Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2024 Earnings Presentation
49 slides from Thai Union Group Public's earnings presentation, Nov 7, 2024
Slide 1: Q3 24 Analyst Meeting
Q3 24 Analyst Meeting Thai Union Group PCL. November 7, 2024 Q3 24 Analyst Meeting Investor Relations Department
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: Q3 24 Key highlights and key developments
Q3 24 Key highlights and key developments Q3 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 4: CEO quote on sustainable growth and Strategy 2030
“Thai Union’s focus remains on delivering sustainable growth, with Strategy 2030 serving as the cornerstone of our long-term ambitions. This strategic approach ensures we are well-positioned to continue delivering value and supports our vision of becoming the world’s leading marine health and nutrit
Slide 5: 9M 24: strong financial performance across all metrics
9M 24: Thai Union delivered strong financial performance, with growth across all metrics, especially in EBITDA, which showed accelerated growth QoQ 9M 24 sales rose by 2.7% YoY to Financial Summary 9M 23 9M 24 (THB mn) THB 103,343 mn +2.7% YoY 103,343 Share price movement* 100,624 +12.9% YoY 2023 YT
Slide 6: Q3 24: organic sales growth, record-high quarterly GPM
Q3 24: solid organic sales expansion, reaching a record-high quarterly GPM, coupled with continued growth in net profit Sales Gross Profit Operating Profit Net Profit* 34,840 6,793 2,074 1,400 THB mn THB mn THB mn THB mn 19.5% 6.0% 4.0% GPM OPM NPM +2.7% YoY +9.0% YoY -3.9% YoY +4.4% YoY -
Slide 7: Net profit and EPS growth for 3 consecutive quarters
Net profit and EPS growth accelerated for 3 consecutive quarters Bridge Net Profit (THB mn) +16.1% YoY +4.4% YoY +21.8% YoY 1,634 -360 +56 +14 -38 +12 1,400 +234 +496 1,341 -115 1,206 -85 +214 Q3 23 Discontinued Red Q3 23 Operating FX gain/loss Other Share Higher Tax NCI Q3 24 Trans- Q3 24 Reported
Slide 8: Corporate Strategy 2030 and transformation programs Sonar and Tailwind
We have launched Thai Union’s Corporate Strategy 2030, and kicked off 2 transformation programs called Project Sonar and Tailwind (more details on Nov 11) Purpose: Healthy Living, Healthy Oceans Group transformation to lay the foundations Vision: The world’s leading marine health & nutrition company
Slide 9: Innovation Hub opened in the Netherlands
Thai Union opened the Innovation Hub in the Netherlands for the Group’s ambient seafood brands, reaffirming innovation is a core pillar of Thai Union strategy Wageningen Netherlands ~20 product, process and packaging developers, nutritionists, sensory and consumer scientists, and innovators To focus
Slide 10: Commitment to sustainability remains key
Our commitment to sustainability remains key, evident in the practices of top management and all employees Thai Union hosted SeaBOS at our booth Thai Union announced new Thai Union hosted officials from the Thai during the Sustainability Expo 2024 partnerships to tackle Ministry of Labour to showcas
Slide 11: Q3 24 Financial performance
Q3 24 Financial performance Q2 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 12: Group CFO quote on Q3 24 performance
“In Q3 24, Thai Union experienced accelerated sales growth due to recovering demand across all key markets, putting organic expansion back on track. Meanwhile, GPM hit a new record-high level. Net profit reached THB 1.4bn; however, excluding transformation costs, net profit grew significantly to THB
