Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2023 Earnings Presentation
50 slides from Thai Union Group Public's earnings presentation, Nov 7, 2023
Slide 1: Analyst Meeting Thai Union Group PCL, Nov 7, 2023
.- i oy in | Yi \ — I ANALYST MEETING tA THAI UNION GROUP PCL. NOV 7, 2023 | ©) seacance _ — (Gow FTSE4Good In collaboration with
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: 3Q23 Key Highlights
Updated 3Q23 Key Highlights
Slide 4: 3Q23 shows better momentum with GPM improving impressively at 18.4%
“ 3Q23 shows better momentum with GPM improving impressively at 18.4%. Moreover, 4Q23 earnings are expected to be the peak quarter from demand recovery due to the tuna prices further softening down. ” Thiraphong Chansiri President and CEO
Slide 5: 3Q23: Better momentum from profit margins improved impressively QoQ
3Q23: Better momentum from profit margins improved impressively QoQ THB mn Sales Gross Profit Operating Profit Net Profit 33,915 6,233 2,158 1,206 Impacted by rightsizing & GPM at 18.4%, huge Record high OPM over the last NP increased QoQ falling freight revenue improvement QoQ 9 quarters Sales drop
Slide 6: 3Q23 Net profit dropped YoY, mainly impacted by lower FX gain/loss and i-Tail dilution
3Q23 Net profit dropped YoY, mainly impacted by lower FX gain/loss and i-Tail dilution impact Bridge Net Profit THB mn 2,530 -324 2,500 2,206 -1,060 2,000 1,500 -124 +234 1,206 -72 +22 1,000 500 0 3Q22 Reported NP i-Tail dilution 3Q22 NP with Lower FX OP Higher finance Share of loss from Others* 3Q2
Slide 7: 9M23: Soft performance due to high baseline in 9M22
9M23: Soft performance due to high baseline in 9M22, lower demand in 2023, and logistic normalization 9M23 sales dropped 13% -13.2% Financial Summary1 YoY to (THB million) THB 100,624mn 115,974 100,624 9M22 9M23 -16.9% Share price movement2 2022 9M23 20,338 (Jan – Dec 22) (Jan – Sep 23) 16,897 -20.7
Slide 8: New and innovative product launches
New and innovative product launches Chicken of the Sea co-branded with McCormick, No.1 PetCare products were expanded to a new sales channel Seasoning Manufacturer and new products development • Introduce NEW on-the-go protein and overflowing with 6 • Expanded branded product flavors to CJ Express i
Slide 9: Awards & Recognitions
Awards Awards && Recognitions Recognitions Waiting for We are proud of the awards we won and the recognition we gained Update We continue to be recognized for our efforts by leading institutions around the world Student Most Attractive People’s Food Awards 2023 ASEAN Risk Awards 2023 Employers Thail
Slide 10: Committed to protecting the environment and supporting local communities
Committed to protecting the environment and supporting local communities, as part of “Healthy Living, Healthy Oceans” Thai Union and TU ranked No. 1 on Sustainable Fisheries Seafood Stewardship Partnership (SFP) Index (SSI) for 3rd released the first-year time report In recognition of its Collaborat
Slide 11: Thai Union decreased the Company's paid-up capital, which will benefit EPS
Thai Union decreased the Company's paid-up capital, which will benefit to EPS • Thai Union has completely registered a decreased in paid-up capital by writing off the unsold shares totaling 116,682,800 shares at par value 0.25 baht per share or 2.45% of the total issued shared of the Company which i
Slide 12: 3Q23 Financial Results - Consolidated
Waiting for Update- Background 3Q23 Financial Results - Consolidated
Slide 13: CFO quote on 3Q23 performance
“ The 3Q23 performance remained challenging due to the ongoing headwinds and FX volatility, however, the operating margin is showing a huge improvement QoQ from the profit protection plan measures implemented. ” Ludovic Garnier, Group CFO Slide 13 3Q23 Analyst Meeting
Slide 14: Showing better margins QoQ, led by Frozen and Value Added
