Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — FY2015 Earnings Presentation

56 slides from Thai Union Group Public's earnings presentation, Feb 24, 2016

  1. Slide 1: 2015 Result Presentation

    2015 Result Presentation 24 February 2016 Page 0

  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  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 2

  4. Slide 4: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 3

  5. Slide 5: More than 38 years of seafood processing experience

    More than 38 years of seafood processing experience Strategic Acquired Expanded to Rebranding: Expanded to Set up Expanded to Entered a JV Founded partnership third largest frozen Entered to Expanded Renaming shrimp feed pet food shrimp with Savola Thai Union with canned seafood tuna fishing in capa

  6. Slide 6: Group Structure

    Group Structure Thai Union Frozen Products Frozen & canned seafood, pet food, snack and ready-to-eat meals Core Branded Business OEM Business Business 100.00% THAI UNION HATCHERY (TUH) 90.50%* 98.00% 51.00%*** 94.44% Supporting TMK FARM CO., LTD. (TMK) Business 75.00% ASIAN PACIFIC CAN THAI UNION GR

  7. Slide 7: Stable sales contribution by product category

    Stable sales contribution by product category 2015 Sales breakdown THB 125,183 mn 1 Tuna Shrimp and related business1 2 Frozen Private 45% shrimp 3 4 5 6 label Sardine & Salmon Pet care Value-added & Mackerel other products2 Shrimp feed 72% Brand 55% 64% 28% 33% 77% 99% 36% 100% 67% 23% 1% % Sales 3

  8. Slide 8: New segmentation to reflect business dynamic

    New segmentation to reflect business dynamic Total 2015 sales: THB 125,183mn Frozen, chilled seafood Pet care, value added Ambient seafood Sales: THB 59,142mn and related and others Sales: THB 50,307mn Sales: THB 15,734mn Shrimp & related Tuna business Pet care business1 Ambient & Pouch Frozen, chil

  9. Slide 9: #1 Global leader in a consumer staple business

    #1 Global leader in a consumer staple business TU is the world’s largest canned tuna producer, with the processing volume 18% of world production. World Canned Tuna Annual Production1 1.67 million tons Others 82% TUF 18% Source: 1Fishstat Plus (FAO) 2010, based on finished product production Page 8

  10. Slide 10: Global market leading brand portfolio

    Global market leading brand portfolio #1 #1 #1 •#1 canned seafood •#1 canned •#1 premium brand in the UK, Ireland seafood brands canned sardine and the Netherlands in France brand in France #1 #1 #1 •#1 premium canned • #1 canned tuna •#1 canned tuna sardine brand in US, brand in China brand in Thai

  11. Slide 11: Fully integrated global supply chain in canned tuna…

    Fully integrated global supply chain in canned tuna… Raw material flow Work-in-process and finished good flow Raw material sources Europe Production base Fishing fleet USA Thailand Ghana Seychelles West Pacific Ocean Atlantic ocean Vietnam Papua New Guinea Indian ocean TU’s 7 own fleets Raw Material

  12. Slide 12: … and frozen shrimp business

    … and frozen shrimp business Production base TU’s export markets Chicken of the Sea Frozen Europe Food (COSFF) COSFF’s sourcing Asia COSFF’s distribution China Japan USA Thailand India Vietnam Pacific ocean Atlantic ocean Latin America Oceania Indian ocean Raw Material Acquisition Production Marketi

  13. Slide 13: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 Dec 2015 Share price (24 Feb 2016) : THB 19.40 Historical price : Chansiri Family 52-week high THB 22.50 20.4% 52-week low THB 15.80 No. of paid up shares : 4,771.8mn Niruttinanon Family 7.0% Par

  14. Slide 14: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 13

  15. Slide 15: Successful integration of MerAlliance & King Oscar

    Successful integration of MerAlliance & King Oscar Revenue Revenue +3.9% +8.1% Unit: EUR mn 158 Unit: NOK mn 559 152 FY2015 FY2015 517 Plan Actual Plan Actual Operating Operating Profit Profit +10.4% 53 +136% 6.6 Unit: EUR mn Unit: NOK mn 2.8 48 FY2015 FY2015 Plan Actual Plan Actual • Strengthened a

