Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2021 Earnings Presentation
64 slides from Thai Union Group Public's earnings presentation, Nov 9, 2021
Slide 1: Virtual Analyst Meeting for 3Q21 Results
Virtual Analyst Meeting for 3Q21 Results Thai Union Group PCL. November 9, 2021
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
Slide 3: 3Q21 Key Highlights
3Q21 Key Highlights Slide 3 Virtual Analyst Meeting for 3Q21 Results
Slide 4: CEO quote on healthy 9M21 performance
“Thai Union continued to deliver a healthy 9M21 performance with strong growth in core products. We are expanding our portfolio to higher-margin businesses as we are committed to Healthy Living, Healthy Oceans. ” Thiraphong Chansiri President and CEO Slide 4 Virtual Analyst Meeting for 3Q21 Results
Slide 5: 3Q21: Healthy net profit of THB1,937mn despite disruption
3Q21: Healthy net profit of THB1,937mn, despite short-term supply chain disruption and pandemic impact THB mn Sales Gross Profit Operating Profit Net Profit 35,539 6,391 1,885 1,937 GPM at 18.0%, OPM at 5.3%, NPM at 5.4%, Growth of 2.2% YoY down 21bps YoY down 44bps YoY down 46bps YoY 3Q21 sales gro
Slide 6: 9M21: Rock-solid KPIs, enhanced profitability, debt ratio 1.08x
9M21: Rock-solid KPIs, enhanced profitability, debt ratio at 1.08x 9M21 Net profit up 27.0% Financial Summary1 +3.6% YoY to (THB million) +7.5% THB 6,083 million 9M20 9M21 +14.9% 18,703 98,938 102,547 17,395 Share price movement 11,341 9,866 +6.7% 20202 20212 +27.0% (Jan – Dec 20) (Jan – Nov 21) 6,0
Slide 7: Key Developments
Key Developments Slide 7 Virtual Analyst Meeting for 3Q21 Results
Slide 8: Managing our supply chain amid COVID-19 well
We are managing our supply chain amid COVID-19 well Compensated labor shortages by reallocating volumes within factories Our global vaccine roll-out is in advanced All factories in Asia are currently progress operational and ramping up production Vaccines in Seychelles, the U.K., i-Tail Corporation
Slide 9: New investment in RBF and joint venture with Starflex
New investment in RBF, a leading food ingredients company in Thailand, and joint venture with Starflex • Thai Union announced acquisition of 10% shares (200mn • Thai Union Graphic Co., Ltd. (TUG) established new joint shares) in R&B Food Supply PCL. (RBF: listed in SET) investment company on Sep. 30
Slide 10: Thai Union Feedmill successfully listed in SET
Thai Union Feedmill (TFM) was successfully listed in SET Leading shrimp feed producer in Thailand Diversified, expanding production base and markets Bangladesh Pakistan Myanmar Investment/Operation India Business partnership/ Joint venture Thailand Export Sri Lanka The Republic Malaysia of Maldives
Slide 11: No.1 in Seafood Stewardship Index & Employer Pays Principle
Thai Union ranked No.1 in Seafood Stewardship Index & commits to a full “Employer Pays Principle” in migrant recruitment No.1 in Seafood Stewardship Index (SSI) for second consecutive time SSI assessed the 30 most influential seafood companies globally on their contributions to sustainable managemen
Slide 12: Awards and Recognitions
Awards and Recognitions We are proud to have efforts recognized by leading institutions around the world Thai Union was recognized in multiple categories in the 2021 Global Banking & Finance Awards® : • Best Group CEO in Asia: Mr. Thiraphong Chansiri, President and CEO • Best New Group CFO in Thaila