Slide 13: Demand recovery drives organic sales growth and record GPM
A surge in demand recovery contributed to organic sales growth, driving Q3 24 GPM to a record-high level In this quarter, sales rose 2.7% YoY, supported by 3.1% YoY organic growth due to Organic sales are back to growth higher demand in Ambient, PetCare, and Value-added categories. However, this was
Slide 14: Operational performance continued to recover
Our operational performance has continued to recover, reflecting growth from the top line to the bottom line 19.5% 19.0% 18.5% 18.2% 18.2% 18.0% 18.0% 18.2% 17.5% 18.2% 18.4% 17.7% 17.3% 17.8% 16.9% 16.9% 17.3% 16.2% GPM 15.1% 6.5% 6.2% 5.9% 5.8% 5.4% 5.2% 5.0% 4.8% 4.4% 4.2% 4.0% 4.2% 4.0% NPM 3.3%
Slide 15: Sales growth: organic growth and FX impact
Q3 24 sales were largely driven by satisfactory organic growth partially offset with a limited negative FX impact Sales growth (% YoY) Organic growth FX translation 16.5% 14.7% 8.5% Accelerated reported sales 12.4% growth YoY 6.0% 12.3% in Q3 24 1.7% 3.6% 2.7% 2.9% 0.9% Organic sales back to growth
Slide 16: Tuna, salmon and shrimp price trends
Tuna prices slightly dropped QoQ, while salmon prices experienced a sharp decline in Q3 due to seasonality. In contrast, shrimp prices have started rise QoQ Tuna (Skipjack; USD/ton) Shrimp (60pcs/kg; THB/kg) Quarterly avg. Quarterly avg. Monthly avg. Q2 23 Monthly avg. Shrimp prices surged temporari
Slide 17: Thai Baht against key currencies
Overall, the Thai Baht appreciates against all key currencies YoY and QoQ, especially a sharp drop in USD/THB from the following quarter USD/THB Quarterly avg. EUR/THB Quarterly avg. Avg. in Q3 24: 1 USD / 34.81 THB (-1.0% YoY, -5.2% QoQ) Monthly avg. Avg. in Q3 24: 1 EUR / 38.21 THB (-0.1% YoY, -3.
Slide 18: Red Lobster exited Chapter 11; shift to supplier role
Red Lobster exited Chapter 11 and Thai Union shifted from a shareholder role to a supplier role. Ongoing continuous supplier partnership with RL RL exited Chapter 11 Shift from Claim from RL lenders on bankruptcy protection shareholder to supplier the 2022 guarantee On Sep 16, 2024, Red Lobster (RL)
Slide 19: Freight prices inflating but below pandemic levels
Freight prices are inflating but remained below pandemic levels, with extended ocean transit time Logistics market Key issues in logistics market in 2024 Freight cost (USD): Thailand to the U.S. (East Coast) Red Sea situation U.S. Tariffs increase on U.S. East cost and Gulf of Chinese imports Mexico
Slide 20: Improved profitability, asset management and leverage ratios
Solid improvement on profitability and asset management as well as lower net debt to EBITDA and stable net debt to equity ROE* Inventory Days Net Debt to EBITDA* 172 167 164 162 4.71x 158 8.7% 8.9% 8.1% 4.19x 7.1% 7.3% 4.02x 3.78x 3.59x 53,632 50,482 48,577 47,364 44,604 Target 3.5 - 4.0x Q3 23 Q4 2
Slide 21: 9M 24 net debt decreased on strong free cash flow
9M 24: net debt decreased to THB 49.8bn, thanks to strong FCF generation of THB 8.1bn. Net Debt/Equity improved QoQ and remained healthy at 0.79x ND/E 0.78x Income tax paid and ND/E 0.79x Free Cash Flow THB +8,052mn Kd* = 3.59% other investing & financing activities Kd* = 3.92% (THB mn) Debt 51,538
Slide 22: Perpetual bond call and debt maturity profile
