Thai Union Group Public Company Limited · SET:TU
Thai Union Group Public — Thai Union Group PCL — Q1 2021 Earnings Presentation
55 slides from Thai Union Group Public's earnings presentation, May 11, 2021
Slide 1: Analyst Meeting for 1Q21 Results
Analyst Meeting for 1Q21 Results Thai Union Group PCL. May 11, 2021
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: 1Q21 Key Highlights
1Q21 Key Highlights Slide 3 Analyst Meeting for 1Q21 Results
Slide 4: CEO quote on health and safety
“ The health and safety of our employees, customers, and supply chain are our top priorities, while we continue to focus on ensuring business continuity and delivering trusted, safe and quality products to consumers around the world. Thiraphong Chansiri ” President and CEO Slide 4 Analyst Meeting fo
Slide 5: 1Q21: Net profit growth of 77% YoY, driven by strong operating profit
1Q21: Net profit growth of 77% YoY, driven by strong operating profit from all three core businesses and FX gains THB mn Sales Gross Profit Operating Profit Net Profit 31,125 5,507 1,871 1,803 GPM of 17.7%, Growing SG&A in light of Record 1Q net profit, up Stable top line YoY up 150bps YoY strong bu
Slide 6: 1Q21: Most KPIs improved YoY, debt ratio below 1x
1Q21: Most KPIs improved YoY, sales remained stable, with debt ratio below 1x 1Q21 Net profit Up 77.4% Financial Summary1 YoY to +0.1% (THB million) THB 1,803 million 1Q20 1Q21 +9.3% 31,103 31,125 Share price movement +30.1% 5,507 5,040 20202 20212 (Jan – Dec 20) (Jan – May 21) +77.4% 3,426 +22.4% 0
Slide 7: Continued top line growth and high gross profit margin
Continued top line growth and high gross profit margin, five quarters in a row Total sales (THB mn) GPM NPM 60,000 18.2% 18.2% 18.0% 17.7% 20.0% 15.8% 16.7% 15.9% 16.1% 16.2% 18.0% 14.8% 14.5% 14.2% 14.9% 14.9% 50,000 13.8% 14.0% 16.0% 14.0% 11.6% 34,40034,847 34,733 33,775 34,169 36,012 32,214 31,8
Slide 8: Key Developments
Key Developments Slide 8 Analyst Meeting for 1Q21 Results
Slide 9: Global operations remain uninterrupted from COVID-19
Our global operations remain uninterrupted from COVID-19 Updated • Thanks to stringent measures and prompt action on COVID-19, all of our plants remain open and operational at near normal capacity • All employees affected at our plants in Samut Sakhon, Thailand have returned to work • Vaccinations i
Slide 10: Key steps to our 2025 corporate strategy
Key steps to our 2025 corporate strategy Strengthening our core business Healthy Living, “Healthy Living” Performance improvement programs for branded business product portfolio Healthy Oceans Culinary project Sustainable Continuous improvement in manufacturing (Automation & packaging Ready-to-eat)
Slide 11: Expanding into new, attractive, value-enhancing areas
Expanding into new, attractive, value-enhancing areas Ingredients Supplements Alternative Protein • Tuna oil refinery in Rostock, • Thai Union Lifescience (TUL) to • OMG Meat plant-based protein Germany, is operating since April distribute supplements to end- brand, expanded to distribute 2021 consu
Slide 12: Launched new, healthy canned tuna under Petit Navire brand
Launched new, healthy canned tuna under Petit Navire brand • Thai Union introduced new, MSC-labeled canned tuna range with nutritional benefits • Rich in essential nutrients: Rich in Vitamin C, Rich in Omega-3, and Antioxidant products • To further expand Petit Navire market presence as a Placeholde
Slide 13: Committed to full transparency in our supply chain
