Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q2 2022 Earnings Presentation
58 slides from Thai Union Group Public's earnings presentation, Aug 9, 2022
Slide 1: Analyst Meeting for 2Q22 Results
Analyst Meeting for 2Q22 Results Thai Union Group PCL. August 9, 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: 2Q22 Key Highlights
2Q22 Key Highlights Slide 3
Slide 4: CEO quote: all-time high quarterly sales and healthy margin
“ We delivered all-time high quarterly sales and healthy margin in 2Q22, thanks to our strong core businesses, robust demand, and FX. Despite ongoing supply chain challenges and two one-off items, we delivered a solid adjusted net profit of THB2.2 bn. ” Thiraphong Chansiri CEO Slide 4
Slide 5: 2Q22: All-time high quarterly sales, up 8.5% YoY
2Q22: All-time high quarterly sales, up 8.5% YoY, from higher selling prices, FX and continued strong demand THB mn Sales Gross Profit Operating Profit Net Profit 38,946 6,584 1,664 1,624 All-time high sales, Operating profit declined YoY Healthy GPM at 16.9% NPM was resilient at 4.2% +8.5% YoY amid
Slide 6: Strong 2Q22 adjusted net profit of THB 2.2bn
Strong 2Q22 adjusted net profit of THB 2.2bn, close to last year’s exceptional performance Adjusted Net Profit THB mn +424 +195 2,243 1,624 2Q22 Reported NP RL's preferred shares Rügen Fisch 2Q22 Adjusted NP fair value restructuring costs +30.7% 20.0% -8.4% YoY 18.0% +34.5% QoQ 16.0% 2,448** 14.0% 2
Slide 7: 1H22: Record-high revenue and solid gross profit
1H22: Record-high revenue and solid gross profit, debt ratio remained healthy and within target 1H22 sales growth 12.3% +12.3% Financial Summary1 YoY to (THB million) 75,217 THB 75,217mn 67,007 1H21 1H22 +5.1% Share price movement2 2021 1H22 12,312 12,939 -22.2% (Jan – Dec 21) (Jan – Jun 22) -24.2%
Slide 8: TU announced 1H22 interim dividend of THB 0.40/share
TU announced 1H22 interim dividend of THB 0.40/share THB/Share 1.00 0.90 Interim dividend for the period: 0.80 January 1 to June 30, 2022 0.70 60% 59%60% 58%57%58% 57%57% 0.60 50%50%53%51%51% 51% 50% 52% DPS THB 0.40 50% 0.50 0.40 0.50 29% 0.40 0.25 0.31 0.31 0.34 Ex-Dividend Date August 22, 2022 0.
Slide 9: We are on track to meet our 2025 targets (1/2)
We are on track to meet our 2025 targets (1/2) Commitments for 2025 Current Status Progress review Lagging On track Achieved ▪ Achieved EBITDA of USD ~470mn in 2021, driven by frozen segment 1 Group EBITDA of USD 450-550mn revival, Pet Care and other value added businesses Stable, organic growth of
Slide 10: We are on track to meet our 2025 targets (2/2)
We are on track to meet our 2025 targets (2/2) Commitments for 2025 Current Status Progress review Lagging On track Achieved ▪ Ingredients: Ongoing collaboration with Mara; Protein hydrolysate enhancing businesses Building new value- Scale-up of our Ingredients and Culinary and collagen peptide plan
Slide 11: Innovation is an essential part of our strategy
Innovation is an essential part of our strategy We launched new products in 1H22 to serve strong demand for ambient seafood Mackerel fillets in olive oil, tomato, lemon new flavors Yellowfin tuna olive oil in garlic, lemon, chili new flavors Premium sardines in “Label Rouge”, Arrabbiata, brine (bone
Slide 12: i-Tail: To become the world's leading pet-centric company
i-Tail: To become the world’s leading pet-centric company Our global footprint • i-Tail Corporation (ITC) is a leading premium quality pet food producer Japan Pet Nutrition globally, with over 40+ years of US Pet Nutrition (PetCare products distributor) experience (Premium pet food distributor) • IT
