Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group — FY2023 Earnings Presentation
53 slides from Thai Union Group Public's earnings presentation, Feb 19, 2024
Slide 1: FY2023 Analyst Meeting - Thai Union Group
FY2023 Analyst Meeting Thai Union Group Dow Jones | ; y CHANGE Sustainability Indices Se 2030 FTSE4Good Inco «a llaboration with .. € ~
Slide 2: FY2023 Analyst Meeting
Slide 2 FY2023 Analyst Meeting
Slide 3: 4Q23 Key Highlights
J? 4Q23 Key Highlights
Slide 4: CEO quote on Strategy 2030
“ While the global economy presented fresh challenges in 2023, Thai Union delivered positive momentum in 2H23. With the launch of our Strategy 2030, I am confident it will drive stronger profitability and value for shareholders ” Thiraphong Chansiri President and CEO
Slide 5: 4Q23: Highest quarterly sales in 2023
4Q23: Highest quarterly sales in 2023, thanks to the rebound of Frozen and PetCare businesses THB mn Sales Gross Profit Operating Profit Net Profit 35,529 6,327 2,122 1,243* Better QoQ momentum, Healthy GPM at 17.8%, NP showed slight improvement OPM remained at a high level achieving highest sales b
Slide 6: 4Q23 Normalized net profit slightly improved YoY
4Q23 Normalized net profit slightly improved YoY, mainly driven by FX 2,500 Bridge Net Profit THB mn 2,000 +536 - 186 - 59 - 87 1,500 - 104 1,238 - 95 1,243 ** 1,143 1,000 500 0 4Q22 Reported i-Tail dilution 4Q22 Net profit Higher FX Operating Higher Share of loss Others* 4Q23 Normalized net profit
Slide 7: THB 18.4bn one-time non-cash impairment from RL
TU recorded THB 18.4bn one-time non-cash impairment charge in 4Q23 financial statements from RL investment exit decision 4Q23 2023 IFRS 5 IFRS 5 4Q23 Reported 2023 Reported RL Discontinued RL Discontinued (THB mn) Normalized numbers after Normalized numbers after Note impairment Operation (DO) impai
Slide 8: TRIS rating remained A+ and bondholder waiver obtained
After RL impairment news, TRIS rating on TU remained A+ and we obtained waiver from holders for 5 bonds We obtained one time waiver to exclude TRIS Rating affirmed A+ to TU financial impairment from 2023 net income of the outlook rating despite impairment in Red following ICR and Dividend Covenants
Slide 9: 2023: Soft performance due to robust FY2022 baseline
2023: Soft performance due to a robust FY2022 baseline, modest demand in 2023, and logistic normalization 2023 sales dropped 12.5% Financial Summary YoY to -12.5% (THB million) 2022 2023 THB 136,153mn 155,586 136,153 Share price movement* -14.6% 2023 YTD2024 (Jan – Dec 23) (Jan - Feb 16, 24) 27,206
Slide 10: 2H23 final dividend of THB 0.24/share
TU announced 2H23 final dividend of THB 0.24/share and payout ratio remained at a high level THB/Share Final dividend for the period: 1.00 July 1 to December 31, 2023 0.90 DPS THB 0.24 0.80 Ex-Dividend Date March 1, 2024 0.70 60% 57%57% 59% 60% 58% 57%57% 58% Record Date March 4, 2024 0.60 53% 51%51
Slide 11: Latest seafood innovations
Discover the latest seafood innovations: From plant-based delights to gourmet pet food King Oscar launched a new range of Thammachart Seafood launched a salmon fish pates. Spread on, dip in, or mix sausage made from superior-grade Norwegian through, our easily spreadable pates are salmon, the best-g
Slide 12: Awards & Recognitions
Awards Awards && Recognitions Recognitions We are proud of the awards we won and the recognition we gained 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 Thailand 2023 Thai Union
Slide 13: Healthy Living, Healthy Oceans
Committed to protecting the environment and supporting local communities, as part of “Healthy Living, Healthy Oceans” Successfully launched THB 11.5bn Sustainability- TU updates its Vessel Code of Conduct TU committed to Ocean Linked loan (SLL) #2, completed in Nov 23, covering to drive improvements
Slide 14: 4Q23 Financial Results
A, 4823 Financial Results mall - Consolidated or
Slide 15: CFO quote on 4Q23 peak sales
