TUF: Sales Surpassing 100 Billion Baht in 2012

TUF announced its 2012 annual result with sales surpassing the one hundred billion baht mark, reaching 106,698 million baht, up 8% from that of the previous year. Sales in US dollar term also rose in tandem. Throughout last year, TUF had faced a host of challenges, namely a fire incident at one of its Thai shrimp processing plants, the high cost of raw materials and strengthening Thai baht, to name a few. The firm nevertheless managed to increase its sales continuously. The management is confident that the firm will be able to continue this growth trend in 2013.

Mr. Thiraphong Chansiri, president of Thai Union Frozen Products PCL. (TUF), a leading manufacturer and exporter of quality seafood with innovations and the owner of some world's leading seafood brands, stated that his firm's sales climbed to 106,698 million baht in 2012, representing 8% increase from 98,670 million baht a year ago, whereas sales in US dollar term also increased by 6% from $3,232 million in 2011 to $3,441 million. However, the annual net profits dropped by 8% to 4,694 million baht from 5,117 million baht a year earlier.

"For the fourth quarter of 2012 alone, sales increased in both Thai baht and US dollar term. There were several challenges throughout 2012, but our determination to perform allowed us achieve sales of 26,309 million baht during the last quarter, which represented 1.1% increase from 26,000 million baht a year ago. In US dollar term, the quarterly sales of $861 million shows 2.3% increase from $837 million during the same time in 2011. However, the quarterly net profit dropped to 621 million baht, down 60% from the same quarter a year ago," Khun Thiraphong added

In 2012, TUF's sales can be broken down in 6 main product categories as follows: tuna (49%), shrimp and related products (23%), sardine and mackerel (6%), salmon (4%), pet food (7%) and value-added and other products (11%). In terms of market, they can be divided as follows: USA (36%), the European Union (30%), Thai domestic market (10%), Japan (9%) and the rest of the world (15%).

As suggested by the result, Khun Thiraphong admitted that 2012 was generally a very challenging year, particularly during the fourth quarter when a host of negative factors occurred at the same time. For instance, the price of tuna raw material suddenly dropped sharply from its historic peak of $2,350 per metric ton in September to a recent low of $1,900 per ton within a month's time and stayed there until the end of the year. This sharp volatility of raw material price did negatively impact the firm's profit margin during the period. In addition, the business also suffered a shortage of shrimp supply and consequent skyrocketing shrimp raw material prices caused by the severe EMS (Early Mortality Syndrome) epidemic. Moreover, the firm's US business did not grow as expected due to intense price competition. In spite of these challenges in the recent quarter, the management believes that they are just temporary.

Khun Thiraphong explained," Our performance in the first 9 months last year was strong, in particular the third quarter when sales and net profits broke new highs. We remain profitable despite the fact that the eventual annual net profits did not meet our goal. In 2012, the major negative factors included a fire incident in our shrimp plant, the high cost of tuna and shrimp raw materials and booking of a one-off extraordinary accounting treatment during the 2nd quarter. The accounting treatment was indeed a non-cash expense worth 407 million baht caused by the accelerated amortization of a deferred finance fee attached to a loan incurred for the acquisition of MW Brands. Excluding this item, our annual net profits should have been 5,101 million baht instead, only 1% below net profits a year ago. "

He further added, "In the first quarter of 2013, the operating performance should improve when the tuna business returns to normal. Also, since the price of shrimp raw material surged in every market, namely Thailand, China, Vietnam and India, we did adjust selling prices to cope with the higher costs in response. We are still confident that our shrimp business should recover in the second half of the year. Our business plan in 2013 is to emphasize investments for growth. We will increase our production capacity, expand to new markets and stress new product developments. For example, we will renovate our salmon processing plant, build a new ready-to-eat meal and bakery plant and a new shrimp factory to replace the one damaged by the fire. Meanwhile, we will also more aggressively penetrate the European markets, such as Eastern Europe, Russia, Germany as well as the ASEAN Economic Community (AEC). Within AEC, we are currently expanding in Vietnam, Myanmar and Laos with our own product brands, such as Sealect, Fisho and Bellotta. This year, we will also penetrate the Indonesian market. In addition, TUF is still considering acquisition opportunities, though the timing is yet certain. With more supportive factors in the making, 2013 should be a good year ahead for us again."

In addition, the TUF board meeting has just passed a resolution to seek approval for an interim dividend payment of Bt1.00 per share (for the 2012 second-half operating performance) in the upcoming annual general shareholders' meeting, of which Bt 0.45 will be tax-exempt thanks to the existing BOI privileges while the remaining Bt0.55 will be subject to the normal withholding tax. Adding to the last dividend payment of Bt 1.10 (for the 2012 first-half operating performance), the total dividend for the full year 2012 operating performance should amount to Bt2.10 per share.