Slide 13: Expanding our Ingredients portfolio into algae-based oil
Expanding our Ingredients portfolio into algae-based oil Mara Renewables: Transaction highlights Thai Union Ingredients: Our portfolio Invested C$10M (~THB 270M) as part of Mara’s Leading tuna oil producer since 2018 growth funding round; 1 board seat for TU Mara Overview One of world’s leading prod
Slide 14: Expanding collagen & fish oil products
is expanding its collagen & fish oil products Core Products New Products FISH OIL DEEPZ Tuna fish oil with 7.7x higher DHA Infused with L-theanine amino acid from green tea Better brain functionality & sleep performance 7 benefits in 1: • Better sleeping patterns • Deep, longer, and well rested slee
Slide 15: Driving growth in Alternative Protein
Driving growth in Alternative Protein Through Alternative Seafood and OEM manufacturing Introducing new, plant-based “shrimp” wonton We launched a new “shrimp” innovation in wonton format in 2Q22 in Thailand Strengthening our alternative seafood expertise Our focus is to be a leading player in alter
Slide 16: Ensuring seafood stocks are healthy for generations to come
We recognize our responsibility to ensure that seafood stocks are healthy for generations to come The 2021 Sustainability Report was released, ahead of a major update of the global SeaChange® strategy • The 2021 issue included new areas such Our commitment towards climate change as Blue Finance to m
Slide 17: Protecting the environment and supporting local communities
Committed to protecting the environment and supporting local communities, as part of “Healthy Living, Healthy Oceans” Thai Union donated THB 1.8mn to Samut Sakhon Hospital to purchase medical equipment, as part of commitment to support communities where it operates. Thai Union has started to distrib
Slide 18: We are proud of the recognition we continue to receive
We are proud of the recognition we continue to receive Key highlight awards in 1H22 Outstanding Company in Thailand Top Company Awards by Business+ Magazine Best CEO: Top 3 (sell side) in 2022 Asia (ex-Japan) Executive Team rankings by Institutional Investor* Best CFO: Top 2 (sell side) and Top 3 (c
Slide 19: 2Q22 Financial Results - Consolidated
2Q22 Financial Results - Consolidated
Slide 20: CFO quote on 1H22 performance
“ We delivered a solid performance and healthy margin in 1H22, in line with our FY guidance. As we continue to focus on cost efficiency, higher margin products, and driving sales in our core and new businesses, we are confident to deliver a stronger performance in 2H22. ” Ludovic Garnier, Group CFO
Slide 21: Record quarterly sales, consistent gross profit margin
Record quarterly sales, consistent gross profit margin 2Q22 Key Highlights • 8.5% YoY sales growth, driven by higher selling prices, favorable FX and continued New all-time high strong demand, particularly PetCare & value-added (+41.7%) and Ambient (+10.7%). quarterly top line Excl. FX, sales rose 6
Slide 22: Ten quarters of topline growth and healthy margin
Strong track record of topline growth and healthy margin for ten quarters in a row Total sales (THB mn) GPM NPM Adjusted 19.0% GPM 18.2% 18.2% 18.0% 17.7% 18.0% 18.2% 20.0% 60,000 17.5% 17.4%* 16.7% 16.1% 16.2% 18.0% 15.8% 15.9% 14.9% 14.9% 14.0% 16.9% 16.0% 50,000 38,501 36,272 38,946 14.0% 11.6% 3
Slide 23: Strong 2Q22 results adjusted for two non-cash one-off items
We delivered strong 2Q22 results, adjusted for two non-cash one-off items, despite supply chain challenges (in mTHB) 2Q22 Adjusted 2Q22 Excl. One-off items We recorded two one-off items: One-offs One-offs Net Sales 38,946 38,946 1. THB 424mn fair value adjustment Restructuring costs related to closu
