Thai Union Group Public Company Limited · SET:TU

Thai Union Group Public — FY2016 Earnings Presentation

54 slides from Thai Union Group Public's earnings presentation, Feb 21, 2017

  1. Slide 1: FY2016 Results Presentation

    FY2016 Results Presentation February 2017 Page 1

  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  Key Highlights  Recent Developments  2016 Financial Results  2017 Business Outlook Page 3

  4. Slide 4: Agenda: Key Highlights

    Agenda  Key Highlights  Recent Developments  2016 Financial Results  2017 Business Outlook Page 4

  5. Slide 5: CEO quote: USD 8.0bn revenue target by 2020

    “Through organic growth, innovation and M&A efforts, we are committed to the USD 8.0bn revenue target by 2020.” Thiraphong Chansiri President and Chief Executive Officer Page 5

  6. Slide 6: 4Q16: Recovery from the low base

    4Q16: Recovery from the low base  Stable quarterly sales. 4Q16 sales growth was YoY Chg % of sales driven by a consolidation of Rügen Fisch and Chez Nous, as well as product repricing from increased raw material prices 33,550 Sales (THB mn) +0.7%  Rising raw material prices. Gross profit margin re

  7. Slide 7: 2016 Sales of THB 134.4bn, up 7.3% YoY

    2016 Sales of THB 134.4bn, up 7.3% YoY Financial Summary1 2016 Net Profit (THB million) down 0.9% YoY to Total Sales 2016 2015* 134,375 125,183 +7.3% THB 5,254million 2016 19,927 Gross Profit +2.2% Share price movement Q1’12 2015* 19,501 Q1’11 20152 20162 Operating 2016 6,805 (Jan- Dec 15 ) (Jan- De

  8. Slide 8: 4Q16: Stable operating result YoY

    4Q16: Stable operating result YoY Total sales (THB mn) GPM NPM 60,000 20.0% 17.2% 17.3% 16.9% 18.0% 16.1% 50,000 14.9% 15.5% 15.8% 13.9% 13.8% 14.2% 14.1% 14.0% 16.0% 14.0% 40,000 34,441 35,128 33,550 32,602 33,333 12.0% 30,258 30,423 32,772 30,642 31,257 30,000 27,948 28,606 10.0% 7.0% 8.0% 20,000

  9. Slide 9: Agenda: Recent Developments

    Agenda  Key Highlights  Recent Developments  2016 Financial Results  2017 Business Outlook Page 9

  10. Slide 10: Recent developments: Recognitions

    Recent developments Recognitions 27 Jan 17: Avanti Feeds Limited, TU’s associate company, ranked 2 Feb 17: TU has won the SET’s one of the top 500 companies in 27 Jan 17: Mr. Joerg Ayrle, Best Investor Relations for company Fortune India 500 magazine. Group CFO has been awarded under market cap. of

  11. Slide 11: Recent developments: Recognitions, Financing, Investment

    Recent developments Recognitions 22 Nov 16: Thanks to the special structure, TU’s first US Dollar 7 Nov 16: TU has been nominated bond awarded Best Corporate 9 Nov 16: TU has been named to for three Asia Sustainability Bond in Thailand by The Asset Thailand Sustainability Investment Reporting Awards

  12. Slide 12: TU Awarded SET's Best Investor Relations

    TU has been Awarded SET’s Best Investor Relations Caption: (from left to right) - Dr. Santi Kiranand, Senior Executive Vice President, Head of Issuer Marketing Division, Stock Exchange of Thailand; SET Chairman Dr. Chaiyawat Wibulswasdi, Mr. Joerg Ayrle, Thai Union Group's Group Chief Financial Offi

  13. Slide 13: 2016 Recap: It was a busy year!

    2016 Recap: It was a busy year! Acquisition & JV Jan: TU fully consolidated Rügen Fisch operation from 51% stake acquisition. Mar: TU entered into a JV to acquire a 40% equity stake of Avanti Frozen Foods Acquisitions Apr: TU set a new benchmark with the first “MUAY THAI” USD Bond offering Jul: TU s

  14. Slide 14: Stable dividend payment despite operational headwinds

    Stable dividend payment despite operational headwinds Proposed final dividend for the period: 1 Jul 16 to 31 Dec 16 DPS THB 0.31 (Full year DPS: THB 0.63) XD 6 March 2017 Book closing date 9 March 2017 Payment date 20 April 2017 THB/Share 0.70 59.9% 0.60 53.5% 57.2% 50.1% 50.4% 50.6% 50.7% 50.0% 51.

