Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q3 2022 Earnings Presentation
58 slides from Thai Union Group Public's earnings presentation, Nov 3, 2022
Slide 1: Analyst Meeting for 3Q22 Results
Analyst Meeting for 3Q22 Results Thai Union Group PCL. November 3, 2022
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: Agenda
Agenda 3Q22 / 9M22 Key Financial Results by Mr. Ludovic Garnier, Group CFO 3Q22 / 9M22 Business Performance by Ms. Ratinan Wongwatcharanon, Head of Investor Relations 3Q22 / 9M22 Key Developments & Strategy Update by Ms. Neroli Goldman, Investor Relations 4Q22 Outlook and FY2022 Guidance by Mr. Ludo
Slide 4: 3Q22 / 9M22 Key Financial Results
3Q22 / 9M22 Key Financial Results Slide 4 3Q22 Analyst Meeting
Slide 5: CFO quote on inflationary pressures and cost efficiency
“As we face ongoing inflationary pressures and an uncertain macro- economic outlook, our focus continues to be on innovative products, cost efficiency, and inventory management to improve our net working capital and ” lower our net debt level. Ludovic Garnier, Group CFO Slide 5 3Q22 Analyst Meeting
Slide 6: 3Q22: Record quarterly topline and net profit
3Q22: Record quarterly topline and net profit, thanks to higher selling prices, volume growth and favorable FX THB mn Sales Gross Profit Operating Profit Net Profit 40,756 7,399 2,335 2,530 All-time high sales, Operating profit New record quarterly NP Strong GPM at 18.2% +14.7% YoY increased +24% Yo
Slide 7: 9M22: Record-high revenue and strong gross profit
9M22: Record-high revenue and strong gross profit, debt ratio increased to support net working capital 9M22 sales growth Financial Summary1 13.1% YoY to +13.1% (THB million) THB 115,974 mn 115,974 9M21 9M22 102,547 +8.7% Share price movement2 20,338 2021 9M22 18,703 -11.5% (Jan – Dec 21) (Jan – Sep
Slide 8: Strong gross profit margin momentum continued in 3Q22
Strong gross profit margin momentum continued in 3Q22, in line with last year’s record performance Total sales (THB mn) GPM NPM 19.0% 18.2% 18.2% 18.0% 17.7% 18.0% 18.2% 17.5% 17.4% 18.2% 20.0% 60,000 16.7% 15.9% 16.1% 16.2% 18.0% 15.8% 14.9% 14.9% 14.0% 16.0% 50,000 40,756 38,501 36,272 38,946 14.0
Slide 9: Headline inflation remained high with improving outlook in key material costs
Headline inflation remained high with an improving outlook in our key material costs and lower freight price Logistics: Recent significant Our solutions to mitigate Macro economic overview improvement inflationary pressures and • Potential improvement thanks Impact to TU: ~ THB 1.6bn in 9M22 (Q3~370
Slide 10: Tuna prices rose in 3Q while salmon prices dropped
Tuna prices rose in 3Q due to FAD-ban, while salmon prices dropped to a manageable range, after reaching peak levels 2,500 Tuna (Skipjack) (USD/ton) Salmon (NOK/kg) 2,300 Tuna price rose in 3Q22 due to 110 2,100 FAD-ban 1,900 90 1,700 2Q22 1Q22 70 1,500 97 1Q19 4Q21 1,717 3Q22 2Q19 1Q22 3Q22 1,300 1
Slide 11: Thai Baht depreciation continued to support sales growth
10.6% YoY Thai Baht depreciation against USD in 3Q22, continued to support our sales growth Oct 22 37.92 50.0 38.0 USD/THB 49.0 GBP/THB 37.0 USD continued to 48.0 36.0 appreciate against THB 47.0 46.0 35.0 3Q22 45.0 34.0 36.41 44.0 33.0 43.0 2Q22 32.0 4Q21 42.0 3Q21 4Q21 1Q22 33.4 34.4 41.0 45.0 3Q2
Slide 12: FX volatility generated significant FX gains below OP
FX volatility generated significant FX gains in 3Q22 below OP but also negative sales adjustments Total FX impact (above OP) We recorded two lines from FX impact: (in mTHB) 3Q22 9M22 FX gain/loss 3Q22 9M22 1. (In net sales line) THB -897mn (in mTHB) sales adjustments in 3Q22, the Net sales 40,756 11
Slide 13: Operations softened from extreme inflationary environment