Slide 24: Record-high headline inflation in key markets
Headline inflation reached record-high levels in our key markets, early signs of improvement in some of our material costs Logistics: Signs of improvement COGS inflation: Packaging, ingredients, raw materials, utilities Impact to TU: ~THB 1.3bn in 1H22 Headline inflation was record-high in June 2022
Slide 25: Key raw material prices softened in 2Q22
Key raw material prices softened in 2Q22, particularly tuna and shrimp 2,500 Tuna (USD/ton) Salmon (NOK/kg) 2,300 Tuna price declined to 110 2,100 Salmon price continued to 1,425 USD/ton as of June 2022, reach record levels in 2Q22, 1,900 from a peak level in 1Q22 90 with some improvements in 1,700
Slide 26: Thai Baht depreciation supported sales growth
9.7% YoY Thai Baht depreciation against USD supported our sales growth in 2Q22 50.0 38.0 USD/THB 49.0 GBP/THB GBP depreciated 37.0 48.0 against THB YoY USD continued to 47.0 36.0 appreciate against THB 46.0 35.0 45.0 34.0 44.0 43.0 33.0 42.0 3Q21 32.0 4Q21 41.0 4Q21 1Q22 2Q18 3Q18 2Q21 45.4 33.4 2Q2
Slide 27: Red Lobster remains challenged in 2Q22
Red Lobster remains challenged in 2Q22 Continue to monitor closely as we face inflation & labor shortages FY share of profit/loss THB mn 2Q22 1Q22 4Q21 3Q21 2Q21 2022E 2021* 2020 2019 (THB mn) Share of profit/loss Operations -950** -178 -1,188 -142 -281 -243 -147 -63 -49 from operations Lease accoun
Slide 28: Non-cash impact on preferred units fair value
Non-cash one-time impact in 2Q22 on preferred units fair value from US interest rate increase RL’s preferred units is a financial instrument under TFRS 9 • Fair value (FV) is calculated through present value of future cash flows (using discount cash-flow calculation) • Discount rates used over past
Slide 29: Quick win actions to address U.S. economic challenges
Quick win actions to address U.S. economic challenges including inflation, softened guest count, and labor shortages • Price increases gradually • Evolve creative media • Redesign of the Operation • Develop marketing vitals implemented to cope with messaging to build brand love management to make th
Slide 30: Internal restructuring within Rügen Fisch
Internal restructuring within Rügen Fisch to enhance competitiveness in German market Closure of one Rügen Fisch plant in Lübeck, Germany as we continue to optimize our manufacturing footprint Thai Union announced on May 25, 2022, plans to transfer production from Lübeck to Sassnitz, Germany • We ai
Slide 31: 1H22: Net debt increased by THB 7.2bn
1H22: Net debt increased by THB 7.2bn primarily from negative NWC changes, offset by strong EBITDA and controlled CAPEX ND/E 0.99x Income tax paid and other investing & ND/E 1.09x Free Cash Flow THB -2,873 mn Kd** = 2.62% financing activities Kd** = 2.70% THB mn 2,422 579 68,544 1,153 1,846 334 -135
Slide 32: Temporary net debt increase from inventory and receivables
Temporary net debt increase from soaring inventory and high receivables, net debt/equity ratio within target ROE INV Days Net Debt to EBITDA 139 135 133 132 126 16.2% 15.8% 16.1% 15.4% 5.17 13.8% 4.50 4.11 Target 4.39 4.0-4.5 42,566 45,409 46,636 48,649 52,528 3.91 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21
Slide 33: 2Q22 Financial Results - Business Units
2Q22 Financial Results - Business Units
Slide 34: Well-balanced, diversified business portfolio
