Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q1 2022 Earnings Presentation
57 slides from Thai Union Group Public's earnings presentation, May 10, 2022
Slide 1: Analyst Meeting for 1Q 2022 Results
Analyst Meeting for 1Q 2022 Results Thai Union Group PCL. May 10, 2022
Slide 2: Disclaimer
Disclaimer The information contained in our presentation is intended solely for 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 based on
Slide 3: 1Q22 Key Highlights
1Q22 Key Highlights Slide 3
Slide 4: CEO message on 1Q22 sales growth
“ Thai Union delivered exceptional 1Q22 sales growth from all three core businesses and a relatively stable margin. Despite strong operations, we are facing challenges with inflation, lingering impacts of pandemic on supply chain, and lower share of profit from Red Lobster. ” Thiraphong Chansiri Pre
Slide 5: 1Q22: Strong sales growth of 16.5% YoY
1Q22: Strong sales growth of 16.5% YoY as demand increased & favorable FX, despite inflation & supply chain challenges THB mn Sales Gross Profit Operating Profit Net Profit 36,272 6,355 1,667 1,746 Solid growth of 16.5% YoY +15.4% YoY from topline strength OPM at 4.6%, down 142bps YoY NPM at 4.8%, d
Slide 6: 1Q22 record high revenue and gross profit, net profit impacted
1Q22: Q1 record high revenue and gross profit value, net profit impacted from logistics, debt ratio within target 1Q22 Net profit down 3.2% +16.5% Financial Summary1 YoY to (THB million) 36,272 THB 1,746 million 31,125 1Q21 1Q22 Share price movement +15.4% 1Q212 1Q222 (Jan – Mar 21) (Jan – May 22) 6
Slide 7: Global production network operating at normal capacity
Our global production network continues to operate at normal capacity Our global vaccine roll-outs in advanced progress Vaccines in the U.S., the U.K., and Seychelles are in advanced progress through co-programs with local authorities. In Thailand, 93% are fully vaccinated (two doses) and 38% employ
Slide 8: Committed to supporting local communities and CSR efforts
We remain committed to supporting local communities and strengthening our CSR efforts Thai Union donated almost 500 kilograms of recycled In April 2022, Thai Union donated more than 4,000 PET bottles upcycled into clothing items and PPE cans of SEALECT products and 1,750 kg of rice to equipment to w
Slide 9: Collagen: promising performance
Promising performance, continuing the excitement no. 2 Highest-ever sell-out + Collagen Positive feedback from in Super/Hyper Chain March ‘2022 consumers New!!! ‘Proven Result’ Continue driving Campaign with skin pharmacy analysis machine at channels Watsons in May ’22 nationwide Slide 9
Slide 10: SPACE-F: investment into food-tech startups
Continued investment into food-tech startups to drive innovation At Thai Union, we continue to build an ecosystem to drive innovation in the food industry: • SPACE-F, the first global FoodTech startup Incubator incubator and accelerator program in Thailand, kick started Batch III in Feb 2022 • 17 st
Slide 11: 1Q22 Financial Results - Consolidated
1Q22 Financial Results - Consolidated Slide 11
Slide 12: CFO message on revised FY2022 outlook
“ We have revised up our FY2022 sales outlook and slightly down our GPM guidance. Given the environment uncertainty, our focus continues to be on cost efficiency and price negotiation to achieve a stronger performance in 2022. ” Ludovic Garnier, Group CFO Slide 12
Slide 13: Consistently high sales and gross margin, normalizing net profit
Consistently high sales & gross margin, with normalizing net profit 1Q22 Key Takeaways • Sales growth of 16.5% YoY, driven by continued increase in all three core Record high Q1 businesses. PetCare & value-added and Ambient demand increased. Frozen & top line chilled business recovery in the U.S and