Operations softened from extreme inflationary environment Focus on foundational and strategic initiatives FY share of profit/loss THB mn 3Q22 2Q22 1Q22 4Q21 3Q21 2022E 2021* 2020 2019 (THB mn) Share of profit/loss Operations -1,100** -178 -1,188 -142 -339 -281 -243 -147 -63 Lease accounting adj. -40
Slide 14: Strategies to turnaround RL within the next 12 months
Strategies to turnaround RL within the next 12 months Amid inflation and soft guest count in the U.S. Drive guest count and sales traffic • Value deals: Traffic-driving menu offerings, i.e. Lobster Dinner & Tail add-on ($10) drove strong 3Q22 sales, as well as Summerfest • Promotions: Ultimate Endle
Slide 15: Red Lobster opens its first franchise in Thailand
Red Lobster opens its first ever franchise in Thailand Through our JV partner and leading restaurant operator, ThaiBev Red Lobster’s (RL) new branch is operated by ThaiBev (Thai Beverage PCL.) through franchise model, with capacity of over 70 seats Benefits to Red Lobster: Revenue sharing, franchise
Slide 16: 9M22: Net debt increased due to high NWC and dividend payment
9M22: Net debt increased due to high NWC and 1H22 interim dividend payment, offset by strong EBITDA ND/E 0.99x Income tax paid and other investing & ND/E 1.13x Free Cash Flow THB -2,070 mn Kd** = 2.62% financing activities Kd** = 2.87% THB mn 1,860 71,617 4,396 1,620 3,106 583 61,318 -230 9,325 -75
Slide 17: Our debt is well-managed, with manageable interest rate risk
Our debt is well-managed, with manageable risk from interest rate hike Interest-bearing debts of THB 73.9bn By Currency By Maturity By Interest Rate 1.4% JPY EUR 1.5% 6.9% Short-term loan 14% Short-term loan* 30% increased mainly to 12.6% 1.2% Current portion support higher NWC USD of long-term 21%
Slide 18: ND/E ratio increased from higher inventory and receivables
ND/E ratio increased from higher inventory and receivables Strengthening our focus on NWC management ROE INV Days Net Debt to EBITDA 139 144 135 133 132 15.8% 16.1% 15.4% 5.17 5.26 14.8% 4.50 13.8% 4.11 Target 4.39 4.0-4.5 45,409 46,636 48,649 52,528 56,319 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q
Slide 19: 3Q22 / 9M22 Business Performance
3Q22 / 9M22 Business Performance
Slide 20: Diversified business portfolio to uplift our margins
Diversified business portfolio to uplift our margins Driven by our focus on health & wellness and convenience trends Total 9M22 sales: THB 115,974mn Ambient seafood Frozen & chilled seafood PetCare, value-added & others THB 49,424mn THB 42,511mn THB 24,039mn business Core Ingredients Supplements Alt
Slide 21: Consistent sales growth post-pandemic
Consistent sales growth post-pandemic, thanks to diversification and strong core businesses Sales (THB bn) 9M20 9M21 9M22 9M20 9M21 9M22 +17.2% +2.4% 116.0 *New High* +19.1% 48.3* 49.4 102.5 43.8 98.9 41.8** 42.5 35.9 +62.6% 24.0 17.0 14.8 Ambient Seafood Frozen and Chilled Seafood PetCare, Value ad
Slide 22: Ambient seafood: Record quarterly sales with high GPM
Ambient seafood: Record quarterly sales with high GPM Sales (THB mn) +4.5% Quantity (tons) -13.5%* +13.6% YoY -1.1% YoY +0.4% QoQ -6.0% QoQ 16,259 16,912 16,985 101,137 90,347 14,954 15,149 15,527 85,865 88,595 91,967 84,948 Brand 57% 57% Brand 47% 43% 42% 45% 58% 61% 55% 52% 49% 46% Private 48% 43%
Slide 23: 9M22 Ambient seafood: Continued sales growth
9M22 Ambient seafood: Continued sales growth amid concern of global recession Continued to launch new products to serve strong demand Ambient Seafood for canned seafood globally Sales (THB mn) and Gross Profit Margin (%) 19.4% 21.1% 21.4% 21.0% 21.4% 25% • Positive from selling price increase and pr
Slide 24: Frozen & chilled seafood: Stable sales YoY
Frozen & chilled seafood: Stable sales YoY, despite last year’s exceptional performance in the U.S. Quantity (tons) Sales (THB mn) +10.8% +3.5% -0.2% YoY -4.4% YoY +6.6% QoQ +3.7% QoQ 14,843 16,628 14,820 13,370 13,790 13,900 38% 61,284 77,100 72,637 71,086 73,704 40% 36% 64,146 37% 42% 38% Brand Br