“ 4Q23 marked our peak sales for this year, driven by Frozen and PetCare. We upheld a robust 17.8% gross profit margin amidst external headwinds, demonstrating resilience and strategic agility ” Ludovic Garnier, Group CFO FY2023 Analyst Meeting
Slide 16: Strong topline improvement QoQ
Strong topline improvement QoQ, driven by accelerating demands from Frozen and PetCare businesses 2023 Key Takeaways 4Q23 Highest • Sales increased 4.8% QoQ and Gross profit margin remained strong at 17.8%, quarterly top line mostly driven by the ongoing recovery in Frozen and PetCare businesses. in
Slide 17: 4Q23 high quarterly sales, GPM 17.8%
4Q23 recorded high quarterly sales, but still soft from record-high last year, while GPM remained strong at 17.8% Total sales (THB mn) GPM NPM 19.0% 18.4% 17.8% 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% 15.1% 16.0% 40,75
Slide 18: Challenging year on NSV growth
Challenging year on NSV growth, given both external factors and our strategic decision US Frozen business THB bn -12.5% 155.6 -4.0% -2.0% -1.5% -1.4% -1.0% -2.6% 136.2 2022 Sales i-Tail baseline U.S. Frozen price Freight Middle East Others 2023 Sales normalization Frozen deflation revenue Rightsizin
Slide 19: Key decisions to strengthen core business
To strengthen our core business and be fit for growth, several key decisions have been made Business closure and Downsizing Operation Closed Business Downsizing Rationalization • Lubeck plant was closed to • Scaled down several local • The U.S. Frozen business increase operational businesses in Thai
Slide 20: Red Sea event and freight prices
Regarding the Red Sea event, freight prices rebound but stay below post-Covid peak; no material impact yet, to closely monitor Logistics: Freight price impact turned positive Red Sea situation Price impact to TU: ~THB 1,650mn in 2023 (Q4 positive ~THB 182mn), thanks to significantly lower freight pr
Slide 21: Thai Baht vs EUR, GBP and USD
Thai Baht depreciated against EUR and GBP, yet contrastingly strengthened against USD YoY 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 36.4 36.4 3Q23 4Q23 43.0 3Q23 4Q23 33.0 2Q22 35.2 35.6 42.0 44.5 44.3 1Q23 3Q21 2Q23 32.0 4Q21 34.4 2Q23 41.0 45.4 4Q21 1Q22 43.1 33.4
Slide 22: Tuna, shrimp and salmon prices
Tuna prices dropped to USD 1,517/ton in 4Q23, thanks to higher catching rate, while shrimp prices remained at a low level Salmon (NOK/kg) Salmon prices slightly 2,500 Tuna (Skipjack) (USD/ton) New low level mainly 130 increased from 2,300 from a continuous seasonality good catching rate 110 2,100 2Q
Slide 23: Red Lobster performance and exit process
In 4Q23, RL performance dropped further amidst industry headwinds; exit process currently ongoing THB mn 4Q23 3Q23 2Q23 1Q23 4Q22 • Share of loss from operations slightly higher than our Share of profit/loss guidance, marked at THB 450mn in 4Q23 vs. THB -450 -395 -94 121 -344 344mn loss in 4Q22, mai
Slide 24: ND/EBITDA, ROE, working capital and ND/E
2023: ND/EBITDA improving from Net Debt reduction in 4Q23 while ND/E ratio remain in strong position after RL impairment ROE INV Days Net Debt to EBITDA 139 145 170 164 155 11.1%* 5.00x 9.8% 9.4% 4.40x 4.64 Target 7.2% 7.1%* 3.67 4.07x 4.0-4.5 4.19*** 52,622 52,948 52,766 53,632 50,482 4Q22 1Q23 2Q2
Slide 25: Net debt THB 51.5bn, ND/E 0.78x
2023: Net debt at THB 51.5bn with healthy ND/E ratio at 0.78x, yet deteriorating vs. 0.54x LY due to RL impairment impact on equity ND/E 0.54x Income tax paid and other investing ND/E 0.78x Free Cash Flow THB +7.3bn Kd* = 3.40% & financing activities Kd* = 3.77% THB mn 683 51,538 2,979 -381 1,416 47
Slide 26: Debt profile with fixed rates
Proactive enhancement of debt profile by securing fixed rates amid future uncertainties Interest-bearing debts of THB 68.0bn By Currency By Maturity By Interest Rate Short-term loan* 16.1% 12.6% JPY 8.5% 7.5% THB 12.6bn bonds which EUR 0.3% Current portion 4.1% 11.2% are classified in short- 0.5% Fl
