Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q2 2021 Earnings Presentation
64 slides from Thai Union Group Public's earnings presentation, Aug 10, 2021
Slide 1: Virtual Analyst Meeting for 2Q21 Results
Virtual Analyst Meeting for 2Q21 Results Thai Union Group PCL. August 10, 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: 2Q21 Key Highlights
2Q21 Key Highlights Slide 3
Slide 4: CEO message: solid performance in 1H21
“ Thai Union reported a solid performance in 1H21 and continues to deliver consistently high dividends to its shareholders. We remain committed to our new, value-enhancing businesses as part of our 2025 strategy. ” Thiraphong Chansiri President and CEO Slide 4 Virtual Analyst Meeting for 2Q21 Result
Slide 5: 2Q21: All-time high net profit, up 37% YoY
2Q21: All-time high net profit, up 37% YoY; Results underpinned by a return to pre-pandemic activities in some core markets THB mn Sales Gross Profit Operating Profit Net Profit 35,883 6,805 2,524 2,343 Exceptional growth of GPM at 19.0%, Record Record 2Q net profit, up 8.6% YoY up 82bps YoY operati
Slide 6: 1H21: Solid KPIs, strong profitability, debt ratio <1x
1H21: Solid KPIs, strong profitability, debt ratio <1x 1H21 Net profit Up 51.7% Financial Summary1 +4.4% YoY to (THB million) +11.2% 67,007 64,154 THB 4,146 million 1H20 1H21 12,312 +26.4% 11,067 Share price movement 7,561 20202 20212 +51.7% +13.1% (Jan – Dec 20) (Jan – Aug 21) 5,984 0.0% +64.2% 4,1
Slide 7: 1H21 interim dividend of THB 0.45/share
With robust net profit, TU announced 1H21 interim dividend of THB 0.45/share THB/Share Interim dividend for the period: 0.80 January 1 to June 30, 2021 0.70 60% 59%60% 58% 0.60 53% 57% 57% DPS THB 0.45 51% 51% 50% 51% 50% 52% 52% 50% 50% 0.40 0.50 Ex-Dividend Date August 23, 2021 0.40 29% 0.25 0.31
Slide 8: Key Developments
Key Developments Slide 8 Virtual Analyst Meeting for 2Q21 Results
Slide 9: Global operations mostly uninterrupted from COVID-19
Global operations mostly uninterrupted from COVID-19, despite significant pressure in Asia Our global vaccine roll-out is in Despite few temporary closures in Asia, advanced progress we are now ramping up production Vaccines in Seychelles, the U.K., Songkla Canning (SCC): After some and the U.S. are
Slide 10: Acquired remaining 49% shares in Rügen Fisch
Thai Union acquired remaining 49% shares in Rügen Fisch, Germany’s shelf-stable seafood leader • Thai Union announced acquisition of remaining shares of Rügen Fisch at EUR 44.8mn in May 2021, which demonstrates Rügen Fisch’s value and our continued commitment to the German market. • In 2016, Thai Un
Slide 11: New product initiatives towards our 2025 strategy
New product initiatives towards our 2025 strategy Expanded “Healthy Living” portfolio: Tuna Bone Calcium Launched new product line under Bellotta, Marvo • Thai Union launched a new, healthy canned tuna • Thai Union launched a new “dry pet food” product product line in Feb 2021, through our long-term
Slide 12: Progress in SeaChange and community support
Thai Union details progress in SeaChange®, continues to support local communities impacted by COVID-19 Thai Union released its 8th annual Sustainability Report The report, published in May 2021, details Thai Union’s performance against KPIs outlined in our global sustainability strategy, SeaChange®.