Committed to full transparency in our supply chain Partnered with The Nature Conservancy (TNC) in a pioneering commitment to 100% electronic monitoring of tuna supply chain by 2025 Joined Ocean Disclosure Project, an initiative launched by Sustainable Fisheries Partnership in 2015, which encourages
Slide 14: Financial Results: 1Q21 - Consolidated
Financial Results: 1Q21 - Consolidated Slide 14 Analyst Meeting for 1Q21 Results
Slide 15: CFO quote on 1Q21 performance
“We delivered a very healthy performance in 1Q21, consistent with our achievements over the past several quarters. This looks very encouraging for the whole year of 2021. ” Ludovic Garnier, Group CFO Slide 15 Analyst Meeting for 1Q21 Results
Slide 16: 1Q21: Key Takeaways
1Q21: Key Takeaways • Stable sales YoY, supported by Frozen and chilled business in the US and strong Steady top line sales contribution from PetCare and value-added business, despite lower sales in Ambient business. Excl. FX, sales growth was -0.2% YoY • GPM remained at high level of 17.7% vs 16.2%
Slide 17: Tuna prices remained within our expectations
Tuna prices remained within our expectations Tuna raw material price 2,400 (USD/ton) -11.0% YoY 2,200 2,000 1Q20 1Q21 1,442 1,283 1,800 1,600 3Q17 4Q17 April 2021 1,400 2Q17 2,010 2,033 1,340 1,200 1Q17 1,763 1Q18 2Q18 1Q19 3Q20 1Q20 1,633 1,577 1,667 3Q18 4Q18 1,4532Q19 1,500 4Q20 1Q21 1,467 1,408
Slide 18: Sales growth driven by Frozen seafood and PetCare businesses
Sales growth driven by Frozen seafood and PetCare businesses Sales +6.0% THB mn • 1Q21 sales were stable YoY, driven by: -0.2% YoY +0.1% YoY Before currency impacts -7.0% QoQ • Frozen and chilled seafood business greatly turned around in 1Q21 at 10% YoY growth, 33,051 34,784 33,464 after a negative
Slide 19: 1Q21 revenue growth from shrimp, lobster, and PetCare
1Q21 revenue growth from shrimp, lobster, and PetCare, offset by lower sales in tuna, sardine and mackerel +6.0% THB mn +0.1% YoY 31,103 -2,084 +454 31,125 29,369 +183 -376 +745 +10% +455 -24 -98 -3% +6% +979 -2% +27% -6% +62% -148 -104 +38 -18% -5% -12% +13% +14% -0.2% YoY Before currency impacts T
Slide 20: Strong sales growth from the US and domestic market
Strong sales growth from the US and domestic market Sales Breakdown by Geographic • 1Q21 higher sales contribution from the US and 100% 13% 15% 15% 15% 14% 13% Others Thailand 6% 6% 5% 5% Japan 80% 8% 6% 9% 11% 6% 10% 12% Domestic • The US and Thailand sales increased 6% YoY 12% and 5% YoY respectiv
Slide 21: We delivered consistent high gross profit margin
We delivered consistent high gross profit margin Gross Profit +25.7% THB mn • 1Q21 gross profit margin remained at high +9.3% YoY 30.0% quarterly level at 17.7% vs 16.2% in 1Q20, -8.6% QoQ 28.0% 26.0% thanks to: 6,027 6,327 6,023 24.0% • Frozen and chilled seafood gross profit 5,040 5,507 22.0% 4,38
Slide 22: 1Q21 Strong operating profit, up 22% YoY
1Q21 Strong operating profit, up 22% YoY Operating Profit* +83.4% THB mn • 1Q21 operating profit was robust at 22% YoY +22.4% YoY growth to THB 1,871mn: 20.0% 18.0% -3.5% QoQ • 16.0% 1Q21 SG&A to sales ratio was at 11.7%, 2,356 14.0% 1,998 1,938 1,871 12.0% increased from 11.3% in 1Q20. The increase
Slide 23: 1Q21 EBITDA at THB 3.4bn, up 30% YoY
1Q21 EBITDA at THB 3.4bn, up 30% YoY on reported basis EBITDA* +21.5% THB mn +30.1% YoY • 1Q21 EBITDA at THB3.4bn, an increase of 28.0% 30% YoY, thanks to: +10.8% QoQ • 23.0% TU reported 1Q21 FX gain of THB 244mn vs 3,883 3,426 FX loss of THB 262mn in 1Q20, as a result of 2,819 3,350 3,092 18.0% 2,6
Slide 24: Record high 1Q21 net profit at THB 1.8bn