  16. Slide 16: Low tuna price prompt fleet impairment

    Low tuna price prompt fleet impairment Due to a sharp fall in tuna prices, TU decided to impair the asset for prudent accounting policy by THB 508mn during 4Q15 Overview Catch Volume and Tuna price 50  2007: Purchased 4 fishing vessels & associated 2,500 Volume (tonnes 000s) 2,127 Tuna price USD/to

  17. Slide 17: “Seafood is good for all,” US Department of Health and Human Services

    “Seafood is good for all,” US Department of Health and Human Services US Department of Health and Human Services (HHS) has recently released the 2015-2020 U.S. Dietary Guidelines for Americans (DGA’s), which highlighted seafood not only as an “important source” of nutrients that offers many “health

  18. Slide 18: 2016 Recent Development

    2016 Recent Development Feb: Announcement of the completion of a 51% equity stake of Rügen Fisch AG Rügen Fisch will contribute to TU’s consolidated financial statement from Feb 2016 onward Company Name: Rügen Fisch AG Location: Island of Rügen, Germany Revenue EUR 140mn EV/EBITDA 6.5 times Share pr

  19. Slide 19: 2016 Recent Development (Cont’d)

    2016 Recent Development (Cont’d) Feb: The winner of The “Best Treasury & Finance Strategies in Asia-Pacific” Award “2015 Asia’s Best for Forecasting Strategy”  Thai Union’s Group Corporate Finance & Tax team was announced to be the winner of The “Best Treasury & Finance Strategies in Asia-Pacific”

  20. Slide 20: 2015 Recent Development

    2015 Recent Development Dec: Thai Union welcomed over one thousand former workers from external pre-processing suppliers  Thai Union, by 31 December 2015, has cease working with all external pre- processors and will bring all processing operations in-house. The move will provide TU with full oversi

  21. Slide 21: 2015 Recent Development (Cont’d)

    2015 Recent Development (Cont’d) Dec: Thai Union with Lion Capital mutually terminated the acquisition of Bumble Bee Foods, LLC Thai Union have reached an agreement with Lion Capital to mutually terminate the acquisition of Bumble Bee Foods, LLC (Bumble Bee Seafoods) on December 4, 2015. The termina

  22. Slide 22: 2015 Recent Development (Cont’d)

    2015 Recent Development (Cont’d) Dec: Thai Union was ranked “Best for Overall Corporate Governance in Thailand” for the first time in Asiamoney’s Corporate Governance Poll 2015 Thai Union was ranked: No.1 Best for Overall Corporate Governance in Thailand No.1 Best for Responsibilities of Management

  23. Slide 23: 2015 Recent Development (Cont’d)

    2015 Recent Development (Cont’d) Dec: Thai Union awarded “Excellence in Investor Relations” from IR Magazine Awards South East Asia 2015 Mr. Wai Yat Paco Lee, Deputy General Manager of Investor Relations and Corporate Investment of Thai Union Group PCL, received on behalf of the company, a Certifica

  24. Slide 24: 2015 Recent Development (Cont’d)

    2015 Recent Development (Cont’d) Nov: Thai Union awarded “Outstanding Investor Relations Awards” by SET for the 2 nd year running Mr. Wai Yat Paco Lee, Deputy General Manager, Investor Relations and Corporate Investment of Thai Union Group PCL, recently received, on behalf of the company, SET Awards

  25. Slide 25: 2015 Recap: An eventful year

    2015 Recap: An eventful year Acquisition & JV Jan: Effective date of new par trading (change to THB 0.25 from THB 1) Acquisitions Feb: COSFF signed the asset purchase agreement with Orion Seafood International Feb: BOD approved of Preferential Public Offering (PPO) Jun: Reception of Global Treasury