Slide 13: Strategic categories and new value-enhancing businesses
3 strategic categories and new, value-enhancing businesses Ambient seafood Frozen & chilled seafood PetCare, value-added and related and others business Core Supplements Value-enhancing Ingredients Alternative Protein businesses Slide 13 Virtual Analyst Meeting for 3Q21 Results
Slide 14: Ambient seafood: growing Healthy Living portfolio
Ambient seafood: Growing our “Healthy Living” portfolio and higher-margin branded business Launched nutrient-rich, healthy tuna under John West Bringing spicy tuna to Thai consumers • Range of naturally-enriched tuna (vitamin B6, B12, C, and • Namprik Tuna Narok, one of the most familiar flavors for
Slide 15: Frozen and chilled seafood: new value-added products
Frozen and chilled seafood: New, value-added products pushed higher margins, supported by automation We are focusing on NPDs and entering new markets to expand our portfolio to more profitable products • In 3Q21, we continued to launch new, frozen value- added seafood products with high gross margin
Slide 16: PetCare, value-added and others: new innovative products
PetCare, value-added and others: We are growing the category with new, innovative products Strengthened expertise in wet-based pet food & innovation • i-Tail Corporation (ITC) launched new products (i.e. cat & dog drink, hamburger, pet purée treat) in key markets globally. • Focused on humanization
Slide 17: Protein hydrolysate and collagen peptide plant
Protein hydrolysate and collagen peptide plant Expanding our marine-based Ingredients portfolio in fast growing markets Protein hydrolysate and collagen peptide plant Tuna co-product utilization Tuna protein hydrolysate and collagen Skin peptide products Collagen peptide Protein hydrolysate for anim
Slide 18: Introducing ZEAVITA
Introducing…. Now on shelves nationwide at Watsons, pharmacies and online channels • ZEAVITA was officially launched in Sep 2021 • Focused on three key products: collagen, calcium, and fish oil • Patented in Japan with targeted molecules for better functionality • Huge opportunity with market size T
Slide 19: Building expertise in Alternative Seafood
We are building expertise in Alternative Seafood Thai Union launched ‘Plant-Based Fest’ in collaboration with VFoods, More Meat, and our OMG Meat brand • During Oct. 4 – Nov. 4 with promotional activities at retail, supermarkets, online & offline channels, resulting in higher sales • Capitalizing on
Slide 20: Investing in food-tech startups to drive innovation
We continue to invest in food-tech startups to drive innovation • At Thai Union, we continue to build an ecosystem to drive innovation in the food industry Alternative Protein Functional Nutrition and Biotechnology • Initiated Batch III under the SPACE-F startup incubator and accelerator • Thai Unio
Slide 21: Financial Results: 3Q21 - Consolidated
Financial Results: 3Q21 - Consolidated Slide 21 Virtual Analyst Meeting for 3Q21 Results
Slide 22: CFO quote on 3Q21 sales growth and margin expansion
“3Q21 sales growth and margin expansion was driven by strong recovery in the Frozen seafood business. We maintained a healthy financial position and strengthened our Blue Finance strategy, with a sustainability-linked financing target of 50% in 2022. ” Ludovic Garnier, Group CFO Slide 22 Virtual Ana
