Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group — Q2 2016 Earnings Presentation
63 slides from Thai Union Group Public's earnings presentation, Aug 17, 2016
Slide 1: 2Q16 Results Presentation
2Q16 Results Presentation August 2016 Page 1
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 Company Overview Key Highlights Recent Developments 2Q16 Financial Results Sustainability Update Executive Introduction Page 3
Slide 4: More than 39 years of seafood processing experience
More than 39 years of seafood processing experience Strategic Acquired Expanded to Rebranding: Expanded to Set up Expanded to Entered a JV Founded partnership third largest frozen Entered to Expanded Renaming shrimp feed pet food shrimp with Savola Thai Union with canned seafood tuna fishing in capa
Slide 5: Group Structure
Group Structure Subsidiary companies 99.66% 99.55% 51.00% 90.00% 100.00% 20.00%8 100.00%3 100.00%4 Thai Union Manufacturing Songkla Canning PCL. Thai Union Seafood T-Holding Co., Ltd. Thai Union Europe LDH (La Doria) Etablissement Paul Pioneer Food Co., Ltd. Co., Ltd. Paulet SAS Cannery Limited 90.5
Slide 6: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results Sustainability Update Executive Introduction Page 6
Slide 7: CEO message: 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 7
Slide 8: 2Q16: Strong sales growth
2Q16: Strong sales growth YoY Chg % of sales • 2Q16 strong sales growth was driven by a consolidation of Rugen Fisch and product 34,441 Sales +12.4% repricing from increased raw material prices (THB mn) • Gross profit margin declined YoY was resulted from a sharp increase in raw material prices, 5,4
Slide 9: 1H16 Operating profit of THB 3,516mn, up 12% YoY
1H16 Operating profit of THB 3,516mn, up 12% YoY Financial Summary1 1H16 Operating Profit (THB million) up 12% YoY to Total Sales 1H16 1H15 65,697 59,248 +10.9% THB 3,516million 1H16 10,276 Gross Profit +12.5% Share price movement Q1’12 1H15 9,138 Q1’11 20152 20162 Operating 1H16 3,516 (Jan- Dec 15
Slide 10: 2Q16: Record quarterly sales
2Q16: Record quarterly sales Total sales (THB mn) GPM NPM 17.2% 17.3% 50,000 16.9% 18.0% 16.1% 15.7% 45,000 14.9% 15.5% 15.8% 16.0% 13.9% 13.8% 40,000 14.0% 32,602 34,441 35,000 30,423 32,772 33,333 31,257 30,258 30,642 12.0% 30,000 27,948 28,606 10.0% 25,000 7.0% 8.0% 20,000 5.3% 5.0% 4.6% 5.0% 4.6
Slide 11: Announced interim dividend of THB 0.32 per share
Announced interim dividend of THB 0.32 per share Proposed final dividend for the period: 1 Jan 16 to 30 Jun 16 DPS THB 0.32 XD 18 August 2016 Book closing date 23 August 2016 Payment date 2 September 2016 THB/Share 0.70 59.9% 0.60 53.5% 55.4% 50.1% 50.4% 50.6% 50.7% 50.0% 51.3% 50.5% 51.3% 0.50 0.40
Slide 12: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results Sustainability Update Executive Introduction Page 12
Slide 13: Recent developments
Recent developments Recognition 14 Jul 16: TU received 13 Jul 16: TU successfully 6 Jul 16: TU was ranked 4th Best Overall Company in the Consumer and awards for Best CEO and issued THB 10 billion debentures, Staples segment in Asia by Institutional Investor’s annual All-Asia Executive Best CFO in t