Slide 25: 9M22 Frozen & chilled seafood: Growth in Thailand and Asia
9M22 Frozen & chilled seafood: Growth momentum continued in Thailand and Asia Frozen & chilled Seafood Growing our business through innovative and value- Sales (THB mn) and Gross Profit Margin (%) added products, market expansion and cost efficiency 11.8% 11.8% 15% 90,000 9.1% 10.2% 9.7% 7.4% Launch
Slide 26: PetCare, value-added & others: Record quarterly sales
PetCare, value-added & others: Record quarterly sales with exceptional margin Quantity (tons) +20.8% Sales (THB mn) +73.6% +34.1% YoY +55.9% YoY +9.0% QoQ +10.1% QoQ 8,951 83,096 90,589 8,133 5% 75,019 74,880 78,814 6,724 6,955 5% 67,542 4% 3% Brand 5,742 4% Brand 6% 5% 3% 5,155 6% 7% 6% 7% 95% 95%
Slide 27: 9M22 PetCare, value-added & others: Record high sales
9M22 PetCare, value-added & others: Record high sales from strong momentum PetCare, value-added & others PetCare: Investing into capacity expansion & production Sales (THB mn) and Gross Profit Margin (%) efficiency in Samut Sakhon, Thailand • 35% 26.7% 26.3% 27.0% 27.6% 30% Expanding our plant: To s
Slide 28: https://youtu.be/JZNR7ap4A3c
https://youtu.be/JZNR7ap4A3c Page 28 3Q22 Analyst Meeting
Slide 29: US & Canada: Record topline
US & Canada: Record topline, driven by PetCare, ambient seafood and favorable FX Sales THB mn +19.3% +15.1% YoY +11.6% QoQ 17,177 18,456 15,471 16,042 16,357 16,540 3Q20 3Q21 4Q21 1Q22 2Q22 3Q22 3Q22 North America sales increased 15% YoY • Record-high quarterly sales in 3Q22, driven by strong growth
Slide 30: Europe: Sales increased YoY in all core businesses
Europe: Sales increased YoY in all core businesses, especially PetCare and frozen & chilled seafood Sales THB mn +8.2% +6.0% YoY -0.9% QoQ 9,827 10,031 10,709 10,723 10,628 8,899 3Q20 3Q21 4Q21 1Q22 2Q22 3Q22 3Q22 European sales increased 6% YoY • Sales growth was driven by higher selling prices and
Slide 31: Thailand: All-time high topline
Thailand: All-time high topline, driven by growth from ambient and value-added businesses Sales THB mn +23.5% +31.4% YoY +7.3% QoQ 4,101 3,923 3,957 4,244 3,437 3,230 3Q20 3Q21 4Q21 1Q22 2Q22 3Q22 3Q22 Thailand sales increased significantly 31% YoY • Domestic sales grew impressively with record-high
Slide 32: Emerging Markets and rest of the world: Strong growth
Emerging Markets (EM) and rest of the world: Strong growth in all key countries Sales THB mn +22.8% +19.1% YoY -3.8% QoQ 7,093 7,725 7,428 6,049 6,237 6,513 3Q20 3Q21 4Q21 1Q22 2Q22 3Q22 3Q22 EM and rest of world sales significantly rose 19% YoY • Sales increased from all key countries, mainly in th
Slide 33: 3Q22 revenue component
3Q22 revenue component: Ambient and PetCare & Value-added grew, with benefits from FX, particularly USD +17.2% THB mn +14.7% YoY +2.2% YoY +1,431 -566 40,756 +407 -5% +2,639 7,0 00 +11% +733 -1,071 +17% +1,221 35,539 -1,105 6,0 00 +143 +693 -1,902 +1,894 +5 +15 34,784 5,0 00 +448 +1% +5% +8% +988 +6
Slide 34: 3Q22 / 9M22 Key Developments & Strategy Update
3Q22 / 9M22 Key Developments & Strategy Update Slide 34
Slide 35: CAPEX key projects to support core & new businesses
CAPEX key projects to support our core & new businesses 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
Slide 36: Delivering humanized innovation to drive well-being of pets
Delivering humanized innovation to drive well-being of pets Dog Mini-cone Treat Swirl chips paté Smoothies Salmon Rockstar Assortment cake chunk Slide 36 3Q22 Analyst Meeting
Slide 37: Leveraging our portfolio to drive growth in Ingredients