Slide 13: Key steps to our 2025 corporate strategy
Key steps to our 2025 corporate strategy Strengthening our core business Healthy Living, “Healthy Living” Performance improvement programs for branded business product portfolio Healthy Oceans Culinary project Sustainable Continuous improvement in manufacturing (Automation & packaging Ready-to-eat)
Slide 14: Culinary Project: new automation and ready-to-eat line
Culinary Project: New automation and ready-to-eat production line, serving customers globally from 2022 We are consolidating three existing factories into a single, The construction is ongoing totally new culinary plant to increase automation and and we are on-track to enhance production efficiency
Slide 15: Expanding into new, value-enhancing areas
Expanding into new, attractive, value-enhancing areas • Focus on valorizing parts of fish • B2C-branded products to be • OMG Meat launch nationwide into value-added marine launched in 3Q/4Q21. Portfolio: − Deploying across modern trade ingredients: and foodservice • Sold via B2B sales channel - ZEAV
Slide 16: Strategic minority investment in Clover Corporation
Strategic minority investment in Clover Corporation Purchased 10% of Clover Corporation’s shares via the ASX market as of July 2021, at total purchase price of AUD 29mn (THB 700mn) Clover Corporation highlights From business partners to strategic partners Owns Nu-Mega Ingredients ▪ TU, as a leading
Slide 17: Launching Supplements under ZEAVITA Brand
We are launching Supplements under ZEAVITA Brand First-time ever; the most enriched & natural supplements from 100% deep sea tuna parts Patented in Japan with targeted molecules for better functionality Huge opportunity with market size THB 30bn in Thailand ZEAVITA to be officially launched in Septe
Slide 18: Thai Union's Alternative Protein efforts
Thai Union’s Alternative Protein efforts thus far • Our ‘Alternative Proteins unit works closely with Global Innovation Center (GIC) and Frozen/Ambient/Culinary businesses to drive growth • Key successes: − Built a multi-product portfolio across categories − Launched OMG Meat in Thailand (Mar 2021):
Slide 19: Investing in food-tech startups to drive innovation
We continue to invest in food-tech startups to drive innovation Alternative Protein • Thai Union has actively continued its corporate venture capital (CVC) activities in 2Q 2021 and expanded the scope of the CVC to also cover Biotechnology • Thai Union’s CVC fund announced two new investments, toget
Slide 20: Financial Results: 2Q21 - Consolidated
Financial Results: 2Q21 - Consolidated Slide 20 Virtual Analyst Meeting for 2Q21 Results
Slide 21: CFO message: exceptional performance in 2Q21
“We saw an exceptional performance in 2Q21, with all-time high operating and net profit, and our financial position remained solid. We also successfully launched the first-ever sustainability-linked bond in Thailand, which reaffirms our commitment to ESG across the business. ” Ludovic Garnier, Group
Slide 22: 2Q21 Key Takeaways
2Q21 Key Takeaways: Solid gross margin in three core businesses and Red Lobster recovery • Sales growth of 8.6% YoY, driven by Frozen & Chilled business turnaround in the Robust top line U.S. and growing sales in PetCare & value-added business, despite lower sales in growth Ambient business. Excl. F
Slide 23: Thai Union's Blue Finance Portfolio
Thai Union’s Blue Finance Portfolio We are committed to sustainability throughout the business Successfully launched THB 5bn sustainability-linked bond (SLB), completed in July 2021 1st ever SLB in Thailand for institutional investors, 2.23x oversubscribed 1st globally to introduce step-up / step-do
Slide 24: Managing ongoing supply chain challenges