Slide 27: 4Q23 Business Performance
or 4Q23 Business Performance
Slide 28: Category mix: Ambient expanded its share
Category mix: Ambient expanded its share Total FY23 sales: THB 136.2bn Ambient Seafood Frozen and Chilled PetCare Value Added & Others THB 63.9bn THB 47.3bn THB 15.1bn THB 9.9bn Categories Business 47% (43% LY) 35% (36% LY) 11% (14% LY) 7% (7% LY) 0.3% Sales Split 17% 35% OEM 43% 99.7% Brand 57% 65%
Slide 29: 2023 soft top line by category
2023 Soft top line, explained by exceptional baseline, rightsizing initiative and price deflation in the U.S. Frozen, along with reduced freight revenue 2021 2022 2023 Sales (THB bn) 2021 2022 2023 -3.5% -12.5% YoY +8.4% 155.6 -19.0% 66.5 63.9 141.0 136.2 70,000 60,000 59.0 58.4 57.0 50,000 47.3* 40
Slide 30: Ambient seafood: growing demand QoQ
Ambient seafood: Growing demand QoQ driven by falling Tuna prices, despite some unfavorable selling price impact Sales (THB mn) +3.6% Quantity (tons) -11.8% -8.2% YoY -11.0% YoY -1.0% QoQ +3.7% QoQ 17,086 17,136 15,851 15,149 15,225 15,693 88,595 87,827 76,988 79,465 75,414 78,167 Brand 51% 59% 51%
Slide 31: Falling tuna prices and Ambient gross margin
As expected, falling tuna prices by ~USD 500 triggered a temporary decrease in 4Q23 Ambient gross profit margin (USD/ton) 2,700 30.0% Peak at 2,300 USD/ton on Oct 17 2,500 23.3% 22.0% 22.7% 22.9% 25.0% 22.4% 21.5% 21.7% 20.4% 20.2% 20.7% 21.2% 19.9% 19.6% 2,30018.4% 17.7% 18.9% 18.6% 18.7%19.4% 20.1
Slide 32: 2023 Ambient seafood
2023 Ambient seafood: decline on top line from price elasticity and freight normalization Ambient Seafood Sales (THB mn) and Gross Profit Margin (%) Growing our business through value-added products and 19.4% 21.1% 21.4% 21.3% market expansion 19.0% 25% 90,000 20% 75,000 62,724 66,510 63,904 15% • F
Slide 33: Frozen & chilled: strong QoQ rebound
Frozen & chilled: Strong QoQ rebound, with the highest quarterly sales for this year, along with exceptional 14.4% GPM Quantity (tons) Sales (THB mn) -24.7% -10.8% -13.3% YoY +8.0% QoQ -0.9% YoY 16,628 +2.5% QoQ 14,453 12,525 72,637 38% 11,684 11,493 11,593 65,352 64,034 63,231 64,786 39% 60,768 Bra
Slide 34: 2023 Frozen & chilled
2023 Frozen & chilled: declining topline from market price deflation (shrimp, lobster, crab) and rightsizing of our U.S. Frozen business Frozen & chilled Seafood Sales (THB mn) and Gross Profit Margin (%) Right-sizing our US Frozen business yields positive results 10.2% 9.7% 11.8% 11.3% 15% • Exitin
Slide 35: PetCare: record quarterly sales of the year
PetCare: Record quarterly sales of the year and high margin, thanks to key customers restocking especially in the U.S. and Europe Sales (THB mn) Quantity (tons) +11.3% +0.6% -17.0% YoY -23.7% YoY +22.5% QoQ +15.2% QoQ 5,568 37,485 4,153 0% 4,622 28,432 0% 28,609 3,495 3,773 23,562 21,574 24,830 Bran
Slide 36: 2023 PetCare full-year performance
2023 PetCare: Full-year performance was softer compared to the exceptional LY, but showed recovery in sales in 2H23 PetCare Sales (THB mn) and Gross Profit Margin (%) Investing into new capacity & strategic partnership 45,000 25.6% 24.3% 26.3% 30% • New plant ITC 2.2, started a trial run for some li
Slide 37: Value-added & others: sales recovered YoY
Value-added & others: Sales recovered YoY mainly thanks to value-added products and ingredient Sales (THB mn) Quantity (tons) +4.6% -5.7% +7.3% YoY -17.8% YoY -0.3% QoQ -8.8% QoQ 2,571 2,505 2,698 2,689 53,312 2,248 2,260 46,448 48,032 45,837 48,009 43,796 13% 12% 19% 17% Brand 5% Brand 13% 18% 7% 3
Slide 38: 2023 Value-added & others margin above 27%
2023 Value-added & others: gross profit margin remained solid above 27% Growing Value-Added to uplift margins Value-added & others Sales (THB mn) and Gross Profit Margin (%) • Future of Culinary, non-halal plant started operations in 28.5% 29.4% 28.0% 27.1% 35% 23.7% 30% Oct 2023, while halal plant