Leveraging our portfolio to drive growth in Ingredients Owned portfolio Strategic investments Expanding our portfolio to algae oil • Invested into a leading Canada-based algae oil producer, Mara in Aug 2022, serving the infant nutrition market Omega-3 encapsulation technology • Invested in the Austr
Slide 38: Building expertise through collagen line extension
Building expertise through collagen line extension We are entering Weight Management segment, while still leveraging Activ70X and Prebiotics Launched June 2022 Launched July 2022 Launched August 2022 4.9 out of 5 Rating from Consumers ZEAVITA Official Store on Shopee for Gluta & Asta Continue being
Slide 39: Driving growth in alternative protein category
Driving growth in alternative protein category Thai Union remains committed to the Alternative Protein opportunity • Category sees global slow-down, but this is only a temporary ‘growing pain’ • Long-term fundamentals remain, a category of strategic relevance for Thai Union Collaboration with U.S. l
Slide 40: SEALECT launched new, innovative products
SEALECT launched new, innovative products In theme of “Healthy Living, Healthy Oceans”, as part of 30th anniversary SEALECT TUNA x Doraemon Original Series launched in August SEALECT TUNA COLLAGEN 2022 and launched Limited Edition premium in mid September 2022 launched in November 4, 2022 o The firs
Slide 41: Continue engaging with food-tech startups to drive innovation
Continue engaging with food-tech startups to drive innovation Exploring insect-based protein within our CVC investments Selected CVC investments: Alternative Protein Insect-based pet treats, sold under Laika brand, Insect protein start-up (listed in Tel Aviv Stock using black soldier fly larvae rais
Slide 42: Industry leader on sustainability: Healthy Living, Healthy Oceans
We continue to be an industry leader on sustainability, and focus on “Healthy Living, Healthy Oceans” • Thai Union received a score of 86 points* on the S&P Global Corporate Sustainability Assessment (CSA), the metric used in the Dow Jones Sustainability Index (DJSI). • This year’s ranking showed th
Slide 43: We are investing in solar panels for sustainability
We are investing in solar panels for sustainability Thai Union installed solar rooftops at our Seychelles plants in September 2022, totaling THB 12-13mn (K€ 340 for 1.5 Megawatt), accounting for 8% of our total energy consumption. The increase in renewable energy is in line with the Seychelles gover
Slide 44: TRIS Credit Rating Result: Affirming Positive outlook
TRIS Credit Rating Result: Affirming "Positive“ outlook Company rating: A+ Outlook: Positive Report date: 29 Sep 2022 o The committee maintained a positive outlook, rating unchanged from last year o Viewing that we are transitioning to gain more share on high value added products with higher and mor
Slide 45: Honored to be recognized by leading institutions
Honored to be recognized by leading institutions around the world Key highlight awards & recognition in 3Q22 People & Community USA Thailand NHRA - Los Angeles HR Excellence Awards Culture Award, 2022, 4 Silver Awards & achieved by Chicken of the 2 Bronze Awards Sea’s Senior VP of HR and Corporate A
Slide 46: Limited impact from minimum wage increase in Thailand
Limited impact from minimum wage increase in Thailand • Thailand’s daily minimum wage increased by an average of 5%, from THB 313-336 to THB 328-354/day, effective October 1, 2022 • The increase in the minimum wage is expected to have minimal impact of ~0.2%* of annual sales, as some of our employee
Slide 47: We confirmed operating KPI guidance
We confirmed operating KPI guidance Sales 10-12% YoY growth Gross profit margin ~ 17.5 – 18.0% SG&A to sales ~ 12.0 – 12.5% Placeholder for graphic Effective interest rate No material change from (paste graphic, crops to H19.05*W10.5) 2021 (add TU logo) CAPEX ~ THB 5.0bn (from THB 6.0bn) Dividend po
Slide 48: Thank you!