We are managing the ongoing supply chain challenges Container shortage issues remained Inflation from packaging and edible oils • We saw a total impact of approx. THB 400mn in • In 2Q21, we saw rising cost from packaging and 1H21, mainly from freight price increase. edible oils, which resulted in so
Slide 25: Tuna prices within our expectations
Tuna prices continued to be within our expectations Tuna raw material price 2,400 (USD/ton) +4.5% YoY 2,200 2,000 2Q20 2Q21 1,267 1,323 1,800 1,600 July 2021 1,500 3Q17 4Q17 1,400 2Q17 2,010 2,033 1,200 1Q17 1,763 1Q18 2Q18 1Q19 3Q20 2Q21 1Q20 1,633 1,577 1,667 3Q18 4Q18 1,4532Q19 3Q19 1,500 4Q20 1Q
Slide 26: Solid top line growth and high gross margin
Solid top line growth and high gross profit margin for six quarters in a row Total sales (THB mn) GPM NPM 19.0% 60,000 18.2% 18.2% 18.0% 17.7% 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 34,784 33,464 40,000 34,400 34,847
Slide 27: Sales growth driven by Frozen and PetCare
Sales growth driven by Frozen seafood and PetCare & value-added businesses Sales +11.4% • 2Q21 sales growth of 8.6% YoY, driven by: THB mn +7.1% YoY +8.6% YoY Before currency impacts • Frozen and chilled seafood business rebounded remarkably at 28.7% YoY growth in +15.3% QoQ 2Q21, after last year’s
Slide 28: 2Q21 revenue component
2Q21 revenue component: a revert situation from last year, Recovering Frozen and normalizing Ambient in 2Q21 +11.4% THB mn +2.6% YoY +8.6% YoY 35,883 +720 +558 +48 -243 +650 +2% -2% +228 +7% +2,391 -1,950 +697 +18% +1,823 +26% 33,051 33,051 -1,156 +17% +355 +41 32,214 32,214 +97% -367 -159 +31 -9% -
Slide 29: Strong sales growth from the U.S. and EU
Strong sales growth from key regions: the U.S. and EU Sales Breakdown by Geographic • 1H21 higher sales contribution from key regions, 100% including the U.S., Europe and Thailand 13% 15% 15% 15% 14% 13% Others 80% 6% 6% 6% 6% 5% 5% Japan • The U.S. and Thailand sales increased 13.1% YoY 8% 9% 11% 1
Slide 30: Continued high gross profit margin
Continued high gross profit margin for five consecutive quarters Gross Profit +26.9% THB mn • 2Q21 gross profit margin was uplifted at a +12.9% YoY 30.0% high level of 19.0% vs 18.2% in 2Q20, thanks +23.6% QoQ 28.0% to: 26.0% 6,327 6,023 6,805 • Frozen and chilled seafood gross profit jumped 6,027 2
Slide 31: 2Q21 strong operating profit continued
2Q21 strong operating profit continued Operating Profit* +60.8% THB mn +7.1% YoY • 2Q21 operating profit continued to grow 7.1% YoY to THB 2,524mn: 20.0% +34.9% QoQ 18.0% • 16.0% 2,524 SG&A expenses increased 16.6% YoY, or THB 2,356 14.0% 1,998 1,938 1,871 12.0% 610mn mainly due to: 1,570 10.0% 8.0%
Slide 32: 2Q21 healthy EBITDA at 4.1bn
2Q21 healthy EBITDA at 4.1bn, up 23% YoY on reported basis EBITDA* +26.4% THB mn +23.4% YoY • 2Q21 EBITDA at THB4.1bn, up 23.4% YoY: 28.0% +20.7% QoQ • TU reported THB 74mn share of loss from 23.0% 4,135 associates in 2Q21 vs THB 579m share of 3,883 3,426 loss in 2Q20. The lower loss contribution wa
Slide 33: 2Q21 net profit at an all-time high
2Q21 net profit at an all-time high of THB 2.3bn, up 37% YoY on reported basis +54.8% Net Profit • 2Q21 reported net profit was at THB 2,343mn, THB mn +36.5% YoY 14.0% up 36.5% YoY +30.0% QoQ 12.0% 10.0% • Thanks to a strong core business, particularly 2,343 Frozen & Chilled seafood and PetCare & 2,
Slide 34: 2Q21 adjusted net profit increased 43% YoY
2Q21 adjusted net profit increased 43% YoY Adjusted Net Profit THB mn +42.5% 20.0% • Excluding one-off item, adjusted net profit +42.6% YoY 18.0% was THB 2,448mn in 2Q21, from the following +20.6% QoQ 16.0% reason: 14.0% 2,448 2,255 12.0% 2,030 • Impairment of TMAC (shrimp hatchery 1,718 1,716 1,603
Slide 35: 2Q21 EPS was up 42% YoY