Showing better margins QoQ, led by Frozen and Value Added 3Q23 Key Takeaways Gross Profit • Gross profit improved 8.4% QoQ, thanks to less pressure from key raw material prices, portfolio rationalization, and the profit protection plan (PPP) measures implemented improving • Gross profit margin was s
Slide 15: Soften topline from record high base last year, strong 18.4% GPM
Soften topline from the record high base last year, however strong 18.4% GPM, the 2nd ever highest performance level Total sales (THB mn) GPM NPM 19.0% 18.4% 18.2% 18.2% 18.0% 17.7% 18.0% 18.2% 17.5% 17.4%* 18.2% 20.0% 60,000 16.7% 17.3% 16.9% 15.9% 16.1% 16.2% 18.0% 50,000 14.9% 14.9% 15.1% 16.0% 4
Slide 16: Freight price slightly rebounded following higher energy price
Freight price slightly rebounded following higher energy price but still in low base Logistics: Freight price impact turned positive Ocean transit time (days) Freight cost (USD) Thailand to US Thailand to US • The freight price generated • Freight price was at 2,340 USD 16,000 75 significant improve
Slide 17: Tuna prices dropped to USD 1,700/ton in Sep
Tuna prices dropped to USD 1,700/ton in Sep, thanks to higher catching rate, while shrimp prices remained at low level Salmon price Tuna price Salmon (NOK/kg) dropped in 3Q23 due 2,500 Tuna (Skipjack) (USD/ton) dropped despite 130 to seasonality 2,300 FAD-ban period 110 2,100 2Q23 1,900 2Q23 90 109
Slide 18: THB has been depreciating QoQ against all key currencies
THB has been depreciating QoQ against all key currencies 38.0 USD/THB 48.0 37.0 47.0 GBP/THB 46.0 36.0 45.0 35.0 44.0 3Q22 4Q22 34.0 3Q23 43.0 3Q23 36.4 36.4 35.2 42.0 44.5 33.0 2Q22 3Q21 2Q23 32.0 4Q21 34.4 2Q23 41.0 4Q21 43.1 33.4 34.5 40.0 2Q21 45.4 45.0 1Q22 2Q22 31.0 3Q21 43.9 44.4 3Q22 4Q22 1Q
Slide 19: FX volatility generated significant FX losses in 3Q23
FX volatility generated significant FX losses in 3Q23 below OP mainly from financing activities We recorded mostly two lines from FX impact: (in mTHB) 3Q22 3Q23 In Net sales line THB -148mn sales adjustments in Sales 41,653 34,063 3Q23, mostly resulting from the designated forward (FWD) rates are Sa
Slide 20: RL back to challenging performance from industry headwinds
RL back to challenging performance from industry headwinds, UES results and the low season THB mn 3Q23 2Q23 1Q23 4Q22 3Q22 FY share of profit/loss 2022 2021* 2020 2019 (THB mn) Share of profit/loss Operations -1,207 -178 -1,187 -142 -395 -94 121 -344 -339 from operations Lease accounting adj. -422 -
Slide 21: FY23 RL share of loss from operations slightly deteriorating
FY23 RL share of loss from operations slightly deteriorating given 3Q23 performance; TU formulates strategies with support from advisers Continue to monitor closely the financial performance Higher losses from operations than • Cash situation and covenant under pressure due to expected in 3Q23 perfo
Slide 22: 3Q23: NWC decreased compared to LY due to inventory and receivable reduction
3Q23: NWC decreased compared to LY due to inventory and account receivable reduction. Inventory days increased as a result of soft topline ROE INV Days Net Debt to EBITDA 170 144 155 139 145 5.26x 5.00x 14.8% 4.40x 11.1%* Target 9.8% 9.4% 3.67** 4.07x 4.0-4.5 7.2% 56,319 52,622 52,948 52,766 53,632
Slide 23: 9M23: Net debt increased to THB 54.0bn
9M23: Net debt increased to THB 54.0bn mainly from active financing activities (mostly share buy back and i-Tail investments) ND/E 0.54x Income tax paid and other investing ND/E 0.65x Free Cash Flow THB 4.5bn Kd* = 3.40% & financing activities THB 11.1bn Kd* = 3.61% THB mn 53,981 683 281 47,328 2,97
Slide 24: Temporary higher portion of float-rate loans
Temporary higher portion of float-rate loans from short-term loan increase to repay THB bond due in Q2 Interest-bearing debts of THB 65.8bn By Currency By Maturity By Interest Rate Short-term loan* 16.1% JPY 8.5% 7.8% 25.6% EUR 0.5% Current portion 4.1% 0.5% of long-term 6.3% USD 14.9% 13.7% debt &
Slide 25: 3Q23 Business Performance
