TRIS Rating affirms the company rating on Thai Union and the ratings on its senior unsecured debentures at “A+”
Bangkok – 25 September 2024 – Thai Union Group PCL company rating and the ratings on its senior unsecured debentures have been affirmed by TRIS Rating at “A+” and those on its subordinated capital debentures (hybrid debentures) at “A-”, with a “stable” outlook. Such ratings reflect Thai Union’s strong market position as one of the world’s leading seafood processors, the diversity of its products and markets, and its strong brand portfolio in Europe and the United States. Thai Union also has strategic investments in upstream and downstream businesses including food ingredient and feed businesses. Key rating considerations are primarily based on Thai Union’s performance recovery in the first half of 2024 thanks to a resurgence in the volume of pet care, value-added, and ambient seafood products. Thai Union's operating revenue rose by 2.6% year-on-year (YoY) to THB 68.8 billion. The company’s profitability improved, fueled by a product mix improvement and cost efficiency in the pet care business, together with falling raw material costs in feed and packaging businesses.
The company’s margin rose following the downsizing of the low-margin frozen business in the US. As a result, EBITDA surged by 22.5% YoY to THB6.2 billion in the first half of 2024. The EBITDA margin was 9.1% in the same period, up from 8.8% in 2023. TRIS Rating expects the company to maintain growth momentum with an acceptable profit margin. Growth will be driven by increased capacity, market expansion, and the launch of new products. Thai Union’s revenue is estimated to reach THB140-THB146 billion per annum in 2024-2026 and EBITDA to be in the range of THB13-THB14 billion per annum, while the EBITDA margin should remain around 9% during 2024-2026.
Thai Union’s operations should improve on the back of escalating revenue contributions from high-margin innovative products as well as from its performance enhancement and cost reduction programs. Thai Union’s business risk is partly mitigated through the geographic diversity of its operations and markets. The company’s ongoing efforts to broaden its geographic coverage aim to alleviate the potential impacts of disease outbreaks, trade barriers, and regulations governing the fishing industry.
TRIS Rating assesses Thai Union’s liquidity as adequate as the company has long-term debt repayments totaling THB9.5 billion over the next 12 months while it expects to generate funds from operations of about THB8 billion in 2024. The liquidity buffer is supported by cash on hand and short-term investments, as well as numerous undrawn credit facilities from several financial institutions.