Well-balanced, diversified business portfolio to uplift our margins Total 1H22 sales: THB 75,217mn Ambient seafood Frozen & chilled seafood PetCare, value-added & others THB 32,439mn THB 27,690mn THB 15,088mn business Core Sales Split 20% 5% 43% 45% 40% 55% 60% Brand 37% 95% OEM Ingredients Suppleme
Slide 35: Consistent sales growth post-pandemic
Consistent sales growth post-pandemic, thanks to diversification and strong core businesses Sales (THB bn) 1H20 1H21 1H22 1H20 1H21 1H22 +17.2% 75.2 +1.3% 67.0 64.1 +23.1% 32.0* 32.4 28.9 26.9** 27.7 22.5 +56.7% 15.1 9.6 11.2 Ambient Seafood Frozen and Chilled Seafood PetCare, Value added and Total
Slide 36: Ambient seafood: Record quarterly sales
Ambient seafood: Record quarterly sales with healthy GPM Sales (THB mn) Quantity (tons) -10.7% +3.2% +10.7% YoY +1.6% YoY +8.9% QoQ -1.8% QoQ 16,394 16,912 101,137 15,272 14,954 15,149 15,527 88,959 85,865 88,595 91,967 90,347 57% 47% 42% Brand 57% 55% 52% Brand 48% 49% 43% 45% 62% 61% Private 48% 4
Slide 37: 1H22 Ambient seafood: Continued sales growth
1H22 Ambient seafood: Continued sales growth Ambient Seafood 1H22 sales grew 12% YoY to THB 32.4bn Sales (THB mn) and Gross Profit Margin (%) • Ambient seafood is back to growth in most key markets 21.1% 21.4% 21.1% 20.6% 25% 90,000 16.9% 19.4% 20% from higher selling prices, strong demand, and favo
Slide 38: Frozen & chilled seafood: Softened sales and margin
Frozen & chilled seafood: Softened sales and margin YoY, after last year’s exceptional performance in the U.S. Quantity (tons) Sales (THB mn) +20.3% +16.0% -6.5% YoY -9.8% YoY +0.8% QoQ +10.8% QoQ 14,869 14,843 16,628 13,790 13,900 11,554 38% 78,791 77,100 72,637 35% 40% 64,146 71,086 42% 38% 61,284
Slide 39: 1H22 Frozen & chilled seafood
1H22 Frozen & chilled seafood: Growth momentum continued in Thailand and Asia Frozen & chilled Seafood 1H22 sales grew 3% YoY to THB 27.7bn Sales (THB mn) and Gross Profit Margin (%) 11.8% 11.1% 15% • Frozen & chilled slightly rose mainly from strong frozen 10.2% 9.7% 90,000 9.1% 8.0% 10% business i
Slide 40: PetCare, value-added & others: Exceptional sales and margin
PetCare, value-added & others: Exceptional sales and margin Sales (THB mn) Quantity (tons) +13.3% +59.4% +11.4% YoY +41.7% YoY +5.4% QoQ +16.9% QoQ 8,133 83,096 6,724 6,955 74,880 78,814 5% 73,322 74,603 67,542 4% Brand 5,103 5,741 5,742 6% 4% Brand 5% 5% 5% 3% 7% 7% 7% 6% 94% 96% 95% 97% 96% Privat
Slide 41: 1H22 PetCare, value-added & others
1H22 PetCare, value-added & others: Delivering double-digit growth PetCare, value-added & others Sales (THB mn) and Gross Profit Margin (%) 1H22 sales grew 35% YoY to THB 15.1bn 40,000 26.7% 26.3% 28.7% 27.0% 35% • Growth driven by all business units, PetCare and 35,000 30,000 19.5% 21.6% 25% Value-
Slide 42: Growing opportunities as people treat pets as family
Growing opportunities as people treat their pets as family (USD mn) Global Pet Food The no. 2 pet food producer in Asia and one of the top 10 pet food producers in the world 210,000 187,000 Our strengths are 1) In-house R&D and innovation as the 174,500 180,000 154,000 165,000 strategic partners, 2)
Slide 43: 2Q22 revenue component
2Q22 revenue component: Ambient and PetCare & Value-added grew, with benefits from FX, particularly USD +17.8% THB mn +8.5% YoY +8.6% YoY +1,175 -321 38,946 +643 +478 35,883 +118 -802 -3% +606 +357 +119 +26 +1,588 +3,398 +1,084 -908 +10% +1% -16 +16% +8% +31% 35,883 +15% -58% -1% 33,051 -1,650 33,05
Slide 44: We increased 2022 sales guidance
We increased 2022 sales guidance Sales 10-12% YoY growth (from 7-8% YoY) 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 2021 (paste graphic, crops to H19.05*W10.5) (add TU logo) CAPEX ~ THB 6.0bn Dividend policy
Slide 45: Thank you!