Slide 14: TU acquired a Canadian lobster processor
TU acquired a Canadian lobster processor July 16: TU expands further in North America with acquisition of Chez Nous TU acquired an 80% of Les Pecheries de Les Pecheries de Chez Nous Company name: (Chez Nous) Chez Nous (Chez Nous) for THB 415mn Location: New Brunswick, Canada • Strengthening the Grou
Slide 15: TU acquired an Indian shrimp processor
TU acquired an Indian shrimp processor July 16: Thai Union successfully acquired 40% of Avanti Frozen Foods Avanti Frozen Foods Private TU acquired an 40% of Avanti Frozen Company name: Limited Foods Private Limited for INR 1,254mn Location: Andhra Pradesh, India • To tap into shrimp sourcing in Ind
Slide 16: TU issued THB 10 billion debenture
TU issued THB 10 billion debenture July 16: TU issued THB 10bn debentures, the largest ever issued by the company TU issued debenture worth THB 10bn, the Notional amount THB 10.0bn largest issuance by the company Trenches 3, 5, and 7-year • With AA- rating, TU’s debenture achieve a favorable interes
Slide 17: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results TU’s Consolidated Results Results by Business Unit Sustainability Update Executive Introduction Page 17
Slide 18: CFO message: commitment to solid growth
“Despite challenging operating environment, we remain committed to deliver solid growth and enhance our shareholders’ value.” Joerg Ayrle Group Chief Financial Officer Page 18
Slide 19: 2Q16 Record quarterly revenue
2Q16 Record quarterly revenue Sales +12.4% YoY THB mn +10.2% QoQ 2Q16 sales grew by 12.4% YoY to THB 34,441mn (up 4.4% YoY in dollar term to USD 976mn), driven 32,602 33,333 34,441 by: 30,642 31,257 Tuna sales improved 7.9% YoY and 14.9% QoQ, mainly driven by strong brand recognition in Europe and a
Slide 20: Most key businesses showing YoY organic growth
Most key businesses showing YoY organic growth Revenue growth component (THB million) +12.4% YoY +10.9% YoY 65,697 +1,285 +1,842 +640 -477 +7% +769 34,441 +719 +1,684 -369 +822 +17% -7% +9% +428 +280 +8% 59,248 +506 +251 +14% +873 +14% -10% +8% +2% +2% +45% +667 +17% +329 +45% 30,642 +8% +3% +7.2% Y
Slide 21: 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 brands 80% 9% 8% 7% 6% 6% 7% 7% 8% 8% Others* 10% While US sales contribution dropped, it continued
Slide 22: Gross margin impacted by raw material price volatility
Gross margin impacted by raw material price volatility 30.0% Gross Profit +4.5% YoY THB mn +12.0% QoQ 25.0% 2Q16 Gross profit of THB 5,428, up 4.5% YoY, driven mostly by strong sales growth in all key 5,634 business segments 5,192 5,428 4,730 4,848 20.0% 2Q16 margin was at 15.8%, down 118bps YoY fro
Slide 23: Operating profit: SG&A in check
Operating profit: SG&A in check 15.0% Operating Profit -6.3% YoY 13.0% THB mn +41.8% QoQ 11.0% 2Q16 Operating profit of THB 2,062mn, down 6.3% YoY, driven by a decline in gross margin. 2,200 2,352 9.0% 2,062 2Q16 SG&A to sales ratio was 9.8%, slightly 1,454 7.0% higher than 2Q15 ratio (+4bps YoY) du
Slide 24: EBITDA up 12% from an impact of FX gains during 2Q16