Slide 14: Topline growth and gross profit expansion for nine quarters
Topline growth and gross profit expansion for nine quarters in a row, with normalizing net profit Total sales (THB mn) GPM NPM 19.0% 18.2% 18.2% 18.0% 17.7% 18.0% 18.2% 20.0% 60,000 17.5% 16.7% 16.1% 16.2% 18.0% 15.8% 15.9% 14.9% 14.9% 14.0% 16.0% 50,000 14.0% 11.6% 38,501 36,272 40,000 34,169 36,01
Slide 15: Complex macro-environment with inflation and supply chain challenges
1Q22 complex macro-environment with unprecedented levels of inflation while supply chain challenges remain Logistics Impacts to TU Our solutions Rising freight costs, global container • Total impact: THB 710mn from freight shortages, and delayed shipments continue to price increase in 1Q22, vs ~THB
Slide 16: Key raw material prices rose in 1Q22
All key raw material prices rose significantly in 1Q22, we are now seeing some improvements in April 2022 2,500 Tuna (USD/ton) Salmon (NOK/kg) 90 2,300 85 2,100 Fluctuation in the range of 1,200 – 1,500 USD/ton, with inflation since 80 Salmon price rose in 1Q22 to 1,900 4Q21 75 an all-time high 1,70
Slide 17: Thai Baht depreciated YoY against key currencies
Thai Baht depreciated YoY against all key currencies, supporting sales growth 38.0 48.0 37.0 USD/THB 47.0 GBP/THB 36.0 46.0 USD continued to 35.0 45.0 GBP continued strengthening appreciate against THB 44.0 against THB since 3Q19, 34.0 43.0 despite declining QoQ 33.0 42.0 4Q21 3Q21 32.0 41.0 4Q21 33
Slide 18: Red Lobster operations under heavy challenge in 1Q22
Red Lobster operations under heavy challenge in 1Q22 Remains under close monitoring due to Omicron variant, inflation and labor shortage Share of profit THB mn 1Q22 4Q21 3Q21 2Q21 1Q21 Q122* 2021* 2020 2019 (THB mn) Share of profit Operations -243 -178 -1,188 -142 -243 -147 -63 -49 81 Lease accounti
Slide 19: Red Lobster challenged by Omicron and inflation
Operations challenged from impacts of Omicron, COGS and labor inflation, despite ongoing strategic initiatives Some immediate actions to address Strategic initiatives Omicron variant Win with Great Food Flawless Execution Lead Off-Premise Overall food, quality, Focused on improving Despite slight de
Slide 20: Achieved 2022 target on sustainable finance
We have already achieved our 2022 target on sustainable finance Our Blue Portfolio * target on long-term 1st ever in Thailand, with series of sustainability- financing (USD 1.4bn or THB 45bn) linked financing of THB 27bn (USD840mn) in 2021 ✓ Issued THB12bn 5-year sustainability-linked loans (SLL) Ta
Slide 21: Our journey towards SeaChange
Our journey towards SeaChange® Be a part of our SeaChange 2030 development by telling us what topics are important to you – watch your inbox for an invite SAFE & LEGAL RESPONSIBLE RESPONSIBLE PEOPLE & Pillars and LABOR SOURCING OPERATIONS COMMUNITIES progress Our Key Providing safe, legal and freely
Slide 22: Sales growth driven by all three core businesses
Sales growth driven by all three core businesses Sales +16.5% THB mn • 1Q22 sales growth of 16.5% YoY, driven by: +12.4% YoY +16.5% YoY Before currency impacts • PetCare and value-added business sales -5.8% QoQ grew 27.2% YoY, continued strong demand on 35,883 35,539 38,501 36,272 existing products,
Slide 23: Gross profit improved, consistently high margin
Gross profit improved and consistently high gross profit margin Gross Profit +26.1% THB mn • 1Q22 gross profit and GPM remained at a high +15.4% YoY 30.0% level, thanks to: -9.5% QoQ 28.0% 26.0% • Ambient seafood gross profit increased 23.3% YoY, 6,805 7,023 6,391 6,355 24.0% thanks to increasing se