  26. Slide 26: Proposed final dividend of THB 0.31 per share

    Proposed final dividend of THB 0.31 per share Proposed final dividend for the period: 1 Jul 15 to 31 Dec 15 DPS THB 0.31 XD 7 March 2016 Book closing date 10 March 2016 Payment date 21 April 2016 THB/Share 0.70 59.9% 0.60 53.5% 56.7% 50.1% 50.4% 50.6% 50.7% 50.0% 51.3% 50.5% 0.50 0.40 0.31 29.4% 0.3

  27. Slide 27: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 26

  28. Slide 28: 4Q15: Sustained at high level

    4Q15: Sustained at high level YoY Chg Margin 33,333 Sales +1.7% (THB mn) 5,238 GP normalized (Reported GP: THB 4,730mn) +11.3% 15.7% (+136bps YoY) 1,861 OP normalized (Reported OP: THB 1,265mn) +22.1% 5.6% (+93bps YoY) 1,614 NP normalized +83.3% 4.8% (+216bps YoY) (Reported NP: THB 757mn) Remark: *O

  29. Slide 29: Record net profit yet another year

    Record net profit yet another year Financial Summary1 2015 Normalized Net (THB million) Profit up 8% YoY to Total Sales 2015 2014 125,183 121,402 +3.1% THB 6,106million (Reported NP THB 5,303million) Gross Profit* 2015 19,501 +2.5% Q1’12 2014 19,020 Share price movement Q1’11 2015 20142 20152 11,526

  30. Slide 30: Consistent YoY quarterly improvement for past 8 quarters

    Consistent YoY quarterly improvement for past 8 quarters Total sales (THB mn) GPM NPM 17.2% 16.9% 17.3% 50,000 16.1% 18.0% 15.7%* 45,000 14.9% 16.0% 13.9% 13.8% 40,000 14.2%**14.0% 35,000 32,772 32,602 33,333 30,258 30,423.26 30,642 12.0% 30,000 27,948 28,606 10.0% 25,000 20,000 6.3% 8.0% 5.0% 5.3%

  31. Slide 31: 4Q15 Key highlights

    4Q15 Key highlights  4Q15 Sales up 1.7% YoY to THB 33.3bn thanks to the contribution from recently acquired businesses, namely the full quarter consolidation of MerAllliance (Nov 2014) and King Oscar (Nov 2014) and Orion (Feb 2015). However, overall growth was limited by depreciation of EUR against

  32. Slide 32: 2015 Key highlights

    2015 Key highlights  2015 Sales up 3.1% YoY to THB 125.2bn thanks to the contribution from recently acquired businesses, namely MerAllliance, King Oscar and Orion. However, overall growth was limited by depreciation of EUR against THB (2015 AVG THB38.06/EUR, -11.4% YoY) and low commodity prices of

  33. Slide 33: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 32

  34. Slide 34: 2015 net profits of THB 6,106mn, before year end items

    2015 net profits of THB 6,106mn, before year end items Unit: THB mn Unit: THB mn 80 211 57 28 57 508 211 6,106 1,614 508 5,302 758 FY2014 FY2015 4Q15 4Q15 Reported Normalized Reported Normalized NP NP NP NP  To demonstrate the true operation performance of the company, we have excluded one-off adju

  35. Slide 35: 2015 sales growth in most categories despite weak EUR and low RM prices

    2015 sales growth in most categories despite the negative impact of weak EUR and low RM prices Sales Breakdown by Category THB mn +1.7% YoY + 3.1% YoY +2.2% QoQ 121,402 125,183 Value added & 32,772 32,602 33,333 other products2 Value added & Pet care other products2 Pet care Salmon Salmon Sardine &

  36. Slide 36: Solid 2015 sales growth of 6.5%, before currency impact

    Solid 2015 sales growth of 6.5%, before currency impact Revenue growth component (THB million) +3.1% YoY +1.7% YoY -771 -495 +1,022 -9% -5,179 125,183 +726 -66 +1,605 +6,279 -3% +2% +137 -3% +487 -565 121,402 -13% 32,772 -1,223 33,333 +102% +26% +25% + 2,285 +8% -23% +4% -6% -4,807 + 6,126 -1,221 -9