EBITDA up 12% from an impact of FX gains during 2Q16 28.0% EBITDA +11.9% YoY THB mn +15.4% QoQ 23.0% 2Q16 EBITDA of THB 3,181mn, up 11.9% YoY, mainly driven by an absence of FX losses during 3,297 18.0% 2Q15 (FX losses of THB 300mn in 2Q15 vs. a FX 3,181 2,843 2,755 gains of THB 32mn in 2Q16) 2,351
Slide 25: Net profit: Registering 17% net profit growth
Net profit: Registering 17% net profit growth 14.0% Net Profit +16.9% YoY THB mn 12.0% +24.1% QoQ 10.0% 2Q16 net profit of THB 1,527mn, up 16.9% YoY 8.0% The improved net profit was driven by: 1,626 1,527 6.0% The strong sales growth, 1,306 1,231 A lower financing costs from a debt NPM 757 4.0% 4.3%
Slide 26: Normalized net profit of THB 1,446mn
Normalized net profit of THB 1,446mn 20.0% Normalized 18.0% Net Profit +3.1% YoY THB mn 16.0% Excluding the one-off quarter-end items, 2Q16 +33.6% QoQ 14.0% normalized net profit was at THB 1,446mn, up 12.0% 3.1% YoY. 10.0% One-off items during 2Q16 of THB 81mn 1,531 1,614 comprised of: 1,402 1,446
Slide 27: EPS: Positive EPS = Dividend payment
EPS: Positive EPS = Dividend payment EPS +16.9% YoY THB +24.1% QoQ 2Q16 EPS was at THB 0.32, up 16.9% YoY 1H16 EPS was at THB 0.58, down 2.4% YoY, along 0.34 with net profit movement 0.32 0.27 0.26 Board of Directors approved dividend payment of THB 0.32 for 1H16, representing 55.4% payout 0.16 rati
Slide 28: Neutral FCF despite rising raw material prices
Neutral FCF despite rising raw material prices Quarterly Free Cash Flow THB mn 2Q16 Free cash flow (FCF) was slightly negative 5,469 at THB 79mn, despite 2Q16 average tuna raw 4,483 material price rose to USD 1,400/ton (vs USD 3,393 1,257mn during 1Q16) and a record salmon prices The neutral FCF was
Slide 29: Increasing proportion of long-term debts
Increasing proportion of long-term debts Interest-bearing debts of THB 38,471mn By Currency By Maturity 1.2% EUR 2.8% USD 21.5% 19.0% Short-term Loan 49% 42% Current 2017 Portion 2018 of Long- 10% 77.3% 79.9% term Debt 10% 2% THB & finance 2020 lease 2019 onwards Long-term 41% 42%48% Debt 2015 2Q16
Slide 30: 1H16 EBITDA: Sufficient internal cash flow to fund M&As
1H16 EBITDA: Sufficient internal cash flow to fund M&As Unit: THB mn Operating Activities Investing & Financing Activities ND/E 0.76x THB 5,937 mn ND/E 0.74x Kd = 3.73% Kd = 2.86% Free Cash Flow THB 4,404 mn 36,363 -5,936 36,264 +456 +1,475 +442 +1,932 +1,533 -1,118 +936 +25 +156 Net Debt EBITDA Cha
Slide 31: Continued improved working capital management
Continued improved working capital management ROE1 INV Days Debt to EBITDA 4.17 14.2% 13.8% 3.40 3.18 3.02 11.7% 11.0% 119 116 2.77 114 110 106 6.6% 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 ROCE2 Net WC3 ND/E4 0.76x 0.74x 13.7% 13.0% 11.4% 11.1% 116 0.69x 114 0.67x
Slide 32: Key challenge: John West and Brexit's impact
Key challenge: John West and Brexit’s impact Possible Brexit’s Impact on John West 2016: Almost all foreign exchange exposure risks hedged 1. For branded business, over 90% of foreign currency exposure are hedged 2. For private label business, all hedging is done upon purchase contract finalized 3.