Slide 24: Operating profit impacted by freight costs and marketing
Operating profit impacted by rising freight costs and marketing investments Operating Profit* -14.0% • 1Q22 operating profit decreased by 10.9% THB mn -10.9% YoY 20.0% YoY: 18.0% -15.6% QoQ 16.0% • SG&A expenses increased 28.9% YoY, or 2,524 14.0% THB 1,051mn, mainly due to logistic costs 1,871 1,88
Slide 25: 1Q22 net profit normalized after exceptional prior year
1Q22 Net profit normalized after LY exceptional performance +71.8% Net Profit 14.0% • 1Q22 reported net profit was at THB 1,746mn, THB mn -3.2% YoY down 3.2% YoY, driven by: 12.0% -9.6% QoQ 10.0% • Rising SG&A, particularly from freights and 2,343 1,937 1,930 marketing investment reducing operating
Slide 26: 1Q22 adjusted net profit impacted by one-off
1Q22 Adjusted net profit impacted by one one-off Adjusted Net Profit • 1Q22 adjusted net profit was THB 1,668mn, THB mn +64.2% 20.0% down 17.8% YoY. The one-off item was: -17.8% YoY -16.6% QoQ 18.0% • A settlement of THB 77mn (at other income) received from the UK Marine Management 16.0% 14.0% 2,448
Slide 27: Net debt increased by THB 4.1bn
1Q22: Net debt increased by THB 4.1bn primarily from negative NWC changes while EBITDA is strong and capex under control ND/E 0.99x Income tax paid and other investing & ND/E 1.01x Free Cash Flow THB -3,732 mn Kd = 2.62% financing activities Kd = 2.58% THB mn 1,023 152 478 65,379 0.9 5,672 138 -50 -
Slide 28: Negative free cash flow from net working capital
1Q22 negative free cash flow, primarily impacted by change in net working capital Quarterly Free Cash Flow • 1Q22 negative free cash flow is explained by a THB mn temporally impact from increasing net working 3,621 capital (due to raw material price inflation, higher inventory of finished goods, to
Slide 29: Temporary net debt increase, debt ratio within target
Temporary net debt increase from soaring NWC, debt ratio within target INV Days ROE 135 Net Debt to EBITDA 133 132 126 122 124 15.5% 16.2% 15.8% 16.1% 15.4% 4.50 4.11 Target 4.39 4.0-4.5 35,720 39,195 42,566 45,409 46,636 48,649 3.87 3.91 1Q21 2Q21 3Q21 4Q21 1Q22 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2
Slide 30: 1Q22 Financial Results - by Business Category
1Q22 Financial Results - by Business Category Slide 30
Slide 31: A well-balanced, diversified portfolio
A well-balanced, diversified portfolio Total 1Q22 sales: THB 36,272 mn Ambient seafood Frozen & chilled seafood PetCare, value-added & others THB 15,527mn THB 13,790mn THB 6,955mn business Core Sales Split 19% 4% 43% 42% 48% 52% 58% Brand 38% 96% OEM Ingredients Supplements Alternative protein Value
Slide 32: Sales growth driven by diversification and core businesses
Sales growth driven by diversification and strong core businesses, well above pre-pandemic levels Sales (THB bn) 1Q20 1Q21 1Q22 1Q20 1Q21 1Q22 +16.6% 36.3 31.1 31.1 -0.7% +26.0% +53.6% 15.6 15.5 13.5 13.8 12.1 10.9 7.0 4.5 5.5 Ambient Seafood Frozen and Chilled Seafood PetCare, Value added and Total
Slide 33: Ambient seafood: recovering topline momentum
Ambient seafood: Recovering topline momentum & healthy margin Sales (THB mn) Quantity (tons) -0.7% -7.7% +14.3% YoY +6.7% YoY +2.5% QoQ +3.8% QoQ 99,599 86,197 88,959 88,595 91,967 15,631 15,272 14,954 15,149 15,527 85,865 13,580 Brand Brand 50% 48% 43% 42% 60% 62% 61% 55% 52% 48% 49% 59% Private Pr
Slide 34: Ambient seafood: sales growth and margin expansion
Ambient seafood: Sales growth and margin expansion Ambient Seafood 1Q22 sales grew 14% YoY to THB 15.5bn Sales (THB mn) and Gross Profit Margin (%) 19,000 3% CAGR 35% Ambient business grew significantly from a volume increase 17,000 30% and pricing effect, after last year’s normalization from pantry