Slide 23: 3Q21 Key Takeaways
3Q21 Key Takeaways: Delivered consistently high gross margin and net profit • Sales growth of 2.2% YoY, driven by Frozen & Chilled business recovery in the Healthy top line U.S. and continued increase in sales of PetCare & value-added business, despite growth lower sales from normalizing Ambient bus
Slide 24: Top line growth for seven consecutive quarters
Top line growth for seven consecutive quarters, with gross margin enhancement Total sales (THB mn) GPM NPM 19.0% 60,000 18.2% 18.2% 18.0% 17.7% 18.0% 20.0% 16.7% 15.9% 16.1% 16.2% 18.0% 15.8% 14.8% 14.5% 14.2% 14.9% 14.9% 14.0% 16.0% 50,000 13.8% 14.0% 11.6% 36,012 35,883 35,539 34,784 33,464 40,000
Slide 25: Firm financial position
Firm financial position The ratings reaffirm and reflect Thai Union’s strengths and competitiveness TRIS Rating affirms A+ rating with Japan Credit Rating Agency (JCR) upward revision to “positive” outlook in assigned A- with stable outlook in Sep. 2021 Aug. 2021 • Maintained company rating at A+ •
Slide 26: Moving towards Sustainable Finance
Moving towards Sustainable Finance Sustainable Finance Target Expected impact on Cost of Debt on Long-term Financing (USD 1.4bn or THB 45bn) 0.05-0.10% p.a.* 2020 2022E 2025E Traditional Fin. Sustainable Fin. Traditional Finance Sustainable Finance Note: * - Thru initial discount from sustainability
Slide 27: Managing our global portfolio in dynamic ways
We manage our global portfolio in dynamic ways Enhance and get the best of profitability We divested our businesses in Middle East back to Thai Union Europe announced on Oct. 1 the closure our local joint venture partner of its MerAlliance plant, Poland • In Sep. 2015, Thai Union formed a joint vent
Slide 28: Ongoing global supply chain challenges
We are facing the ongoing global supply chain challenges Rising freight cost, container shortage, and Inflation from packaging and edible oils** fuel cost issues • We saw rising cost from packaging and edible • We continue to see domino effect from global oils, which resulted in some higher cost of
Slide 29: Tuna prices remained within a manageable range
Tuna prices remained within a manageable range Tuna raw material price 2,400 (USD/ton) -6.7% YoY 2,200 2,000 3Q20 3Q21 1,500 1,400 1,800 Oct 2021 1,600 1,500 3Q17 4Q17 1,400 2Q17 2,010 2,033 1,200 1Q17 1,763 1Q18 2Q18 1Q19 3Q20 1Q20 1,633 1,577 1,667 3Q18 4Q18 1,4532Q19 3Q19 1,500 4Q20 1Q21 2Q21 3Q2
Slide 30: Sales growth driven by Frozen seafood and PetCare
Sales growth driven by Frozen seafood and PetCare & Value-added businesses Sales +11.6% • 3Q21 sales growth of 2.2% YoY, driven by: THB mn -1.2% YoY +2.2% YoY Before currency impacts • Frozen and chilled seafood business delivered strong growth of 11.0% YoY, thanks to the food -1.0% QoQ service busi
Slide 31: 3Q21 revenue component
3Q21 revenue component: Growing Frozen seafood and Petcare & value-added, with normalizing Ambient seafood +11.6% THB mn +9.3% YoY +2.2% YoY +572 35,539 34,784 +903 34,784 -1,806 +649 +499 +165 +6% +365 +283 +1,178 +328 -52 +99 +613 +8% +5% 31,838 31,838 -4% +4% +9% -90 +30 -36 +23% -14% +8% -4% +4%
Slide 32: Strong sales growth from the U.S. and Thailand
Strong sales growth from key regions: the U.S. and Thailand Sales Breakdown by Geographic • 9M21 higher sales contribution from key 100% 13% 15% 15% 15% 14% 13% Others regions, including the U.S., Thailand and Europe 6% 6% 5% 5% Japan 80% 8% 6% 9% 11% 6% 10% 10% Domestic • The U.S. and Thailand sale