  15. Slide 15: Agenda: 2016 Financial Results

    Agenda  Key Highlights  Recent Developments  2016 Financial Results  TU’s Consolidated Results  Results by Business Unit  2017 Business Outlook Page 15

  16. Slide 16: CFO quote on shareholder value

    “Despite challenging operating environment, we remain committed to deliver solid growth and enhance our shareholders’ value.” Joerg Ayrle Group Chief Financial Officer Page 16

  17. Slide 17: The key take away for 4Q16 results

    The key take away for 4Q16 results • 4Q16 sales growth of +0.7% YoY Sales growth driven by M&As • Acquisitions drove growth, whereas organic is declining • Tuna and salmon businesses’ GPM declined YoY due to rising A weak GPM partly offset by raw material prices cost control • Meralliance recorded G

  18. Slide 18: 2016 A record sales year

    2016 A record sales year Sales +0.7% YoY THB mn -4.5% QoQ  4Q16 sales grew by 0.7% YoY to THB 33,550mn (up 1.9% YoY in dollar term to USD 948 mn), 34,441 35,128 33,550 driven by: 33,333 31,257  M&A-driven growth by recent consolidation of Rügen Fisch that boosted sardine and mackerel and salmon bu

  19. Slide 19: TU reported solid 2016 sales growth of 7.3% YoY

    TU reported solid 2016 sales growth of 7.3% YoY Revenue growth component (THB million) +0.7% YoY +7.3% YoY +2,235 134,375 +2,865 +1,113 +247 +6% +863 +3,315 +7% 33,550 125,183 -1,576 +14% +2% +266 +130 +8% 33,333 -869 +353 -3% 0% +45% +267 -18 +3% +918 +57 0% +3% -757 +12% +2% -8% -7% +50% -1.2% YoY

  20. Slide 20: Growing branded sales and geographic breakdown

    Growing branded sales and geographic breakdown Sales Breakdown by Geographic  Higher sales contribution from the European 100% markets, driven by strong performance of our 15% 14% 13% 14% 13% existing branded product and consolidation 80% 9% 8% 7% 6% 6% 7% 7% 8% 8% Others* of recent acquisitions 10

  21. Slide 21: Gross margin remain under pressure

    Gross margin remain under pressure 30.0% 28.0% Gross Profit -0.4% YoY 26.0% THB mn -4.5% QoQ 24.0%  4Q16 Gross profit of THB 4,713mn, down 0.4% 22.0% YoY, driven mostly by raw material prices 5,428 volatility 4,730 4,848 4,937 4,713 20.0%  4Q16 margin was at 14.0%, down 14bps YoY from 18.0% 14.2%

  22. Slide 22: Operating profit: SG&A well within guidance

    Operating profit: SG&A well within guidance 15.0% Operating Profit 13.0% +12.1% YoY THB mn -24.3% QoQ 11.0%  4Q16 Operating profit of THB 1,418mn, up 12.1% YoY, driven by a decline in SG&A to sales ratio. 9.0% 2,062  4Q16 SG&A to sales ratio was 9.8% (from 10.4% 1,872 7.0% during 4Q15), driven par

  23. Slide 23: EBITDA decline from weaker gross margin

    EBITDA decline from weaker gross margin 28.0% EBITDA -2.8% YoY THB mn -21.7% QoQ 23.0%  4Q16 EBITDA of THB 2,284mn, down 2.8% YoY, mainly driven by lower gross profit margin during 18.0% the quarter from unfavorable tuna and salmon 3,181 2,755 2,917 price environment 2,351 2,284 13.0%  2016 EBITDA

  24. Slide 24: Net profit: 2016 net profit stable YoY

    Net profit: 2016 net profit stable YoY 14.0% Net Profit +19.1% YoY THB mn 12.0% -43.4% QoQ  4Q16 net profit of THB 902mn, up 19.1% YoY, 10.0%  The increased net profit was driven by:  A lower fishing fleet-related losses during 4Q16 8.0% 1,527 1,594 6.0%  An absence of Bumble Bee acquisition 1,2

  25. Slide 25: Normalized net profit of THB 1,423mn

    Normalized net profit of THB 1,423mn 20.0% Normalized 18.0% Net Profit -11.8% YoY THB mn 16.0%  Excluding the one-off quarter-end items, 4Q16 +2.8% QoQ 14.0% normalized net profit was at THB 1,423mn, down 12.0% 11.8% YoY. 10.0%  One-off items during 4Q16 of THB 522mn 1,614 comprised of: 1,446 1,38

  26. Slide 26: EPS: Keeps momentum despite operational headwinds

    EPS: Keeps momentum despite operational headwinds EPS** +19.1% YoY THB -43.4% QoQ  4Q16 EPS was at THB 0.19, up 19.1% YoY, but down 43.4% QoQ  2016 EPS was at THB 1.10, stable from the 2015 0.32 0.33 EPS of THB1.11 0.26  Our M&As were immediately EPS accretive 0.19 0.16  Red Lobster first contri