Record high 1Q21 net profit at THB 1.8bn, up 77% YoY on reported basis +41.6% Net Profit • 1Q21 reported net profit was at THB 1,803mn, 14.0% THB mn +77.4% YoY up 77% YoY 12.0% +23.7% QoQ 10.0% • This was due to strong core business, 2,056 particularly Frozen seafood and PetCare and 1,716 1,803 8.0%
Slide 25: 1Q21 Adjusted net profit increased 100% YoY
1Q21 Adjusted net profit increased 100% YoY Adjusted Net Profit THB mn +82.7% 20.0% • Excluding one-off items, adjusted net profit +99.8% YoY 18.0% was THB 2,030mn in 1Q21 due to the +26.6% QoQ 16.0% following: 14.0% 2,255 12.0% 2,030 • At share of profit from Red Lobster, there was 1,716 1,603 10.0
Slide 26: EPS: 1Q21 EPS was up 88% YoY
EPS: 1Q21 EPS was up 88% YoY Earning per Share (EPS)* THB +39.0% • 1Q21 EPS was at THB 0.37, up 88.2% YoY, +88.2% YoY backed by net profit growth. +26.6% QoQ 0.42 0.34 0.37 0.27 0.29 0.20 1Q19 1Q20 2Q20 3Q20 4Q20 1Q21 1.26 1.26 1.09 1.09 Remark: Excluding one-time net accrual for US legal-related se
Slide 27: Red Lobster operations turned a profit, lease accounting impact
1Q21: Red Lobster operations turned a profit, one-off impact from lease accounting differences • Share of profit from operations turnaround to THB 81mn THB mn 1Q21 4Q20 3Q20 2Q20 1Q20 in 1Q21 vs. share of loss at THB 111mn in 1Q20. Share of profit • Including lease accounting adjustment, it’s marked
Slide 28: Red Lobster has accelerated its business recovery initiatives
Red Lobster has accelerated its business recovery initiatives amid ongoing COVID-19 pandemic % Outlets Opened • Business recovery driven by improving guest 100% 100% 96% 93% 98% 96% count and key strategic initiatives (Lobsterfest, 87% 88% 91% 86% 92% 75% 75% Valentine’s Day and Lent) 65% • Continue
Slide 29: Negative net working capital caused a temporarily negative FCF
1Q21: Negative net working capital caused a temporarily negative FCF Quarterly Free Cash Flow • Free cash flow in 1Q21 had a temporary THB mn 5,609 impacted from higher inventory of finished goods and goods in transit on a delayed shipment and container shortage from 4Q20. 2,585 • Thai Union committ
Slide 30: THB 1bn net debt increase from working capital and CAPEX
1Q21: THB 1bn net debt increase from negative change in net working capital and CAPEX, offsetting healthy EBITDA ND/E 0.94x Income tax paid and other investing & ND/E 0.93x Free Cash Flow THB -125 mn Kd = 2.91% financing activities Kd = 2.74% THB mn 487 53,181 52,129 85 371 81 843 2,662 60 -96 -15 -
Slide 31: Majority THB funding, reducing currency risk
Majority THB funding, reducing risk associated to currency volatility Interest-bearing debts of THB 57,258mn By Currency By Maturity JPY 0.0% 1.7% EUR 1.5% USD 2.3% 13% 0.0% Short-term loan 23% 15.7% Current portion of long-term 14% 37% debt & finance THB 98.5% lease Long-term debt 80.3% 63% 50% 202
Slide 32: Debt ratio target achieved, improved profitability ratio
Debt ratio target achieved, improved profitability ratio ROE INV Days Net Debt to EBITDA 15.5% 122 123 125 124 120 4.64 13.5% 14.1% 4.32 4.17 11.5% 11.9% Target 4.0-4.5 35,720 34,696 37,758 38,546 39,195 4.02 3.87 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 INV (THB mn
Slide 33: Financial Results: 1Q21 – Business Units
Financial Results: 1Q21 – Business Units Slide 33 Analyst Meeting for 1Q21 Results
Slide 34: Tuna and shrimp prices favorable, salmon price increased
Tuna and shrimp prices remained favorable, salmon price increased sharply over the quarter 2,500 Tuna (USD/ton) Salmon (NOK/kg) 2,300 90 Fluctuation in the range 85 2,100 Sharp rebound after of 1,300 – 1,700 USD/ton 80 downward trend since 2Q20 1,900 75 1,700 4Q17 70 1,500 3Q172,033 65 1,300 2Q172,0