Slide 33: Consistently high gross profit margin
Consistently high gross profit margin Gross Profit +25.9% THB mn • 3Q21 gross profit margin remained at a high +1.0% YoY 30.0% level of 18.0% vs 18.2% in 3Q20, thanks to: -6.1% QoQ 28.0% 26.0% • Frozen and chilled seafood gross profit soared 6,327 6,023 6,805 6,391 24.0% with 30% growth YoY, from a
Slide 34: 3Q21 operating profit remained resilient
3Q21 operating profit remained resilient Operating Profit* +24.3% THB mn -5.7% YoY • 3Q21 operating profit declined by 5.7% YoY to THB 1,885mn: 20.0% -25.3% QoQ 18.0% • 16.0% 2,524 14.0% SG&A expenses increased 4.1% YoY, or 1,998 1,938 1,871 1,885 12.0% THB 177mn due to: 10.0% 1,516 8.0% • Sharp ris
Slide 35: 3Q21 healthy EBITDA at THB 3.8bn
3Q21 healthy EBITDA at THB 3.8bn EBITDA* +18.8% THB mn -2.7% YoY • 3Q21 EBITDA at THB 3.8bn, down 2.7% YoY: 28.0% -8.6% QoQ • Avanti contributed lower share of profit YoY, 23.0% 4,135 mainly due to its weakening frozen business 3,883 3,426 3,780 from outbreak impact to workforce capacity in 3,182 3,
Slide 36: 3Q21 solid net profit at THB 1.9bn
3Q21 solid net profit at THB 1.9bn, on reported basis +41.0% Net Profit • 3Q21 reported net profit was at THB 1,937mn, THB mn -5.8% YoY 14.0% down 5.8% YoY -17.3% QoQ 12.0% 10.0% • Despite a strong core business, particularly 2,343 Frozen & Chilled seafood with robust top line 2,056 1,937 1,803 8.0%
Slide 37: 3Q21 adjusted net profit
3Q21 adjusted net profit from an insurance claim receipt Adjusted Net Profit +36.4% • Excluding one-off item, adjusted net profit THB mn 20.0% was THB 1,874mn in 3Q21, from the following -16.9% YoY 18.0% reason: -23.4% QoQ • 16.0% We received an insurance claim at THB 14.0% 2,448 63mn (booked at oth
Slide 38: 3Q21 EPS declined by 4% YoY
3Q21 EPS declined by 4% YoY, on the back of lower net profit Earning per Share (EPS)* THB +38.9% • 3Q21 EPS was at THB 0.40, down 3.7% YoY, in -3.7% YoY light of lower net profit YoY. -18.0% QoQ • 9M21 EPS was at THB 1.26, up 31.5% YoY, 0.49 thanks to our strong core operations, cost 0.42 0.37 0.40
Slide 39: Red Lobster operations in-line with plan
3Q21: Red Lobster operations were in-line with plan THB mn 3Q21 2Q21 1Q21 4Q20 3Q20 • Share of loss from operations marked at THB 63mn in 3Q21 vs. share of loss at THB 54mn in 3Q20. Share of profit from operations -63 -49 81 -321 -54 • Including lease accounting adjustment of THB 108mn in 3Q21, Thai
Slide 40: Red Lobster progressing with strategic initiatives
Red Lobster progressing with strategic initiatives Driving profitable guest count growth is the top priority Win with Great Food Improving menu satisfaction by enhancing legacy menu items Red Lobster Adding relevant new menu items that reflect evolving trends Flawless Execution Strengthening staffin
Slide 41: Free cash flow remained positive
3Q21: Free cash flow remained positive, however impacted by record high net working capital Quarterly Free Cash Flow • Free cash flow in 3Q21 remained positive THB mn after the temporary impact from higher net working capital (raw material price inflation, higher inventory of finished goods, goods i
Slide 42: 9M21: Net debt increased by THB 11.2bn