Thank you! We would love to hear from you! Please scan the QR code for a quick survey (3-4 min) to share your feedback about our 2Q22 analyst meeting. Slide 47
Slide 46: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of June 30, 2022 Share price (Aug 5, 2022) THB 16.60 Others, Historical closing price 53.43% Chansiri 52-week high THB 22.70 Family, 20.44% 52-week low THB 15.20 No. of paid up shares 4,771.
Slide 47: All time high sales
All time high sales, driven by increased demand, higher selling prices and FX Sales +17.8% THB mn • 2Q22 sales growth of 8.5% YoY, driven by: +6.2% YoY +8.5% YoY Before currency impacts • PetCare and value-added business sales grew +7.4% QoQ 42% YoY, thanks to continued strong demand on 35,883 38,50
Slide 48: 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 • 1H22 higher sales contribution from key 100% regions, including 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 • The
Slide 49: New high track record for 1H gross profit
New high track record for 1H 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 20,110 1H21 23,000 18,892 1H21 7,000 5,642 1H20 1H20 6,000 4,395 18,000 12,312 12,939 4,669 3,885 11,067 5,000 (6.1%) (6.6%) 3,331 (18.
Slide 50: 2Q22: Free cash flow turned positive
2Q22: Free cash flow turned positive, despite impacted by record high net working capital Quarterly Free Cash Flow THB mn • Free cash flow in 2Q22 turned positive, 5,609 despite the temporary impact from high net working capital due to higher inventory of finished goods and goods in transit on delay
Slide 51: Diversify source of funds
Diversify source of funds, reducing risk associated to currency volatility Interest-bearing debts of THB 70.6bn By Currency By Maturity 1.4% JPY Short-term loan 1.5% 14% EUR 7.3% 25% 12.6% 1.5% Current portion USD of long-term 21% 12.7% debt & finance lease THB 84.5% Long-term debt 65% 75% 78.5% 202
Slide 52: 1H22: Record high sales in the U.S.
1H22: Record high sales in the U.S., higher contribution from Asia and Middle East Europe United States and Canada 26% 44% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 19% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 11% Slide 54 Analyst Meeting for 2Q22 Result
Slide 53: US & Canada: Strong topline
US & Canada: Strong topline, driven by ambient seafood, PetCare, and FX gains Sales THB mn +18.8% +6.2% YoY +1.1% QoQ 16,042 17,177 16,357 16,540 15,571 13,925 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 2Q22 North America sales increased 6% YoY • Driven by higher selling prices and volume growth of ambient seafo
Slide 54: Europe: Sales remained stable YoY
Europe: Sales remained stable YoY, despite Baht appreciation Sales THB mn +13.7% -0.7% YoY +20.5% QoQ 10,800 10,031 10,709 10,723 9,430 8,899 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 2Q22 European sales stable YoY • Strong growth from 1Q22 and remained stable YoY, driven by higher volumes and price increase, e
Slide 55: Thailand: Driven by growth in core businesses
Thailand: Driven by growth in core businesses Sales THB mn +24.2% +9.0% YoY +0.9% QoQ 3,631 4,101 3,923 3,957 3,187 3,230 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 2Q22 Thailand sales increased 9% YoY • Domestic sales grew significantly compared to last year, thanks to core businesses, especially ambient seafoo
Slide 56: Emerging Markets and rest of the world
Emerging Markets (EM) and rest of the world: Strong growth in all key countries Sales THB mn +18.7% +31.4% YoY +8.9% QoQ 7,093 7,725 6,509 5,881 6,237 6,513 2Q20 2Q21 3Q21 4Q21 1Q22 2Q22 2Q22 EM and rest of world sales significantly rose 31% YoY • Sales increased from all key countries, mainly in th
Slide 57: 2Q22 Category profitability
2Q22 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 16,912 19.5 3,294 • Tuna • Sardine and mackerel (2Q21: 15,272) (2Q21: 22.0%) (2Q21: 3,362) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related1 13,900 6.6 918 • Lobster (2
Slide 58: Thank You!
Thank You! Slide 60