Slide 35: Thai Baht weakened against key currencies
Thai Baht weakened, but still contributed to gains against key currencies YoY except USD 38.0 48.0 37.0 USD/THB 47.0 GBP/THB Continued downward 36.0 46.0 GBP on upward trend against THB since 35.0 45.0 trend since 3Q19 3Q20 44.0 34.0 43.0 33.0 42.0 32.0 1Q17 41.0 1Q21 2Q17 1Q17 2Q173Q174Q171Q182Q183
Slide 36: 3 strategic business categories
3 strategic business categories Total 1Q21 sales: THB 31,125 mn Ambient seafood Frozen & chilled seafood and related PetCare, value-added and others Sales: THB 13,580 mn Sales: THB 12,076 mn Sales: THB 5,469 mn Sales Split Sales Split Sales Split 18% 5% 43% 41% 38% 59% 39% 62% 95% Brand Brand Brand
Slide 37: Ambient seafood: Normalized topline, continued healthy margin
Ambient seafood: Normalized topline, continued healthy margin Sales (THB mn) Quantity (tons) +7.8% +0.9% -13.5% YoY -13.1% YoY -8.0% QoQ -6.0% QoQ 99,599 101,136 98,176 15,631 16,394 16,259 14,440 79,973 93,652 86,197 13,456 13,580 50% 47% 47% 42% Brand 60% 57% 58% 53% Brand 48% 58% 59% 51% Private
Slide 38: Frozen, chilled seafood and related: Recovering topline and GPM
Frozen, chilled seafood and related: Recovering topline and GPM Sales (THB mn) Quantity (tons) +4.7% +2.0% +10.3% YoY +3.1% YoY -12.1% QoQ -8.9% QoQ 13,370 13,738 71,224 69,236 11,529 10,944 11,554 12,076 61,862 61,179 61,284 63,081 37% 38% Brand 35% 38% 34% 38% Brand 71% 73% 71% 72% 72% 73% Private
Slide 39: Frozen and chilled seafood: Back to growth
Frozen and chilled seafood: Back to growth Frozen and Chilled Seafood • 1Q21 gross profit recorded at THB 1,273mn, up Gross Profit (THB mn) 44% YoY, beating 1Q19 pre-COVID level, with 1,726 1,560 strong sales push driven by the U.S. and Thailand 1,450 1,490 1,273 1,261 • Increased focus on modern tr
Slide 40: PetCare, value-added and others: Solid growth, uptrend margin
PetCare, value-added and others: Solid growth, uptrend margin Sales (THB mn) Quantity (tons) +24.7% +7.5% +20.8% YoY +16.1% YoY +3.4% QoQ -3.3% QoQ 5,103 5,155 5,287 5,469 67,838 73,322 75,019 75,409 72,957 4,384 4,528 5% 5% 62,852 6% 6% 5% 6% 6% 4% Brand 12% 8% Brand 4% 5% 94% 94% 95% 95% 96% 95% 9
Slide 41: PetCare and value-added business at an all-time high
PetCare and value-added business at a new, all-time high PetCare and Valued Added • PetCare and value added sales grew from THB 15.7bn in Sales (THB mn) and Gross Profit Margin (%) 2015 to THB 20.0bn in 2020 6,000 35% 5,500 30% • Upward margin trend driven by growing demand for pet food, 25% 5,000 i
Slide 42: Geographic diversity: Sales
Geographic diversity: Sales Europe United States and Canada 27% 45% Pacific Ocean Pacific Ocean Atlantic Ocean Others Thailand 16% Indian Ocean (Asia, Australia, Middle East, Africa and South America) 12% Slide 42 Analyst Meeting for 1Q21 Results
Slide 43: US & Canada: Recovery in frozen seafood
US & Canada: Recovery in frozen seafood Sales THB mn +14.0% +5.6% YoY -6.3% QoQ 15,471 14,851 13,175 13,925 13,911 12,207 1Q19 1Q20 2Q20 3Q20 4Q20 1Q21 • 1Q21 North America sales increased by 6% YoY in THB term • US and Canada ambient seafood businesses delivered growth of 6% YoY from higher volume
Slide 44: Europe: Lower topline after last year's strong sales push
Europe: Lower topline after last year’s unusually strong sales push Sales THB mn +1.6% -10.9% YoY -13.4% QoQ 9,417 9,430 9,827 9,688 8,255 8,387 1Q19 1Q20 2Q20 3Q20 4Q20 1Q21 • 1Q21 EU sales decreased 11% YoY, due to lower branded demand across all markets, from an exceptional push of shelf- stable