9M21: Despite high EBITDA, net debt increased by THB 11.2bn from investments*, a change in NWC, and dividend payment ND/E 0.94x Income tax paid and other investing & ND/E 1.08x Free Cash Flow THB 2,117 mn Kd = 2.91% financing activities Kd = 2.71% THB mn 7,250 63,332 4,438 52,129 1,146 2,585 691 759
Slide 43: Majority THB funding, reducing currency risk
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 67,696mn By Currency By Maturity JPY 0.0% 1.5% EUR 1.5% 1.6% 16% USD 0.0% Short-term loan 13.3% 23% Current portion 24% of long-term 14% debt & finance THB 98.5% lease 83.7% Long-term debt 63% 60% 202
Slide 44: Improved profitability ratios and debt ratio within target
Improved profitability ratio, temporary net debt increase from soaring NWC, debt ratio remained within our target ROE INV Days 135 Net Debt to EBITDA 126 123 125 124 15.5% 16.2% 15.8% 13.5% 14.1% Target 4.17 4.39 4.0-4.5 37,758 38,546 39,195 42,566 45,409 4.02 3.87 3.91 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20
Slide 45: Financial Results: 3Q21 – Business Units
Financial Results: 3Q21 – Business Units Slide 45 Virtual Analyst Meeting for 3Q21 Results
Slide 46: Tuna stable, salmon and shrimp prices declined
Tuna price remained relatively stable, salmon and shrimp prices declined during 3Q21 2,500 Tuna (USD/ton) Salmon (NOK/kg) 2,300 100 Rebounded at beginning of Fluctuation in the range 2,100 of 1,200 – 1,500 USD/ton 2021 from record low end- 90 last year, started downward 1,900 80 trend since Apr. 202
Slide 47: Thai Baht depreciated against key currencies YoY
Thai Baht depreciated against all key currencies YoY 38.0 48.0 37.0 USD/THB 47.0 GBP/THB 36.0 USD continued strong 46.0 GBP continued upward upward trend against THB 45.0 trend since 3Q19 35.0 44.0 34.0 43.0 33.0 42.0 32.0 1Q17 41.0 3Q21 2Q17 1Q172Q173Q174Q171Q182Q183Q18 2Q21 45.4 35.1 3Q21 40.0 31.
Slide 48: 3 strategic business categories
3 strategic business categories Total 9M21 sales: THB 102,547 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 43,807 mn Sales: THB 41,789 mn Sales: THB 16,951 mn Sales Split Sales Split Sales Split 39% 17% 6% 42% 38% 61% 41% 62% 94% Brand Brand Bran
Slide 49: Solid growth on back of business diversification
Solid growth on the back of successful business diversification Sales (THB bn) 3Q20 2Q21 3Q21 9M19 9M20 9M21 -8.0% +3.6% +11.0% 16.3 +9.8% 15.3 15.0 14.9 14.8 102.5 98.9 13.4 93.4 +11.4% 5.7 5.7 5.2 Ambient Seafood Frozen and Chilled Seafood PetCare, Value added and Total other products GPM 21.5% 22
Slide 50: Ambient seafood: normalized topline, healthy margin
Ambient seafood: Normalized topline, continued to deliver healthy margin Sales (THB mn) Quantity (tons) +3.4% -5.0% -8.0% YoY -12.5% YoY -2.1% QoQ -3.5% QoQ 16,259 98,176 14,466 14,440 13,580 15,272 14,954 90,353 93,652 86,197 88,959 85,865 Brand 58% Brand 49% 47% 42% 48% 57% 53% 62% 61% 48% 49% 59%
Slide 51: Frozen, chilled seafood: strong recovery in sales & GPM
Frozen, chilled seafood and related: Strong recovery in sales & GPM Sales (THB mn) Quantity (tons) +16.2% +5.5% +11.0% YoY +8.2% YoY -0.2% QoQ -2.1% QoQ 14,869 14,843 12,768 13,370 13,738 12,076 78,791 77,100 35% 73,084 71,224 69,236 37% 38% 40% 63,081 36% 38% Brand Brand 71% 72% 72% 75% 77% 73% 64%
Slide 52: PetCare, value-added and others: solid sales growth