3Q23 Business Performance
Slide 26: Category mix: Ambient sales contribution increased
Category mix: Ambient sales contribution increased to the expense of PetCare and Frozen categories Total 9M23 sales: THB 100,624mn Categories Business 48% (42% LY) 35% (37% LY) 10% (14% LY) 7% (7% LY) Ambient Seafood Frozen and Chilled PetCare Value Added & Others THB 48,211mn THB 34,771mn THB 10,43
Slide 27: 9M23 soft sale performance explained by high baseline
9M23 soft sale performance explained by high baseline and negative freight price impact of ~1.5% in 9M23 Sales (THB bn) 9M21 9M22 9M23 9M21 9M22 9M23 -1.9% 70,000 116.0 +10.1% 60,000 -16.8% 49.4 48.2 102.5 100.6 50,000 43.8 41.8* 42.5 40,000 34.8 30,000 -0.7% +11.8% 20,000 16.1 10.5 10.4 7.9 7.2 10,
Slide 28: Ambient seafood: Sign of margin recovery QoQ
Ambient seafood: Sign of margin recovery QoQ, thanks to falling raw material price Sales (THB mn) +6.0% Quantity (tons) -12.2% -6.7% YoY -11.2% YoY -7.5% QoQ -5.1% QoQ 16,985 17,086 17,136 15,851 14,954 15,225 85,865 84,948 87,827 76,988 79,465 75,414 Brand 57% 51% 59% Brand 41% 61% 56% 60% 49% 46%
Slide 29: 9M23 Ambient seafood: Expected greater demand in Q4
9M23 Ambient seafood: Expected greater demand in Q4 from further softened down in tuna prices Ambient Seafood Sales (THB mn) and Gross Profit Margin (%) Growing our business through value-added products 21.1% 21.4% 21.3% 21.4% 19.5% 25% and market expansion 90,000 20% 75,000 62,724 66,510 15% • Focu
Slide 30: Frozen & chilled: Huge improvement in gross profit margin to 12.9%
Frozen & chilled: Huge improvement in gross profit margin to 12.9%, thanks to product mix and portfolio rationalization Quantity (tons) Sales (THB mn) -21.9% -18.0% -21.8% YoY +0.9% QoQ -14.2% YoY 14,843 -1.3% QoQ 14,820 14,453 11,684 11,593 77,100 73,704 11,493 65,352 64,034 63,231 40% 36% 39% 60,7
Slide 31: 9M23 Frozen & chilled: topline decline from raw materials deflation
9M23 Frozen & chilled: topline decline from raw materials deflation (shrimp, lobster, crab) and rightsizing of our US Frozen business Frozen & chilled Seafood Growing our business through value-added products Sales (THB mn) and Gross Profit Margin (%) and market expansion 11.8% 15% 9.7% 10.1% 7.7% 7
Slide 32: PetCare: Demand recovery in 3Q23
PetCare: Demand recovery in 3Q23 especially global brands and retail customers in the U.S. and Europe Sales (THB mn) Quantity (tons) +12.0% +4.6% -39.2% YoY -35.3% YoY +19.1% QoQ +15.1% QoQ 6,210 38,405 37,485 5,568 0% 0% 1% 0% 3,367 3,495 3,773 23,745 23,562 21,574 24,830 Brand 3,169 Brand 0% 100%
Slide 33: 9M23 PetCare: Confirm full year guidance
9M23 PetCare: Confirm full year guidance with Q4 expected to continue to improve QoQ PetCare Investing into capacity expansion & strategic partnership Sales (THB mn) and Gross Profit Margin (%) 26.3% 27.3% • New plant ITC 2.2, already got approval from the 45,000 25.6% 24.3% 30% 19.2% 25% Department
Slide 34: Value-added & others: Sales recovered QoQ
Value-added & others: Sales recovered QoQ across all categories with solid GPM Sales (THB mn) Quantity (tons) +13.6% +9.6% -1.6% YoY -8.0% YoY +19.4% QoQ +4.7% QoQ 2,741 2,505 2,698 52,185 53,312 2,374 2,248 2,260 43,797 48,032 45,837 48,009 14% 12% 19% 6% 5% Brand 15% 13% 18% Brand 10% 3% 3% 4% Pri
Slide 35: 9M23 Value-added & others: Maintain solid gross profit margin
9M23 Value-added & others: Maintain solid gross profit margin Value-added & others Sales (THB mn) and Gross Profit Margin (%) Growing Value-Added to uplifting margins 28.5% 29.4% 28.0% 28.2% 27.4% 35% 30% • Future of Culinary, commercialized since November, with 25% 38% capacity increase. Expected t
Slide 36: Outlook
Waiting for Update- Background
Slide 37: Adjusted 2023 guidance
Adjusted 2023 guidance Sales -10 / -12% YoY decline (from -5 / -6% YoY) Gross profit margin ~ 16.5 – 17.5% SG&A to sales ~ 11.0 – 12.0% Effective interest rate Increase 0.5 – 1.0% CAPEX ~ THB 5.0 – 5.5bn (from 5.5 – 6.0bn) Dividend policy At least 50% dividend payout ratio Slide 37 3Q23 Analyst Meet