2Q21 EPS was up 42% YoY Earning per Share (EPS)* THB +53.8% • 2Q21 EPS was at THB 0.49, up 41.7% YoY, +41.7% YoY backed by vigorous net profit growth. +31.4% QoQ 0.49 0.42 0.37 0.32 0.34 0.29 2Q19 2Q20 3Q20 4Q20 1Q21 2Q21 1.26 1.26 1.09 1.09 1H21 Remark: Excluding one-time net accrual for US legal-r
Slide 36: Clear improvement in Red Lobster operations
2Q21: Clear improvement in Red Lobster operations THB mn 2Q21 1Q21 4Q20 3Q20 2Q20 • Share of loss from operations rebounded nicely to THB 49mn in 2Q21 vs. share of loss at THB 702mn in Share of profit 2Q20. -49 81 -321 -54 -702 from operations Share of profit • Including lease accounting adjustment
Slide 37: Red Lobster's turnaround continued
Red Lobster’s turnaround continued amid ongoing pandemic % Outlets Opened Red Lobster has appointed CEO and Board Member, Kelli Valade, effective Aug 2. Under her leadership, we will continue to drive business recovery and strategic initiatives. 100%100%100% 96% 93% 98% 96% 97%100% 87% 88% 91% 92% 8
Slide 38: Free cash flow turned positive
2Q21: Free cash flow turned positive after a hiccup Quarterly Free Cash Flow • Free cash flow in 2Q21 turned positive after the THB mn 5,609 temporary impact from higher inventory of finished goods and goods in transit on delayed shipments and container shortages during 4Q20 2,585 and 1Q21. 1,178 1,
Slide 39: 1H21 net debt increase
1H21: THB 4.7bn net debt increase to support CAPEX, change in net working capital, and investments into Rügen Fisch & Clover Corporation ND/E 0.94x Income tax paid and other investing & ND/E 0.98x Free Cash Flow THB 1,508 mn Kd = 2.91% financing activities Kd = 2.88% 2,932 56,855 THB mn 2,061 52,129
Slide 40: Majority THB funding
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 63,327mn By Currency By Maturity JPY 0.0% 1.6% EUR 12% 1.5% 2.3% USD 0.0% Short-term loan 23% 14.2% Current portion of long-term 14% 33% debt & finance THB 98.5% lease 82.0% Long-term debt 63% 55% 202
Slide 41: Debt ratio target achieved, improved profitability ratio
Debt ratio target achieved, improved profitability ratio ROE INV Days Net Debt to EBITDA 126 123 125 124 15.5% 16.2% 120 13.5% 14.1% 4.32 4.17 11.9% Target 4.0-4.5 34,696 37,758 38,546 39,195 42,566 4.02 3.87 3.91 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 INV (THB mn
Slide 42: Financial Results: 2Q21 – Business Units
Financial Results: 2Q21 – Business Units Slide 42
Slide 43: Tuna, shrimp and salmon prices
Tuna and shrimp prices remained relatively stable, salmon price continued its upward trend in 2Q21 2,500 Tuna (USD/ton) Salmon (NOK/kg) 2,300 90 Fluctuation in the range 85 Continued upward trend 2,100 of 1,300 – 1,700 USD/ton 80 since 1Q21 from record low 1,900 at end-2020 75 1,700 4Q17 70 1,500 3Q
Slide 44: Thai Baht depreciated against key currencies
Thai Baht depreciated against key currencies YoY, except for USD, still contributed to gains 38.0 48.0 37.0 USD/THB 47.0 GBP/THB USD appreciated against 46.0 36.0 GBP continued its THB after continued 45.0 35.0 upward trend since 3Q19 downward trend since 3Q20 44.0 34.0 43.0 33.0 42.0 32.0 1Q17 41.0
Slide 45: 3 strategic business categories
3 strategic business categories Total 1H21 sales: THB 67,007 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 28,852 mn Sales: THB 26,946 mn Sales: THB 11,209 mn Sales Split Sales Split Sales Split 17% 6% 43% 40% 37% 60% 40% 63% 94% Brand Brand Brand
Slide 46: Solid growth on business diversification
Solid growth on the back of successful business diversification Sales (THB bn) 2Q20 1Q21 2Q21 1H19 1H20 1H21 -6.8% +4.4% 16.4 +28.7% 67.0 +8.8% 15.3 14.9 64.2 13.6 12.1 61.6 11.6 +12.5% 5.5 5.7 5.1 Ambient Seafood Frozen and Chilled Seafood PetCare, Value added and Total other products GPM 23.3% 20.
