** 2Q16 3Q15 2Q16 to sales to sales to sales Change Change Sales 35,128 100% 32,602 100% 34,441 100% 7.7% 2.0% Cost of sales (30,190) -85.9% (26,968) -82.7% (29,012) -84.2% 11.9% 4.1% Gross profit 4,937 14.1% 5,634 17.3% 5,

  48. Slide 48: 9M16 Income Statement

    9M16 Income Statement 9M16/ % % (Unit: THB mn) 9M16 9M15** 9M15 to sales to sales Change Sales 100,825 100% 91,850 100% 9.8% Cost of sales (85,611) -84.9% (77,078) -83.9% 11.1% Gross profit 15,214 15.1% 14,771 16.1% 3.0% SG&A expenses (9,826) -9.7% (9,251) -10.1% 6.2% FX gain (loss) 266 0.3% 976 1.1

  49. Slide 49: Statement of Financial Position as of 30 September 2016

    Statement of Financial Position as of 30 September 2016 % to total % to total (Unit: THB mn) 9M16 2015 Change assets assets Cash and cash equivalents* 1,401 1.2% 2,816 2.5% -50.2% Trade and other receivables 17,412 14.7% 16,554 14.9% 5.2% Inventories - net 37,248 31.3% 35,180 31.7% 5.9% Other curren

  50. Slide 50: 9M16 Statement of Cash Flow

    9M16 Statement of Cash Flow Consolidated (Unit: THB mn) 9M16 9M15 Change Profit before income tax 5,695 6,126 (432) Adjustments for depreciation & amortisation expenses 2,207 1,972 234 Other adjustments 984 1,420 (436) Changes in operating assets and liabilities (478) 7,899 (8,376) Cash flows receip

  51. Slide 51: Thank you

    Thank you Corporate website: http://www.thaiuniongroup.com IR website: http://www.thaiuniongroup.com/en/investor.ashx E-mail: ir@thaiunion.com Tel:51+66 2298 0024 Page

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