  27. Slide 27: 2016 free cash flow hit by rising raw material costs

    2016 free cash flow hit by rising raw material costs Quarterly Free Cash Flow THB mn  4Q16 Free cash flow (FCF) was negative at THB 425mn, as inventories increased from higher raw 4,483 material prices  2016 free cash flow remain positive at THB 3.8bn, driven by profitable operation and efficient

  28. Slide 28: Short-term debt up due to bridge loans for Red Lobster

    Short-term debt up due to bridge loans for Red Lobster Interest-bearing debts of THB 65,918 mn By Currency By Maturity 1.0% 1.3% 2018 Short-term Loan 56% 49% 2017 1.2% EUR Current USD 21.5% Portion of Long- 97.7% term Debt 10% 2019 2% 5% 2020 THB & finance lease onwards 77.3% 39% Long-term 41% 42% D

  29. Slide 29: 2016: M&As activities, CAPEX and weak cashflow lifted debts

    2016: M&As activities, CAPEX and weak cashflow lifted debts Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.76x THB 7,744 mn ND/E 1.37x Kd = 3.73% Kd = 2.74% Free Cash Flow THB 3,812 mn +4,917 64,942 +3,466 +12,175 +1,001 +10,858 36,363 -11,138 +3,933 +1,707 +143 +1,026 +42

  30. Slide 30: Continued improved working capital management

    Continued improved working capital management ROE1 ROCE2 A/R Days 43 44 12.2% 12.5% 41 12.0% 11.9% 10.5% 11.8% FY14 FY15* FY16 FY14 FY15* FY16 FY14 FY15* FY16 INV Days Net WC3 ND/E4 129 1.37x 123 131 124 118 0.85x 0.76x 113 44,438 41,070 42,926 FY14 FY15* FY16 FY14 FY15* FY16 FY14 FY15* FY16 WC (THB

  31. Slide 31: Agenda: Results by Business Unit

    Agenda  Key Highlights  Recent Developments  2016 Financial Results  TU’s Consolidated Results  Results by Business Unit  2017 Business Outlook Page 31

  32. Slide 32: Quote on transparency and investor trust

    “Corporate performance can fluctuate, to us, transparency, consistent and timely disclosure are keys to investor trust, particularly in times of uncertainty.” Wai Yat Paco Lee General Manager, Business Development, Global Frozen and Related Business Page 32

  33. Slide 33: Key operating impact: raw material prices on the rise

    Key operating impact: raw material prices are on the rise due to challenges in supply Raw material prices Skipjack tuna raw material prices (USD/ton)  In January, tuna price closed at USD 1,700/ton. In 4Q16, average +60% price was at USD 1,508/ton (+44.1% YoY, +5.8% QoQ).  An average price for FY2

  34. Slide 34: Key operating impact: Exchange rate

    Key operating impact: Exchange rate USD/THB 38  In January, USD/THB closed at 35.43. In 4Q16, average USD/THB 36 35.43 was at 35.39 (-1.2% YoY, +1.6% QoQ). 34 (Jan’17)  An average USD/THB for FY2016 was at 35.29 (+2.9% YoY). 32 30 28 Jan-14 Jan-15 Jan-16 Jan-17 EUR/THB 50  In January, EUR/THB clo

  35. Slide 35: Thai Union's global footprint

    Thai Union’s global footprint Page 35

  36. Slide 36: 3 strategic business segments

    3 strategic business segments Total 2016 sales: THB 134,375mn Frozen, chilled seafood PetCare, value added and Ambient seafood Sales: THB 61,043mn and related others Sales: THB 55,832mn Sales: THB 17,500mn Shrimp & related Tuna business PetCare business1 Ambient & Pouch Frozen, chilled & Value-added

  37. Slide 37: Ambient Seafood

    Ambient Seafood cS , Gatz art (9h 222 roorpaisr ance 1) comsnarion

  38. Slide 38: Ambient Seafood: 2016 sales growth driven by M&A

    Ambient Seafood 2016 sales growth driven by M&A Sales (THB million) Quantity (Tons) -2.3% YoY +3.2% YoY -0.8% YoY +2.9% YoY -6.0% QoQ -1.8% QoQ 65,000.00 64,000.00 63,000.00 59,141 61,043 400,000.00 399,000.00 398,000.00 397,000.00 396,000.00 395,000.00 394,000.00 393,000.00 392,000.00 391,000.00 39