Slide 33: Key challenge: MerAlliance and rising salmon prices
Key challenge: MerAlliance and rising salmon prices Chilean algae bloom affect global production Salmon raw material prices (NOK/kg) 2Q16 price was NOK 65/kg, +68% YoY* 80 70 • It is estimated that 2016 Chilean salmon production 60 would decline 20-25% YoY, which imply global 50 production impact by
Slide 34: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results TU’s Consolidated Results Results by Business Unit Sustainability Update Executive Introduction Page 34
Slide 35: Investor Relations message on investor trust
“Corporate performance could fluctuate from time to time, but investor trust is what we care most. To us, transparency, consistent and timely disclosure are keys to investor trust, particularly in times of uncertainty. Wai Yat Paco Lee General Manager, Page 35 Investor Relations and Corporate Invest
Slide 36: Key operating impact: rising salmon price is a key challenge
Key operating impact: rising salmon price is a key challenge Raw material prices Skipjack tuna raw material prices (USD/ton) 3,000 2,500 In Jul, tuna price closed at USD 1,400/ton. In 2Q16, average price 2,000 was at USD 1,503/ton (+36.5% YoY, +19.6% QoQ). 1,400 1,500 (Jul’16) 1,000 500 0 Jul-13 Jul
Slide 37: Key operating impact: exchange rate
Key operating impact Exchange rate USD/THB 38 36 35.08 In Jul, USD/THB closed at 35.08. In 2Q16, average USD/THB was at (Jul’16) 35.28 (-1.1% QoQ, +6.1% YoY) 34 32 30 28 Jul-13 Jul-14 Jul-15 Jul-16 EUR/THB 48 In Jul, EUR/THB closed at 38.79. In 2Q16, average EUR/THB was at 43 39.83 (+1.3% QoQ, +8.2%
Slide 38: Thai Union's global footprint
Thai Union’s global footprint Page 38
Slide 39: 3 strategic business segments
3 strategic business segments Total 1H16 sales: THB 65,697mn Frozen, chilled seafood PetCare, value added and Ambient seafood Sales: THB 32,459mn and related others Sales: THB 25,377mn Sales: THB 7,861mn Shrimp & related Tuna business PetCare business1 Ambient & Pouch Frozen, chilled & Value-added S
Slide 40: Ambient Seafood
Ambient Seafood SEALECT B BRAND FOOTPRINT (MARKET) 3 2 = PRIVATE LABEL (PRODUCTION PLANT) : v > | COMBINATION
Slide 41: Ambient Seafood: Solid growth boosted by branded business
Ambient Seafood Solid growth boosted by branded business Sales (THB million) Quantity (Tons) +10.5% YoY +7.6% YoY +13.6% QoQ +9.9% QoQ 20,000.00 19,000.00 17,261 120,000.00 119,000.00 118,000.00 117,000.00 116,000.00 115,000.00 114,000.00 113,000.00 96,116 90,351 89,117 94,086 103,387 15,621 15,307
Slide 42: Frozen, chilled seafood and related
Frozen, chilled seafood and related Page 42
Slide 43: Frozen, chilled seafood and related: Catching up
Frozen, chilled seafood and related Catching up Sales (THB million) Quantity (Tons) +17.9% YoY +17.8% YoY +7.6% QoQ +9.7% QoQ 20,000.00 90,000.00 89,000.00 88,000.00 19,000.00 87,000.00 86,000.00 85,000.00 84,000.00 83,000.00 82,000.00 18,000.00 17,000.00 15,099 81,000.00 80,000.00 79,000.00 78,000.
Slide 44: PetCare, value added and others
PetCare, value added and others Page 44
Slide 45: PetCare business continue to deliver
PetCare, value added and others PetCare business continue to deliver Sales (THB Million) Quantity (Tons) +4.3% YoY +9.6% YoY +5.1% QoQ +9.9% QoQ 6,000.00 50,000.00 49,000.00 48,000.00 47,000.00 46,000.00 45,000.00 44,000.00 43,000.00 31,617 31,031 30,746 31,545 34,654 42,000.00 5,000.00 3,861 4,098
Slide 46: 1H16 Segment Profitability
1H16 Segment Profitability Sales Margin Gross Profit New segment (THB million) (%) (THB million) Ambient seafood 32,459 19.3% 6,249 *Tuna business *Sardine & Mackerel *Ambient & Pouch Salmon Gross Profit Frozen, chilled seafood and 25,377 8.9% 2,254 THB 10,276 million related *Shrimp & related busin
Slide 47: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results Sustainability Update Executive Introduction Page 47
Slide 48: Sustainability message from Group Director
“At Thai Union, we are dedicated to being the world’s most trusted seafood leader. That means earning trust from all our stakeholders and working with all of our partners to ensure a healthy seafood supply for generations to come.” Darian McBain, Ph.D. Group Director of Sustainable Development Page