Slide 39: Background
Waiting for Update- Background
Slide 40: 2024 guidance: back to topline growth
Targeting back to topline growth in 2024 with improved profitability. Softer Q1 profitability expected YoY Sales 3 - 4% YoY Growth Gross profit margin ~ 17.0 – 18.0% SG&A to sales ~ 11.0 – 12.0% Effective interest rate Increase 0 – 0.5% CAPEX ~ THB 4.0 – 4.5bn Dividend policy At least 50% dividend p
Slide 41: Placeholder for graphic
Updated Placeholder for graphic (paste graphic, crops to H19.05*W10.5) (add TU logo)
Slide 42: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of December 28, 2023 Share price (February 16, 2024) THB 15.90 Historical closing price Others, 54.89% 52-week high THB 16.20 Chansiri 52-week low THB 12.50 Family, No. of paid-up shares 4,6
Slide 43: Four major CAPEX projects completed in 2024
Four major CAPEX projects will be completed in 2024 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 sq.m Tot
Slide 44: Sales contribution by geography and business
Sales contribution increased mainly from Europe and Thailand Sales Breakdown by Geographic • 2023 lower sales contribution from almost 100% all regions, especially the U.S. 15% 13% 14% 12% 12% 13% 12% Others 5% 5% 6% 6% 80% 6% 6% 11% 6% 10% 10% 11% 11% Japan • The U.S. & Canada dropped significantly
Slide 45: FY23 margin dropped YoY from high baseline
FY23 margin dropped YoY from high base line last year Gross Profit 33,000 Operating Profit 10,000 THB mn 25,727 27,206 THB mn 9,000 7,834 8,220 7,872 28,000 23,418 23,225 ** 8,000 6,853 23,000 20,110 7,000 6,000 5,642 18,000 5,000 13,000 4,000 3,000 8,000 -14.6% 2,000 -13.0% 3,000 YoY 1,000 YoY - -2
Slide 46: Geographic diversity: 2023 Sales
Geographic diversity: 2023 Sales United States and Canada Europe 41% 30% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 18% Indian Ocean (Asia, Australia, Middle East, Africa, and 11% South America) Slide 46 FY2023 Analyst Meeting
Slide 47: The U.S. & Canada sales
The U.S. & Canada: Sales exhibit upward momentum QoQ, despite the rightsizing frozen business Sales THB mn -13.7% -13.5% YoY +7.6% QoQ 17,177 17,135 14,071 13,775 14,822 12,699 4Q21 4Q22 1Q23 2Q23 3Q23 4Q23 4Q23 North America sales decreased 13.5% YoY • Sales dropped mainly from frozen & chilled sea
Slide 48: Europe sales
Europe: Sales flat, accelerates by Value-Added, mitigated by Petcare shortfall Sales THB mn -0.2% -0.2% YoY +7.6% QoQ 10,709 10,711 11,118 9,937 10,692 8,542 4Q21 4Q22 1Q23 2Q23 3Q23 4Q23 4Q23 EU sales flat YoY • EU sales dropped mainly from weak demand and soft volume temporally impacted by further
Slide 49: Thailand sales
Thailand: Soft sales, led by lower demand almost all categories Sales THB mn +7.9% -11.7% YoY -4.5% QoQ 4,101 4,280 3,783 4,166 3,956 3,779 4Q21 4Q22 1Q23 2Q23 3Q23 4Q23 4Q23 Thailand sales dropped by 11.7% YoY • Domestic sales dropped mainly from Ambient (Tuna, plus Sardine and Mackerel), packaging
Slide 50: Emerging Markets and rest of the world sales
Emerging Markets (EM) and rest of the world: Sales flat quarter by quarter, meanwhile behind last year Sales THB mn -4.3% -16.7% YoY -0.2% QoQ 6,513 7,486 6,256 6,075 6,247 6,236 4Q21 4Q22 1Q23 2Q23 3Q23 4Q23 4Q23 EM and rest of world sales decreased by 16.7% YoY • Sales decreased across key countri
Slide 51: 4Q23 strong Free Cash Flow of THB 2.8bn
In 4Q23, TU generated strong Free Cash Flow of THB 2.8bn Quarterly Free Cash Flow THB mn • 4Q23 reported materially positive Free 3,862 3,319 cash flow at THB 2.8bn, mainly driven by 2,819 strong EBITDA and well managed NWC, 1,328 1,362 partially offset by CAPEX spending. • 4Q23 Net Capex spending w
Slide 52: 4Q23 Category profitability
4Q23 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 15,693 17.4 2,737 • Tuna • Sardine and mackerel (4Q22: 17,086) (4Q22 : 21.2%) (4Q22 : 3,622) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related* 12,525 14.4 1,801 • Lobst
Slide 53: Union
Union