TU decided to call Perpetual Bond and plan to refinance it next year. TRIS maintains TU credit rating Debt maturity profile in 2024 - 2031 As of 30 September 2024 ST Loans SLLs SLBs Bonds Perp. Maturity Amount Interest Rate (Unit: THB bn) Types of Debts in 2024 (THB bn) (% p.a.) 14.7 1 09-Oct-24 Bon
Slide 23: Q3 24 Business performance
Q3 24 Business performance Q3 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 24: Category portfolio mix: 70% of sales from high-margin categories
We are transforming our category portfolio mix, resulting in 70% of sales coming from high-margin categories Total 9M 24 sales: THB 103,343mn Ambient Frozen PetCare Value-added THB 52,452mn THB 30,296mn THB 12,763 mn THB 7,832mn 18.6% 11.5% 29.3% 27.0% GPM GPM GPM GPM 50.8% (47.9% LY) 29.3% (34.6% L
Slide 25: Q3 24 Ambient: all-time high sales
Q3 24 Ambient: achieved all-time high sales, driven by strong demand recovery, with GPM improvement supported by lower raw material costs Sales (THB mn) and GPM (%) YoY and QoQ analysis: 20.4% 20.1% 18.9% • In Q3 24, Ambient sales surged by 13.1% YoY, primarily due to a 17.4% 16.6% 23.7% YoY increas
Slide 26: 9M 2024 Ambient: sales back to growth
9M 2024 Ambient: sales are back to growth, achieving an all-time high in sales contribution Sales (THB mn) and GPM (%) Business update: 21.1% 21.4% 21.3% Innovations from Petit Navire 19.4% 19.0% 19.5% 18.6% • Introduced Les Super Salades – new CAGR +3.7% YoY salad recipes that are rich in protein +
Slide 27: Q3 24 Frozen: sales volumes slightly increased
Q3 24 Frozen: sales volumes slightly increased after 9 quarters of decline, primarily driven by the Feed business Sales (THB mn) and GPM (%) YoY and QoQ analysis: 14.4% • In Q3 24, Frozen sales dropped significantly by 15.2% YoY, 12.9% 11.8% 12.0% primarily due to soft demand in the U.S. Additionall
Slide 28: 9M 24 Frozen: GPM reached 11.5%
9M 24 Frozen: with our focus on improving GPM, currently Frozen GPM reached 11.5%, in line with our target level at 10 – 12% Sales (THB mn) and GPM (%) Business update: 11.8% 11.3% 11.5% Growing the business through value-added products and market 10.2% 9.7% 10.1% 7.7% expansion • Frozen business: a
Slide 29: Q3 24 PetCare: GPM above 30% for 2 quarters
Q3 24 PetCare achieves consistent GPM above 30% for 2 consecutive quarters driven by rising demand Sales (THB mn) and GPM (%) 31.3% 30.6% YoY and QoQ analysis: 25.7% 19.4% 23.4% • In Q3 24, PetCare sales increased by 15.4% YoY, primarily driven by higher contribution of the premium product. In addit
Slide 30: 9M 24 PetCare: sales back on track
9M 24 PetCare: sales were back on track following the easing of destocking and higher share of premium-priced product, leading to the significant rise in GPM Sales (THB mn) and GPM (%) Business update: 29.3% New ASRS warehouse at 25.6% 26.3% 24.3% Songkhla plant is on-track and 20.1% 20.5% 19.2% exp
Slide 31: Q3 24 Value-added: sales and volumes increase
Q3 24 Value-added: overall sales and sales volume increase both YoY and QoQ. Despite the drop in GPM, it remained in line with our target level Sales (THB mn) and GPM (%) YoY and QoQ analysis: 28.9% 29.5% • In Q3 24, Value-added sales slightly increased by 1.3%, mainly 26.2% 26.5% 25.1% driven by hi
Slide 32: 9M 24 Value-added: high growth potential category
9M 24 Value-added: continued to be the high growth potential category Sales (THB mn) and GPM (%) Business update: 28.5% 29.4% 28.0% 27.1% 27.4% 27.0% Growing our business through Value-added products and market 23.7% expansion CAGR +6.5% YoY • Continue launched new and innovative products 10,420 +8.