Slide 47: Ambient seafood: normalized topline, healthy margin
Ambient seafood: Normalized topline, continued to deliver healthy margin Sales (THB mn) Quantity (tons) +8.8% +14.0% -6.8% YoY -12.0% YoY +12.5% QoQ +3.2% QoQ 16,394 16,259 101,136 98,176 14,031 14,440 13,580 15,272 78,018 93,652 86,197 88,959 47% 47% 42% Brand 57% 58% 53% 62% Brand 48% 48% 59% 59%
Slide 48: Frozen, chilled seafood: strong recovery
Frozen, chilled seafood and related: Strong recovery in sales & GPM Sales (THB mn) Quantity (tons) +10.7% +15.0% +28.7% YoY +28.6% YoY +23.1% QoQ +24.9% QoQ 14,869 13,435 13,370 13,738 78,791 11,554 12,076 68,504 71,224 69,236 35% 61,284 63,081 38% 37% 38% Brand 34% 38% Brand 71% 72% 72% 75% 71% 73%
Slide 49: Frozen and chilled seafood: strategies for growing profit
Frozen and chilled seafood: Strategies for growing profit 1H21 gross profit was THB 2,990mn, up 72% YoY, beating both 1H20 COVID and 1H19 pre-COVID levels Strong sales push, driven by the U.S., Asia and Thailand • Continued recovery of culinary channels in the U.S, from strong performance in wholesa
Slide 50: PetCare, value-added and others
PetCare, value-added and others: Robust sales growth & margin Sales (THB mn) Quantity (tons) +20.9% +10.5% +12.5% YoY +1.7% YoY +5.0% QoQ +2.3% QoQ 5,287 5,469 5,741 75,019 75,409 74,603 4,747 5,103 5,155 73,322 72,957 5% 5% 7% 67,508 6% 6% 5% 6% 6% 4% 5% Brand 13% Brand 5% 94% 94% 95% 95% 93% 95% 9
Slide 51: PetCare and value-added business: above and beyond
PetCare and value-added business: Above and beyond 1H21 sales grew 16% YoY to THB 11.2bn PetCare & Valued Added 6,000 Sales (THB mn) and Gross Profit Margin (%) 40% Annual sales have grown from THB 15.7bn in 2015 to 30% 5,000 THB 20.1bn in 2020, with continued upward margin trend 20% from growing de
Slide 52: Geographic diversity: 1H21 Sales
Geographic diversity: 1H21 Sales Europe United States and Canada 29% 44% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 16% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 11% Slide 52 Virtual Analyst Meeting for 2Q21 Results
Slide 53: US & Canada: strong recovery in frozen seafood
US & Canada: Strong recovery in frozen seafood Sales THB mn +21.7% +11.8% YoY +11.9% QoQ 15,471 14,851 15,571 12,792 13,925 13,911 2Q19 2Q20 3Q20 4Q20 1Q21 2Q21 • 2Q21 North America sales increased by 11.8% YoY in THB term • Frozen seafood sales increased by 28% YoY, thanks to vaccine administration
Slide 54: Europe: growing topline
Europe: Growing topline from strong demand and FX benefit Sales THB mn +11.0% +14.5% YoY +28.8% QoQ 9,726 9,827 9,688 10,800 9,430 8,387 2Q19 2Q20 3Q20 4Q20 1Q21 2Q21 • 2Q21 EU sales increased 14.5% YoY, thanks to higher demand in branded ambient, particularly in France and Italy. Last year, there w
Slide 55: Thailand: PetCare and Frozen turnaround