Slide 35: Frozen & chilled seafood: sales growth YoY
Frozen & chilled seafood: Sales growth YoY, with normalizing GPM Sales (THB mn) Quantity (tons) +26.0% +4.8% +14.2% YoY +1.7% YoY -17.1% QoQ -11.7% QoQ 14,869 14,843 16,628 13,790 78,791 77,100 10,944 12,076 35% 38% 61,179 63,081 72,637 64,146 40% 42% Brand 38% 38% Brand 75% 77% 71% 73% 73% 74% Priv
Slide 36: Frozen & chilled seafood: growth momentum in Asia
Frozen & chilled seafood: Growth momentum continued in Asia THB mn Frozen & Chilled Seafood Gross Profit 1Q22 gross profit was at THB 1.3bn, +0.8% YoY, improving from 1Q20-1Q21 COVID and 1Q19 pre-COVID levels 1,940 1,941 1,717 1,726 1,560 1,284 1,450 1,490 Solid sales growth driven by Asia, Thailand
Slide 37: PetCare, value-added & others: outstanding growth
PetCare, value-added & others: Outstanding growth, robust GPM Sales (THB mn) +53.6% Quantity (tons) +24.8% +27.2% YoY +7.5% YoY +3.4% QoQ +4.8% QoQ 6,724 6,955 74,880 78,814 62,852 72,957 74,603 67,542 5,469 5,741 5,742 6% 4% 3% 4,528 7% 7% Brand 4% 5% 5% Brand 5% 5% 7% 8% 94% 96% 96% 95% 95% 97% Pr
Slide 38: PetCare, value-added & others: promising growth
PetCare, value-added & others: Promising growth PetCare and Valued Added Sales (THB mn) and Gross Profit Margin (%) 7,500 40% 1Q22 sales grew 27% YoY to THB 7.0bn 7,000 35% 6,500 30% Annual sales grew from THB 15.7bn in 2015 to THB 23.7bn 6,000 25% in 2021, with double digit growth last year. We con
Slide 39: 1Q22 revenue component
1Q22 revenue component: All segments, except with lobster, grew firmly along with benefits of foreign exchange rate +16.5% +16.5% YoY +1,126 +146 36,272 +887 +468 +2% +643 -201 +23 +539 +9% +23% +1,506 -25 +20 +16 -17% +26% +2% +34% 31,252 -1% +3% +5% +8% 31,130 +15% +12.4% YoY Before currency impac
Slide 40: 1Q22 category profitability
1Q22 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood 15,527 21.7 3,377 • Tuna • Sardine and mackerel (1Q21: 13,580) (1Q21: 20.2%) (1Q21: 2,738) • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related 1 13,790 9.3 1,284 • Lobster
Slide 41: Our adjusted 2022 guidance
Our adjusted 2022 guidance Sales 7 – 8% YoY growth (revised up from 4-5%) Gross profit margin ~ 17.5 – 18% (revised down from 18-18.5%) SG&A to sales ~ 12.0 – 12.5% Placeholder for graphic (revised down from 12-13%) Effective interest rate No material change from (paste graphic, crops to H19.05*W10.
Slide 42: Appendix
Appendix Slide 42
Slide 43: Inflation impacting tuna price in 1Q22
Inflation has also started to impact tuna price in 1Q22; watch out for the next quarters Tuna raw material price 2,400 (USD/ton) +33.8% YoY 2,200 2,000 1Q21 1Q22 1,283 1,717 1,800 1,600 3Q17 4Q17 1,400 2Q17 2,010 2,033 2Q18 1Q17 1,763 1Q18 4Q211Q22 1,200 1,667 3Q184Q18 1Q19 1Q20 3Q20 1,6171,717 1,63
Slide 44: Strong sales growth from all regions
Strong sales growth from all regions Sales Breakdown by Geographic • 1Q22 higher sales contribution from key regions, 100% including the U.S., Thailand, and Europe 13% 15% 15% 15% 14% 13% 15% Others 6% 5% 5% Japan 80% 8% 6% 6% 11% 6% 10% 10% 6% Domestic • The U.S., Thailand, and Europe sales rose by
Slide 45: Robust EBITDA at THB 3bn
Robust EBITDA at THB 3bn, however, impacted from FX loss and Red Lobster business EBITDA* +15.4% • 1Q22 EBITDA at THB 3.0bn, down 11.3% YoY: THB mn -11.3% YoY 28.0% • 1Q22 FX loss explained by THB appreciation -15.3% QoQ against key currencies i.e. USD 23.0% 4,135 3,780 3,587 • Red Lobster operation
Slide 46: 1Q22 EPS impacted from normalizing net profit