  39. Slide 39: Frozen, chilled seafood and related

    Frozen, chilled seafood and related Page 39

  40. Slide 40: Frozen, chilled seafood and related: Business recovery continued

    Frozen, chilled seafood and related Business recovery continued Sales (THB million) Quantity (Tons) +1.4% YoY +11.0% YoY -4.0% YoY +9.8% YoY +1.2% QoQ 55,832 +1.1% QoQ 250,000.00 239,143 58,000.00 57,000.00 249,000.00 248,000.00 247,000.00 246,000.00 245,000.00 244,000.00 243,000.00 242,000.00 241,0

  41. Slide 41: PetCare, value-added and others

    PetCare, value-added and others Page 41

  42. Slide 42: PetCare, value-added and others: Strong operational performance

    PetCare, value-added and others Delivering strong operational performance Sales (THB Million) Quantity (Tons) +8.0% YoY +11.2% YoY +0.7% YoY +14.0% YoY -16.7% QoQ 17,500 -27.1% QoQ 150,000.00 149,000.00 139,653 148,000.00 147,000.00 146,000.00 19,000.00 145,000.00 18,000.00 15,734 144,000.00 143,000

  43. Slide 43: 2016 Segment Profitability

    2016 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 61,043 17.0% 10,384 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 55,832 9.1% 5,097 THB 19,927 million related *Shrimp & related busi

  44. Slide 44: Agenda: 2017 Business Outlook

    Agenda  Key Highlights  Recent Developments  2016 Financial Results  2017 Business Outlook Page 44

  45. Slide 45: 2017 Guidance

    2017 Guidance FY 2017 Sales THB 150bn ( +15% YoY) GPM 15-16% due to recovery of raw material price situation SG&A 10% Effective interest rate No material change from 2016 Effective tax rate 15% CAPEX Approx. THB 4.8bn Dividend policy At least 50% dividend payout Page 45

  46. Slide 46: Five key focus areas into 2017

    Five key focus areas into 2017 Category Highlight Continue to profitably grow market share in European ambient markets 1 Operation improvement Improved profitability of the tuna business (COSI and Private Label business) MerAlliance salmon business improvement M&A / Post Merger Successfully drive gr

  47. Slide 47: Committed to USD 8.0bn sales by 2020

    Committed to USD 8.0bn sales by 2020 Emerging markets Food services Ambient sales in Europe Innovations 2020 Red Lobster USD8.0bn Marine Ingredient M&A Integration Frozen business in US 2016 USD3.8bn 2015 USD3.7bn Page 47

  48. Slide 48: Appendix

    ia Thai Page 48 ® Union

  49. Slide 49: Share Capital Information

    Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 Dec 2016 Share price (20 Jan 2017) : THB 19.80 Historical price : Chansiri Family 52-week high THB 23.00 20.2% 52-week low THB 17.90 No. of paid up shares : 4,771.82mn Niruttinanon Others Family 6

  50. Slide 50: 4Q16 Income Statement

    4Q16 Income Statement Consolidated 4Q16/ 4Q16/ % % % (Unit: THB mn) 4Q16 4Q15** 3Q16 4Q15 3Q16 to sales to sales to sales Change Change Sales 33,550 100% 33,333 100% 35,128 100% 0.7% -4.5% Cost of sales (28,837) -86.0% (28,603) -85.8% (30,190) -85.9% 0.8% -4.5% Gross profit 4,713 14.0% 4,730 14.2% 4

  51. Slide 51: 2016 Income Statement

    2016 Income Statement 2016/ % % (Unit: THB mn) 2016 2015** 2015 to sales to sales Change Sales 134,375 100% 125,183 100% 7.3% Cost of sales (114,448) -85.2% (105,682) -84.4% 8.3% Gross profit 19,927 14.8% 19,501 15.6% 2.2% SG&A expenses (13,122) -9.8% (12,716) -10.2% 3.2% FX gain (loss) 084 0.1% 1,0

  52. Slide 52: Statement of Financial Position as of 31 December 2016

    Statement of Financial Position as of 31 December 2016 % to total % to total (Unit: THB mn) 2016 2015** Change assets assets Cash and cash equivalents* 976 0.7% 2,816 2.5% -65.3% Trade and other receivables 16,412 11.5% 15,776 14.2% 4.0% Inventories - net 39,626 27.8% 35,180 31.6% 12.6% Other curren

  53. Slide 53: 2016 Statement of Cash Flow

    2016 Statement of Cash Flow Consolidated (Unit: THB mn) 2016 2015 Change Profit before income tax 6,443 7,338 (896) Adjustments for depreciation & amortisation expenses 2,983 2,726 257 Other adjustments 1,660 2,299 (639) Changes in operating assets and liabilities (1,609) 4,434 (6,042) Cash flows re

  54. Slide 54: 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:54+66 2298 0024 Page

Thai Union Group Public Company — FY2016 Earnings Presentation on 6ix