Slide 49: Agenda: Sustainability Update
Agenda Sustainability Update Sustainability Report and DJSI submission John West and Greenpeace WWF partnership review Sea Change review Page 49
Slide 50: Sustainability report and DJSI submission
Sustainability report and DJSI submission You can download TU’s sustainability report at: http://www.thaiunion.com/Sustainability_Report2015_E.pdf (Thai version: http://www.thaiunion.com/Sustainability_Report2015_T.pdf) Page 50
Slide 51: John West and Greenpeace update
John West and Greenpeace update Campaign continues in UK market, as well as global campaign John West retained many retailers as customers Of the range, 22 product lines were withdrawn and 5 were added, bringing the total of supply to 59 product lines into Tesco 6 pink and red salmon products that w
Slide 52: WWF and Thai Union Europe Partnership
WWF and Thai Union Europe Partnership • Partnership is very successful, and guiding direction for our sustainability work on fisheries • First public progress report after entering into the partnership in 2014 • A full environmental risk assessment across all fish species sourced by Thai Union Europ
Slide 53: Sea Change consultation
Sea Change consultation Gathering feedback from stakeholders worldwide and refining our strategy – a key to our transparency and industry leading approach July • Presentation of revised Sea Change Strategy • Online consultation • Compilation of • Consultation comments received workshops and • Adapta
Slide 54: Agenda
Agenda Company Overview Key Highlights Recent Developments 2Q16 Financial Results Sustainability Update Executive Introduction Page 54
Slide 55: Executive introduction: Whitney Small
Executive introduction: Whitney Small “We are sharing Thai Union’s story in support of our responsible and sustainable business practices around the world. As Thai Union continues to grow and innovate, our industry leading role showcases our efforts, shaping public perception.” Whitney Foard Small G
Slide 56: Executive introduction: Valentin Ramirez
Executive introduction: Valentin Ramirez “At COSI, our objective is to be the most trusted seafood leader in the US, driving positive change in the areas of sustainability, innovation, and quality. We will provide strategic thought leadership to drive penetration and growth of the category. Valentin
Slide 57: Appendix
Appendix im ™ Qos.
Slide 58: Share Capital Information
Share Capital Information Stock Information Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 30 Jun 2016 Share price (05 Aug 2016) : THB 21.70 Historical price : Chansiri Family 52-week high THB 23.00 19.6% 52-week low THB 15.80 Niruttinanon No. of paid up shares : 4,771.82mn Family 6.9% Par
Slide 59: 2Q16 Income Statement
2Q16 Income Statement Consolidated 2Q16/ 2Q16/ % % % (Unit: THB mn) 2Q16 1Q16 2Q15 2Q15 1Q16 to sales to sales to sales Change Change Sales 34,441 100% 31,257 100% 30,642 100% 10.2% 12.4% Cost of sales (29,012) -84.2% (26,409) -84.5% (25,450) -83.1% 9.9% 14.0% Gross profit 5,428 15.8% 4,848 15.5% 5,
Slide 60: 1H16 Income Statement
1H16 Income Statement 1H16/ % % (Unit: THB mn) 1H16 1H15** 1H15 to sales to sales Change Sales 65,697 100% 59,248 100% 10.9% Cost of sales (55,421) -84.4% (50,110) -84.6% 10.6% Gross profit 10,276 15.6% 9,138 15.4% 12.5% SG&A expenses (6,760) -10.3% (5,997) -10.1% 12.7% FX gain (loss) 296 0.5% 826 1
Slide 61: Statement of Financial Position as of 30 Jun 2016
Statement of Financial Position as of 30 Jun 2016 % to total % to total (Unit: THB mn 1H16 2015 Change assets assets Cash and cash equivalents* 2,207 1.9% 2,816 2.5% -21.6% Trade and other receivables 17,415 15.2% 16,554 14.9% 5.2% Inventories - net 34,977 30.6% 35,180 31.7% -0.6% Other current asse
Slide 62: 1H16 Statement of Cash Flow
1H16 Statement of Cash Flow Consolidated (Unit: THB mn) 1H16 1H15 Change Profit before income tax 3,924 3,702 222 Adjustments for depreciation & amortisation expenses 1,421 1,289 132 Other adjustments 657 1,204 (547) Changes in operating assets and liabilities 921 4,701 (3,779) Cash flows receipts f
Slide 63: 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:63+66 2298 0024 Page