Slide 45: Thailand: Driven by growing PetCare business
Thailand: Driven by growing PetCare business Sales THB mn +15.7% +4.8% YoY +12.7% QoQ 3,135 3,460 3,187 3,437 3,219 3,628 1Q19 1Q20 2Q20 3Q20 4Q20 1Q21 • 1Q21 Thailand sales were up 4.8% YoY. • PetCare business was key growth driver for domestic sales as people are spending more for their pets since
Slide 46: Emerging Markets and rest of the world: Growth in Middle East
Emerging Markets and rest of the world: Growth in Middle East Sales THB mn -9.9% +2.9% YoY -8.9% QoQ 5,772 6,509 6,049 5,706 5,052 5,198 1Q19 1Q20 2Q20 3Q20 4Q20 1Q21 • 1Q21 sales in emerging markets and rest of the world experienced an increase of 3% YoY. •Sales increase was driven by ambient seafo
Slide 47: 1Q21 Category profitability
1Q21 Category profitability Business category Sales Margin Gross profit THB mn % THB mn Ambient seafood • Tuna 13,580 20.2 2,738 • Sardine and mackerel • Ambient and pouched salmon Frozen and chilled seafood • Shrimp and related 1 • Lobster 12,076 10.5 1,273 • Frozen, chilled and smoked salmon • Oth
Slide 48: 2021 Guidance
2021 Guidance Sales 3-5% YoY growth Gross profit margin ~ 17% SG&A to sales ~ 11 – 12% Effective interest No material change Placeholder for graphic rate from 2020 (paste graphic, crops to H19.05*W16.93) (add TU logo) CAPEX ~ THB 6.0 – 6.5bn Dividend policy At least 50% dividend payout ratio Slide 4
Slide 49: Healthy Living, Healthy Oceans
Thai Union is one of the world's most trusted seafood leaders, delivering healthy and responsibly-sourced nutrition to our consumers globally, while creating long-term value for our stakeholders. Healthy Living, Healthy Oceans With our global business portfolio, we will focus on continued performanc
Slide 50: Appendix
Slide 50 Analyst Meeting for 1Q21 Results
Slide 51: Impact from Red Lobster lease accounting adjustment
Impact from Red Lobster lease accounting adjustment Indicative impact to Red Lobster net profit from TFRS • Thai Union adopted TFRS16 while Red Lobster adopted 16 implementation US GAAP ASC 840. In theory, principles are almost aligned in both standards, except one point which is Right of Use (ROU)
Slide 52: Share capital information
Share capital information Stock Performance at a Glance Major Shareholders Bloomberg/ Reuters TU TB/ TU.BK As of 9 March, 2021 Share price (7 May, 2021) THB 15.20 Others, Historical closing price 46.9% Chansiri 52-week high THB 16.00 Family, 52-week low THB 11.90 19.3% Social No. of paid up shares 4
Slide 53: 1Q21 Income statement
1Q21 Income statement Consolidated 1Q21 1Q21 % % % (Unit: THB mn) 1Q21 1Q20 4Q20 1Q20 4Q20 to* sales to sales to sales Change Change Sales 31,125 100% 31,103 100% 33,464 100% 0.1% -7.0% Cost of sales (25,617) -82.3% (26,063) -83.8% (27,441) -82.0% -1.7% -6.6% Gross profit 5,507 17.7% 5,040 16.2% 6,0
Slide 54: Statement of Financial Position as of 31 March 2021
Statement of Financial Position as of 31 March 2021 % to total % to total (Unit: THB mn) 1Q21 2020 Change assets assets Cash and cash equivalents* 4,077 2.8% 6,286 4.3% -35.1% Trade and other receivables - net 14,565 10.1% 13,320 9.2% 9.4% Inventories - net 39,195 27.2% 38,546 26.7% 1.7% Other curre
Slide 55: 1Q21 Statement of cash flow
1Q21 Statement of cash flow Consolidated (Unit: THB mn) 1Q21 1Q20 Change Profit before income tax 2,037 1,227 810 Adjustments for depreciation & amortisation expenses 992 966 26 Other adjustments 411 648 (237) Changes in operating assets and liabilities (2,722) (551) (2,171) Cash flows receipts from