Thank you! Slide 48 3Q22 Analyst Meeting
Slide 49: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of August 23, 2022 Share price (Nov 1, 2022) THB 18.20 Others, Historical closing price 49.02% 52-week high THB 21.50 Chansiri 52-week low THB 15.20 Family, Social Security 20.44% No. of pai
Slide 50: All time high sales, driven by higher selling prices and FX
All time high sales, driven by higher selling prices and FX, especially PetCare and value-added business Sales +17.2% THB mn • 3Q22 sales growth of 14.7% YoY, driven by: +12.3% YoY +14.7% YoY Before currency impacts +4.6% QoQ • PetCare and value-added business sales grew 40,756 *New High* 56% YoY, t
Slide 51: Strong sales growth from all key regions
Strong sales growth from all key regions, led by the U.S., Thailand, and Japan Sales Breakdown by Geographic • 9M22 higher sales contribution from all regions, 100% especially the U.S., Thailand, and Japan 13% 15% 15% 15% 14% 13% 15% Others 6% 5% 5% Japan 80% 8% 6% 6% 11% 6% 10% 10% 6% Domestic • Th
Slide 52: New high 9M gross profit with healthy margin
New high 9M gross profit with healthy margin Gross Profit 33,000 Operating Profit 10,000 THB mn 28,000 25,727 THB mn 9,000 7,821 8,256 23,418 8,000 23,000 18,892 20,110 7,000 6,000 5,642 18,000 9M22 4,669 9M20 9M21 9M21 5,000 9M22 9M20 20,338 *New High* 5,883 6,280 13,000 18,703 4,000 5,666 17,395 (
Slide 53: 3Q22: Free cash flow remained positive
3Q22: Free cash flow remained positive, despite impacted by record high net working capital Quarterly Free Cash Flow THB mn • Free cash flow in 3Q22 remained positive, driven by strong EBITDA, partially offset by a temporary impact from the increase in net working capital due to higher inventory, hi
Slide 54: 9M22: Record high sales in the U.S. and Thailand
9M22: Record high sales in the U.S. and Thailand United States and Canada Europe 44% 26% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 19% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 11% Slide 54 3Q22 Analyst Meeting
Slide 55: 3Q22 Category profitability
3Q22 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 16,985 22.9 3,882 • Tuna • Sardine and mackerel (3Q21: 14,954) (3Q21: 20.7%) (3Q21: 3,094) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related1 14,820 6.4 945 • Lobster (3
Slide 56: Sales incur
Enter into Cash receipt from customer forward contract Sales incur and F/W is settled
Slide 57: TU Group's Previous Accounting Treatment: Hedge Accounting
TU Group’s Previous Accounting Treatment PL Q4’ 18 Q1’ 19 Q2’ 19 Total Sales - 3,100 - 3,100 Gain(loss) on FX – AR (Cust.) - 50 - 50 [(31.5-31.0) x $100] Gain/(loss) on FX – AP (Bank) 200 (50) - 150 [(33.0-31.0) x $100] [(31.0-31.5) x $100] Amortization of Deferred Exp. (30) (30) (10) (70) [(33.0-32
Slide 58: Thank You!
Placeholder for graphic (paste graphic, crops to H19.05*W10.5) Thank You! (add TU logo) Slide 58