Slide 38: Appendix
Updated Placeholder for graphic (paste graphic, crops to H19.05*W10.5) (add TU logo)
Slide 39: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of August 22, 2023 Share price (November 3, 2023) THB 13.70 Historical closing price Others, 54.16% 52-week high THB 18.20 Chansiri Family, 52-week low THB 12.40 19.63% No. of paid-up shares
Slide 40: Four major CAPEX projects will be completed in 2023 onward
Four major CAPEX projects will be completed in 2023 onward Culinary business Ingredients business PetCare business Ambient tuna business Key Ready-to-eat, Protein hydrolysate Wet pet food Ambient tuna cold Products dimsum and bakery and collagen peptide and treat storage Increased by 18.7% ~11,500 s
Slide 41: Sales contribution increased mainly from Europe and Thailand
Sales contribution increased mainly from Europe and Thailand Sales Breakdown by Geographic • 9M23 lower sales contribution from all 100% regions, especially the U.S. 15% 13% 14% 12% 12% 13% 13% Others 5% 5% 6% 6% 80% 6% 6% 11% 6% 10% 10% 11% 12% Japan • The U.S. & Canada dropped significantly by 9%
Slide 42: 9M margin dropped YoY from high base line last year
9M margin dropped YoY from high base line last year Gross Profit 33,000 Operating Profit 10,000 THB mn 28,000 25,727 27,206 THB mn 9,000 7,834 8,220 7,872 23,418 8,000 23,000 20,110 7,000 6,000 5,642 18,000 9M222 9M21 9M21 5,000 9M22 20,338 9M23 6,258 9M23 13,000 18,703 4,000 5,565 (18.2%) (17.5%) 1
Slide 43: Geographic diversity: 9M23 Sales
Geographic diversity: 9M23 Sales United States and Canada Europe 40% 29% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 19% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 12% Slide 43 3Q23 Analyst Meeting
Slide 44: US & Canada: Sales recover QoQ
US & Canada: Sales recover QoQ despite the rightsizing frozen business Sales THB mn -14.1% -25.4% YoY +8.5% QoQ 18,456 17,135 16,042 14,071 12,699 13,775 3Q21 3Q22 4Q22 1Q23 2Q23 3Q23 3Q23 North America sales decreased 25% YoY • Sales dropped mainly from frozen & chilled seafood due to rightsizing s
Slide 45: Europe: Soft sales, led by PetCare and Ambient categories
Europe: Soft sales, led by PetCare and Ambient categories Sales THB mn -0.9% -6.5% YoY -10.6% QoQ 10,031 10,628 10,711 11,118 9,937 8,542 3Q21 3Q22 4Q22 1Q23 2Q23 3Q23 3Q23 EU sales slightly dropped by 7% YoY • EU sales dropped mainly from lower volume temporally impacted by further price increases
Slide 46: Thailand: Soft sales, led by feed and packaging businesses
Thailand: Soft sales, led by feed and packaging businesses Sales THB mn +22.5% -6.8% YoY -5.1% QoQ 4,244 4,280 3,783 4,166 3,956 3,230 3Q21 3Q22 4Q22 1Q23 2Q23 3Q23 3Q23 Thailand sales dropped by 7% YoY • Domestic sales dropped mainly from feed and packaging businesses, partially offset by PetCare a
Slide 47: Emerging Markets and rest of the world: Sales shown a recovery QoQ
Emerging Markets (EM) and rest of the world: Sales shown a recovery QoQ Sales THB mn +0.2% -15.9% YoY +2.8% QoQ 7,428 7,486 6,237 6,256 6,075 6,247 3Q21 3Q22 4Q22 1Q23 2Q23 3Q23 3Q23 EM and rest of world sales decreased 16% YoY • Sales decreased across key countries from soft demand and high base. H
Slide 48: 3Q23 Free cash flow generates substantial positive
3Q23 Free cash flow generates substantial positive mainly driven by EBITDA, NWC and CAPEX are under control Quarterly Free Cash Flow THB mn • 3Q23 reported materially positive Free 3,862 3,319 cash flow at THB 1.4bn, mainly driven by strong EBITDA, partially offset by 1,362 CAPEX spending 609 803 •
Slide 49: 3Q23 Category profitability
3Q23 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 15,851 20.4 3,226 • Tuna • Sardine and mackerel (3Q22: 16,985) (3Q22 : 22.9%) (3Q22 : 3,882) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related1 11,593 12.9 1,493 • Lobst
Slide 50: Thai Union
Union