Slide 33: Outlook
Outlook Q2 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 34: Revised 2024 guidance
Revised 2024 guidance Sales growth + 3 - 4% YoY (Prior target: + 4 - 5% YoY) Gross profit margin ~18.5 – 19.0% (Prior target: ~ 18 – 18.5%) SG&A to sales ~12.5 – 13.0% (Prior target: ~ 12 – 12.5%) Effective interest rate Increase 0 - 0.5% CAPEX ~ THB 3.5 - 4.0bn (prior target ~ THB 4 - 4.5bn) Divide
Slide 35: Q&A
Q&A Q&A Q2 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 36: We value your opinion! Event survey
We value your opinion! Scan here to complete our event survey. Q3 24 Analyst Meeting Investor Relations Department
Slide 37: Appendix
Appendix Q2 24 Q3 24 Analyst Meeting Analyst Investor Relations Meeting Department
Slide 38: Thai Union footprint: sales contribution and production locations
Thai Union footprint: 9M 24 sales contribution 17 Production locations ~39% ~30% North America Europe 6 Asia • Indonesia • Vietnam • Pakistan • India • Thailand (2) 10 Europe & Africa • France • Poland • Germany (2) • Portugal • Ghana • Seychelles • Lithuania • Russia • Norway Pacific Ocean Pacific
Slide 39: Sales breakdown by geography and business segments
Sales breakdown by geography and business segments Sales breakdown by geography Sales breakdown by business segment 9.8% 9.5% 10.1% 9.7% 9.8% 9.5% Others* 2.5% 5.3% 2.4% 5.1% 3.2% 2.5% 2.5% 4.5% 5.8% 6.0% 6.2% 5.8% Middle East 10.0% 10.3% 10.5% 11.5% 11.8% 10.9% Japan Brand Brand Thailand 37.8% 37.2
Slide 40: The U.S. & Canada and Europe sales
The U.S. & Canada: Sales dropped solely from Frozen Europe: Sales increased primarily from Ambient and business, while Ambient and PetCare showed positive PetCare businesses, especially in Germany market sales growth -3.3% YoY +2.8% YoY -5.7% QoQ -10.5% QoQ 14,822 14,130 11,414 13,775 13,327 10,692
Slide 41: Thailand, Japan, EM and rest of world sales
Thailand: Sales slightly increased across all categories Japan, Emerging Markets (EM) and the rest of the except for PetCare world: Sales growth, driven by strong demand in the Middle East +16.7% YoY +1.3% YoY +19.1% QoQ +10.7% QoQ 6,951 7,291 3,956 3,779 4,007 3,606 3,619 6,247 6,236 6,120 Sales Sa
Slide 42: Ambient sales contribution and GPM history
Ambient has the highest sales contribution, together with increasing sales and recovering GPM Increasing A sharp drop Higher demand from Normalization effect from in tuna price Recognizing low- High base for Ambient selling price ~USD 700 lockdown and promotions 2020’s pantry loading during cost inv
Slide 43: Ambient GPM and tuna prices
Ambient GPM continued to improve despite slightly lower tuna prices in Q3 24 22.4% 23.3% 22.7% 21.7% 22.9% 21.5% 20.2%22.0% 21.2% 19.9%20.4% 18.9%20.1% 18.4% 19.6% 17.7% 17.1%16.9% 17.6% 18.9% 18.6% 19.4% 17.4% 20.1% 20.7% 19.5% 16.5% 16.7% 18.0%18.7% 18.0% 15.6% 16.6% 14.0% 14.0% Peak at Q3 17 Q4 1
Slide 44: Frozen category on track to better profitability
Frozen category is on track to deliver better profitability after the rightsizing Recovery Market price Market price Reduced demand for frozen from robust correction in the stabilization Strategic rightsizing food amid the COVID-19 food service U.S., heightened and reduced of frozen business in pand
Slide 45: PetCare remains flagship business for expansion
With strong and continuous sales growth, along with an impressive GPM, PetCare remains the flagship business for future expansion Signs of Strong demand for pet food, High base for pet food and Inventory recovery Back to growth supported by COVID-19 inventory build up destocking from pandemic restoc
Slide 46: Value-added sales improved with healthy GPM
Value-added sales improved constantly, with healthy GPM Higher GPM >30%, Established Thai Union Record high Strong GPM driven by Record high GPM due mostly from improved Lifescience (supplement) quarterly sales with our strategy to prioritize to strong performance packaging margins and and launched
Slide 47: Well-diversified debt portfolio
Well-diversified debt portfolio, minimizing potential adverse effects (THB mn) By Currency By Maturity By Interest Rate 67,988 67,988 7.5% 63,185 63,185 0.3% 12.6% 8.1% 13.5% 17.9% 0.2% 11.2% 19.2% 6.1% THB 12.6bn bonds, Float classified in short- 22% term as of 4Q 23 for 18.5% which we obtained bon
Slide 48: Proudly Acknowledged: Awards & Honors
Proudly Acknowledged: Awards & Honors Outstanding CEO and Best CFO Thai Union has been honored with two prestigious awards in the Agro & Food industry from Investment Analysts Association (IAA). • OUTSTANDING CEO: Mr. Thiraphong Chansiri, President and CEO • BEST CFO: Mr. Ludovic Garnier, Group CFO
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