"TUF" Maintained Continual Sales Growth in Q2 With The Annual Growth Target At 10%

TUF announced its operating performance in Q2/2013, with sales growing at 9.7% in US dollar term and at 5% in Thai baht term from the same period of last year, and the management continues to project an annual growth rate of 10% this year.

Mr. Thiraphong Chansiri, President of Thai Union Frozen Products PCL. (TUF), the world's leader and expert on innovative and quality seafood products with a portfolio of global brands disclosed the firm's Q2/2013 operating results with a comparison to the figures of the same period in the previous year. The Company's quarterly sales were USD 935 million in USD, representing 9.7% growth from USD 852 million a year ago. The sales value in Thai baht term was 28,119 million, increasing by 5% from Thai baht 26,764 million. The net profit was therefore Thai baht 359 million, declining from Thai baht 1,001 million or by 64%. Earnings per share amounted to 0.31 baht.

By considering the overall performance in the first half, the Company's sales were USD 1,759 million, rising 5% from USD 1,674 million and sales in Thai baht term amounting to baht 52,560 million, however only slightly higher than Thai baht 52,062 million from the same period of last year. The total 6-month net profit stood at baht 1,033 million.

The Company's revenues breakdown by its six main strategic product groups during the first 6-month period were tuna business (50%), shrimp and related business (22%), sardine and mackerel business (7%), salmon business (4%), pet food business (7%), value-added products and other business (10%). The Company's revenues by market include the US (38%), Europe (31%), domestic market accounts (8%), Japan (8%), and other countries (16%).

Mr. Thiraphong clarified the operating results that various negative factors occurred in the first quarter continued to cause impacts in the second quarter. For instance, the price of tuna raw material remained volatile. Its average price in Q1 was 2,198 USD per ton while in Q2 was 2,178 USD per ton. Despite a slight decrease in its average price in Q2, the price during the period was actually highly volatile, leading to a slowdown of orders from customers due to pricing uncertainty. The price of shrimp raw material has continued to hit new highs since Q1 as a result of the EMS (Early Mortality Syndrome) outbreak, setting a new record price not seen for years. The shrimp price in Q2 soared by 20% (a size of 60 pieces per kilogram) from Q1, or 72% compared with its price in Q2/2012, sending negative impacts to the local shrimp processing for export industry. With the challenges of skyrocketing costs, net profit of the business was generally depressed in Q2 The Company also experienced a loss from foreign exchange hedging, caused by the high fluctuation of Thai baht exchange rate. Nevertheless, under a normal situation which Thai baht moves in in a consistent direction, the Company usually can manage this risk successfully by use of various financial tools. In addition, an increase in tax expenses and an absence of insurance compensation on last year's fire incident as seen in Q1, the net profit for the period was consequently lower than that of a quarter ago. In spite of numerous challenges, the Company could achieve a higher gross margin of 12.4% than that of Q1. In terms of comparing sales between Q2 and Q1, the amounts in USD rose by 13% and Thai baht by 15%. The overall picture of Company exhibited improvement in operating profit due to product repricing and prominent import and distribution circumstances of shrimp business in USA.

Despite the strong challenges faced by our business during the first half, we believe that the trend would turn more positive in the second half of the year, resulted from adjustments in management strategies and plans to cope with the situations with focus on our strengths and efficiency optimization. The Company would emphasize efficient use of its resources and careful investments to achieve profitability. TUF has built strong competitiveness as a seafood producer, from upstream to downstream operaitons and is able to benefit from diversified sourcing raw materials. After all, we believe that our growth rate in this year would reach 10%, or close to USD 4,000 million, said Mr. Chansiri.

The Board of Directors recently resolved to approve an allocation of net profit gained from the operating results during a period of 1 January - 30 June 2013 as an interim dividend of 0.60 baht per share. Such dividend derived from the portion of profits without investment promotion privileges is subject to the 10% withholding tax. The dividend payment was scheduled to be on 9 September 2013.