Thailand: Driven by PetCare & value-added and turnaround of Frozen seafood business Sales THB mn +1.9% +13.9% YoY +0.1% QoQ 3,562 3,187 3,437 3,219 3,628 3,631 2Q19 2Q20 3Q20 4Q20 1Q21 2Q21 • 2Q21 Thailand sales were up 13.9% YoY. • Frozen and chilled seafood, together with PetCare and value- added
Slide 56: Emerging Markets and rest of the world
Emerging Markets and rest of the world: Lower ambient sales Sales THB mn -4.1% -9.7% YoY +13.1% QoQ 6,134 6,509 6,049 5,706 5,881 5,198 2Q19 2Q20 3Q20 4Q20 1Q21 2Q21 • 2Q21 sales in Emerging markets and rest of the world decreased 9.7% YoY. •Sales decrease resulted from ambient seafood business. •Sa
Slide 57: 2Q21 Category profitability
2Q21 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 15,272 22.0 3,362 • Tuna • Sardine and mackerel (2Q20: 16,394) (2Q20: 23.3%) (2Q20: 3,828) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related 1 14,869 11.5 1,717 • Lobste
Slide 58: Our adjusted 2021 guidance
Our adjusted 2021 guidance Sales 3-5% YoY growth Gross profit margin ~ 17-18% (revised up from ~17%) SG&A to sales ~ 11 – 12% Placeholder for graphic Effective interest rate No material change from 2020 (paste graphic, crops to H19.05*W10.5) (add TU logo) CAPEX ~ THB 5.0bn (revised down from THB 6.0
Slide 59: Virtual Analyst Meeting for 2Q21 Results
Slide 59 Virtual Analyst Meeting for 2Q21 Results
Slide 60: Healthy Living, Healthy Oceans
Thai Union is one of the world's most trusted seafood leaders, delivering healthy and responsibly-sourced nutrition to our consumers globally, while creating long-term value for our stakeholders. Healthy Living, Healthy Oceans With our global business portfolio, we will focus on continued performanc
Slide 61: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 June, 2021 Share price (6 August 2021) THB 22.50 Historical closing price Others, 46.0% Chansiri 52-week high THB 23.00 Family, 52-week low THB 13.10 19.3% Social No. of paid up shares
Slide 62: 2Q21 Income statement
2Q21 Income statement Consolidated 2Q21 2Q21 % % % (Unit: THB mn) 2Q21 2Q20 1Q21 2Q20 1Q21 to sales to sales to sales * Change Change Sales 35,883 100% 33,051 100% 31,125 100% 8.6% 15.3% Cost of sales (29,078) -81.0% (27,024) -81.8% (25,617) -82.3% 7.6% 13.5% Gross profit 6,805 19.0% 6,027 18.2% 5,5
Slide 63: Statement of Financial Position as of 30 June 2021
Statement of Financial Position as of 30 June 2021 % to total % to total (Unit: THB mn) 2Q21 2020 Change assets assets Cash and cash equivalents* 6,472 4.2% 6,286 4.3% 3.0% Trade and other receivables - net 16,468 10.7% 13,320 9.2% 23.6% Inventories - net 42,566 27.7% 38,546 26.7% 10.4% Other curren
Slide 64: 1H21 Statement of cash flow
1H21 Statement of cash flow Consolidated (Unit: THB mn) 1H21 1H20 Change Profit before income tax 4,704 3,145 1,560 Adjustments for depreciation & amortisation expenses 2,026 1,946 80 Other adjustments 812 1,058 (246) Changes in operating assets and liabilities (4,004) 2,568 (6,572) Cash flows recei