  37. Slide 37: Stable geographic market and business breakdown

    Stable geographic market and business breakdown Sales Breakdown by Geographic Sales Breakdown by Business THB 121,402mn THB 125,183mn 13% 14% 7% 6% Others 7% 8% 59% 59% Japan 29% 29% Domestic Privale label Europe Brand 44% USA 41% 41% 42% 2014 2015 2014 2015  Higher sales contribution from the dome

  38. Slide 38: GPM hitting top end of the target

    GPM hitting top end of the target Gross Profit Normalized Gross Profit* THB mn THB mn +2.5% YoY +3.6% YoY +3.9% YoY +11.3% YoY 19,501 20,009 -16.0% QoQ 19,020 -7.0% QoQ 19,323 5,634 5,634 4,730 5,238 4,552 4,704 4Q14 3Q15 4Q15 2014 2015 4Q14 3Q15 4Q15 2014 2015 GP Margin 13.9% 17.3% 14.2% 15.7% 15.6

  39. Slide 39: 2015 average raw material prices were on downtrend

    2015 average raw material prices were on downtrend Skipjack tuna raw material prices White shrimp raw material prices (USD/ton) (THB/kg. of 60 pcs./kg) 3,000 300 2,500 250 189 (Jan’16) 2,000 200 1,500 150 1,000 1,000 100 (Jan’16) 500 50 0 0 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-11 Jan-12 Jan

  40. Slide 40: Continual rise in OP while SG&A still in check

    Continual rise in OP while SG&A still in check Operating Profit Normalized Operating Profit* THB mn THB mn +0.7% YoY -2.9% YoY 7,810 7,725 -6.2% YoY 6,990 +22.1% YoY 6,785 -24.2% QoQ -46.6% QoQ 2,366 2,456 1,861 1,348 1,265 1,524 4Q14 3Q15 4Q15 2014 2015 4Q14 3Q15 4Q15 2014 2015 Operating Norm OP Ma

  41. Slide 41: 4Q15 EBITDA growth of 23% YoY mainly driven by FX

    4Q15 EBITDA growth of 23% YoY mainly driven by FX EBITDA Normalized EBITDA* +2.0% YoY THB mn +4.8% YoY THB mn 11,799 12,038 11,526 10,999 +23.2% YoY +6.1% YoY -8.0% QoQ -28.7% QoQ 3,202 2,947 3,297 2,391 2,351 2,214 4Q14 3Q14 4Q14 2014 Norm 2015 4Q14 3Q14 4Q14 2014 2015 EBITDA EBITDA 7.3% Margin 6.8

  42. Slide 42: 2015 normalized and reported NP making record high

    2015 normalized and reported NP making record high Net Profit Normalized Net Profit* THB mn THB mn +7.7% YoY +4.1% YoY 6,106 5,303 5,672 +8.5% YoY 5,092 +83.3% YoY -53.4% QoQ +5.4% QoQ 1,626 1,614 1,531 878 698 757 4Q14 3Q15 4Q15 2014 2015 4Q14 3Q15 4Q15 2014 2015 NP Margin 2.1% 5.0% 2.3% 4.2% 4.2%

  43. Slide 43: Improving margin and declining WC reducing leverage

    Improving margin and declining WC reducing leverage Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.85x THB 14,826 mn ND/E 0.75x Kd = 3.75% Kd = 3.71% Free Cash Flow THB 11,664 mn 40,567 -12,246 +1,362 36,363 +2,720 +1,315 +2,063 +3,162 -4,806 +1,103 +1,071 +52 Net Debt EBI

  44. Slide 44: Improving profitability and inventory turnover

    Improving profitability and inventory turnover ROE1 ROCE2 A/R Days 13.6%* 12.5% 12.9%* 45 12.2% 43 9.3% 40 7.4% 11.9% 12.0% FY13 FY14 FY15 FY13 FY14 FY15 FY13 FY14 FY15 INV Days Net WC3 129 ND/E4 125 0.92x 0.85x 123 0.75x 127 131 124 42,634 44,438 41,070 FY13 FY14 FY15 FY13 FY14 FY15 FY13 FY14 FY15