PetCare, value-added and others: Continued solid sales growth Sales (THB mn) Quantity (tons) +24.7% -1.9% +11.4% YoY -10.0% YoY +0.01% QoQ -9.5% QoQ 5,287 5,469 5,741 5,742 75,019 75,409 72,957 5,155 68,874 74,603 67,542 4,604 5% 5% 7% 7% 6% 5% 6% 6% 4% 5% Brand 8% Brand 7% 94% 95% 95% 93% 93% 94% 9
Slide 53: Geographic diversity: 9M21 Sales
Geographic diversity: 9M21 Sales Europe United States and Canada 29% 44% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 17% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 10% Slide 53 Virtual Analyst Meeting for 3Q21 Results
Slide 54: US & Canada: organic sales declined, offset by FX
US & Canada: Organic sales declined, offset by FX gains Sales THB mn +32.1% +3.7% YoY +3.0% QoQ 15,471 14,851 15,571 16,042 13,911 12,143 3Q19 3Q20 4Q20 1Q21 2Q21 3Q21 • 3Q21 North America sales increased 3.7% YoY, driven by FX gains • North America organic sales declined 1.4% YoY from lower demand
Slide 55: Europe: growing topline, supported by FX
Europe: Growing topline, supported by FX Sales THB mn +9.5% +2.1% YoY -7.1% QoQ 9,827 9,688 10,800 10,031 9,164 8,387 3Q19 3Q20 4Q20 1Q21 2Q21 3Q21 • 3Q21 EU sales increased 2.1% YoY, despite organic sales declining by 4.9% YoY due to lower volume, particularly in France, United Kingdom and Germany,
Slide 56: Thailand: sales declined after last year's stockout
Thailand: Sales declined after last year’s stockout situation Sales THB mn -19.3% -6.0% YoY -11.1% QoQ 4,003 3,437 3,628 3,631 3,219 3,230 3Q19 3Q20 4Q20 1Q21 2Q21 3Q21 • 3Q21 Thailand sales were down 6.0% YoY. • Domestic sales decreased mostly due to lower ambient business sales from last year’s pa
Slide 57: Emerging Markets and rest of the world
Emerging Markets and rest of the world: Frozen and PetCare businesses grew well Sales THB mn -4.5% +3.1% YoY +6.1% QoQ 6,529 6,049 5,706 5,881 6,237 5,198 3Q19 3Q20 4Q20 1Q21 2Q21 3Q21 • 3Q21 sales in Emerging markets and rest of the world increased 3.1% YoY. • Sales increased mostly from Frozen bus
Slide 58: 3Q21 Category profitability
3Q21 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 14,954 20.7 3,094 • Tuna • Sardine and mackerel (3Q20: 16,259) (3Q20: 21.5%) (3Q20: 3,488) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related 1 14,843 13.1 1,940 • Lobste
Slide 59: Our adjusted 2021 guidance
Our adjusted 2021 guidance Sales 3-5% YoY growth Gross profit ~ 17-18% margin SG&A to sales ~ 11 – 12% Placeholder for graphic Effective interest No material change from rate 2020 (paste graphic, crops to H19.05*W10.5) (add TU logo) CAPEX ~ THB 4.0-4.5bn (revised down from THB 5.0bn) Dividend policy
Slide 60: Slide 60 Virtual Analyst Meeting for 3Q21 Results
Slide 60 Virtual Analyst Meeting for 3Q21 Results
Slide 61: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 24 August 2021 Share price (5 November 2021) THB 20.60 Others, Historical closing price 46.6% Chansiri 52-week high THB 23.00 Family, 52-week low THB 13.30 19.3% No. of paid up shares 4,7
Slide 62: 3Q21 Income statement
3Q21 Income statement * Slide 62 Virtual Analyst Meeting for 3Q21 Results
Slide 63: Statement of Financial Position as of September 30, 2021
Statement of Financial Position as of September 30, 2021 Remark: *Including short-term investments Slide 63 Virtual Analyst Meeting for 3Q21 Results
Slide 64: 9M21 Statement of cash flow
9M21 Statement of cash flow Remark: *Figures as reported in November 2021 Slide 64 Virtual Analyst Meeting for 3Q21 Results