1Q22 EPS impacted from normalizing net profit Earning per Share (EPS)* THB +79.5% Earning per Share (EPS)* THB -3.3% YoY • 1Q22 EPS was at THB 0.36, down 3.3% YoY, driven by normalizing net -9.9% QoQ profit YoY. 0.49 0.37 0.40 0.40 0.36 0.20 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 1.66 Remark: Excluding one-t
Slide 47: Majority THB funding reducing currency risk
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 66.9bn By Currency By Maturity JPY 1.4% 7.7% EUR 14% 1.5% USD Short-term loan 25% 1.8% 21% 12.6% Current portion 13.4% of long-term debt & finance THB lease 84.5% Long-term debt 65% 75% 77.1% 2021 1Q2
Slide 48: Geographic diversity: 1Q22 sales
Geographic diversity: 1Q22 Sales Europe United States and Canada 25% 44% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 20% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 11% Slide 48
Slide 49: US & Canada: organic sales increased
US & Canada: Organic sales increased, supported by FX Sales THB mn +24.2% +17.6% YoY -4.8% QoQ 16,042 17,177 16,357 15,571 13,175 13,911 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • 1Q22 North America sales increased 17.6% YoY • Driven by higher volumes of ambient seafood, improving frozen business from continue
Slide 50: Europe: strong topline
Europe: Strong topline, driven by ambient seafood and FX Sales THB mn -5.5% +6.1% YoY -16.9% QoQ 10,800 10,031 10,709 9,417 8,387 8,899 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • 1Q22 EU sales increased 6.1% YoY, thanks to higher volumes of the ambient branded business, particularly in France and Germany. This
Slide 51: Thailand: growing ambient and PetCare
Thailand: Driven by growing ambient and PetCare businesses Sales THB mn +13.4% +8.1% YoY -4.4% QoQ 3,460 3,628 3,631 4,101 3,923 3,230 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • 1Q22 Thailand sales increased 8.1% YoY • Domestic sales rebounded mostly thanks to higher ambient and frozen seafood businesses, comp
Slide 52: Emerging Markets and rest of the world
Emerging Markets (EM) and rest of the world: Frozen and PetCare businesses grew well Sales THB mn +40.4% +36.5% YoY +8.9% QoQ 6,237 6,513 7,093 5,052 5,198 5,881 1Q20 1Q21 2Q21 3Q21 4Q21 1Q22 • 1Q22 EM and rest of world sales increased 36.5% YoY: • Sales increased from ambient seafood, frozen seafoo
Slide 53: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of March 10, 2021 Share price (May 3, 2022) THB 16.90 Others, Historical closing price 50.02% 52-week high THB 23.00 Chansiri 52-week low THB 14.90 Family, No. of paid up shares 4,771.8mn 20
Slide 54: 1Q22 Income statement
1Q22 Income statement Consolidated 1Q22 1Q22 % % % (Unit: THB mn) 1Q22 1Q21 4Q21 1Q21 4Q21 to sales to sales to sales * Change Change Sales 36,272 100% 31,125 100% 38,501 100% 16.5% -5.8% Cost of sales (29,917) -82.5% (25,617) -82.3% (31,478) -81.8% 16.8% -5.0% Gross profit 6,355 17.5% 5,507 17.7% 7
Slide 55: Statement of Financial Position as of March 31, 2022
Statement of Financial Position as of March 31, 2022 % to total % to total (Unit: THB mn) 1Q22 2021 Change assets assets Cash and cash equivalents* 1,552 0.9% 9,723 5.8% -84.0% Trade and other receivables - net 19,074 11.7% 16,308 9.8% 17.0% Inventories - net 48,649 29.7% 46,636 28.0% 4.3% Other cur
Slide 56: 1Q22 Statement of cash flow
1Q22 Statement of cash flow Consolidated (Unit: THB mn) 1Q22 1Q21 Change Profit before income tax 1,573 2,037 (464) Adjustments for depreciation & amortisation expenses 1,022 992 30 Other adjustments 507 411 95 Changes in operating assets and liabilities (5,809) (2,722) (3,087) Cash flows receipts f
Slide 57: Thank You!
Thank You! Slide 57