  45. Slide 45: Improvement in inventory turn and WC

    Improvement in inventory turn and WC Inventory Days Net Working Capital Days 135 134 133 131 125 122 119 120 119 117 117 116 114 110 34,464 108 108 44,438 37,518 35,809 34,133 35,032 35,180 33,885 33,169 40,278 40,088 40,514 39,918 39,315 38,631 41,070 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q14 2Q

  46. Slide 46: Strong 2015 FCF sending cash conversion rate to a new high

    Strong 2015 FCF sending cash conversion rate to a new high Quarterly Free Cash Flow Annual Free Cash Flow THB mn THB mn 11,664 5,469 9,162 1,039 4Q14 3Q15 4Q15 2013 2014 2015 -356 -1,747 Cash Conversion -0.1 1.1 1.2 Rate1 Remark: 1Cash Conversion Rate = FCF / EBIT Page 45

  47. Slide 47: Declining debts with balanced maturities

    Declining debts with balanced maturities Interest-bearing debts of THB 39,179mn By Currency By Maturity 3.6% EUR USD 18.0% 2016 1.2% Short-term Loan 21.5% 49% Current 2017 Portion of Long- 2018 78.5% 77.3% term Debt 9% THB 2% & finance 1% lease Finance lease Long-term 41% 42% 2019 Debt onwards 2014

  48. Slide 48: 4Q15 Income Statement

    4Q15 Income Statement Consolidated 4Q15/ 4Q15/ % to % to % to (Million baht) 4Q15 4Q14 3Q15 4Q14 3Q15 sales sales sales Change Change Sales 33,333 100% 32,772 100% 32,602 100% 1.7% 2.2% Cost of sales (28,603) -85.8% (28,221) -86.1% (26,968) -82.7% 1.4% 6.1% Gross profit 4,730 14.2% 4,552 13.9% 5,634

  49. Slide 49: 2015 Income Statement

    2015 Income Statement Consolidated 2015/ 2014 (Million baht) 2015 % to sales 2014 % to sales Change Sales 125,183 100% 121,402 100% 3.1% Cost of sales (105,682) -84.4% (102,382) -84.3% 3.2% Gross profit 19,501 15.6% 19,020 15.7% 2.5% SG&A expenses (12,716) -10.2% (12,031) -9.9% 5.7% FX gain (loss) 1

  50. Slide 50: Statement of Financial Position as of 31 Dec 2015

    Statement of Financial Position as of 31 Dec 2015 Consolidated % to total % to total (Million baht) 2015 2014 Change assets assets Cash and cash equivalents* 2,816 2.5% 6,156 5.4% -54.3% Trade and other receivables 15,776 14.2% 15,404 13.4% 2.4% Inventories - net 35,180 31.6% 37,518 32.6% -6.2% Othe

  51. Slide 51: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 50

  52. Slide 52: 2016 Outlook

    2016 Outlook  2016 forming a solid foundation for growth  Launch of Sea Change Project and sustainability initiatives  Continual organic expansion of the existing businesses, enhanced by new product and process innovations  Kick off the second phase of Global Innovation Incubator (Gii)  Launchi

  53. Slide 53: 2016 Guidance

    2016 Guidance FY 2016 Sales USD 4.5 – 5 bn GPM +/- 16% SG&A +/- 10% Effective interest rate No material change from FY2015 Effective tax rate 18 - 20% CAPEX Approx. THB 3.5bn Dividend policy At least 50% dividend payout Page 52

  54. Slide 54: Agenda

    Agenda  Company Overview  Recap & Recent Developments  Key Highlights  2015 Financial Results  2016 Outlook & Guidance  2020 Target & Strategy Page 53

  55. Slide 55: Committed to 5-year target

    Committed to 5-year target Organic growth must play a bigger role in bridging the gap versus ambition along with M&A USD Sales (Billion) Bridging the Gap Excludes Organic Growth M&A M&A 8.0 1.4 1.2 3.7 4.1 1.7 1.3 2015 Organic Growth New Divisions M&A 2020F Page 54

  56. Slide 56: 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:55+66 2298 0024 Page

Thai Union Group Public Company — FY2015 Earnings Presentation on 6ix