Strong sales volume growth increases 3.8 percent with a slight improvement in gross profit marginSales down 6.8 percent to THB 31,838 million due to strong Thai baht appreciation against key currencies 9M2019 net profits improved 4.8 percent, with profitability improvement amid volatile currency environment
Thai Union Public PCL. reported consolidated sales during the third quarter of THB 31,838 million. Excluding the impact of foreign exchange, sales during the quarter would have weakened 1.3 percent year-on-year amid the company’s strength in higher sales volume growth of 3.8 percent, driven by the frozen and chilled seafood business and PetCare and Value Added business.
Gross profit for the period was THB 5,077 million and the gross profit margin improved slightly to 15.9 percent from 15.8 percent in the third quarter of 2018. Year to date operations improved year-on-year, with 9M2019 normalized net profits at THB 4.2 billion with profitability improvement against currency volatility.
In the first nine months of 2019, North America contributed 38 percent of total sales, followed by Europe at 31 percent, the Thai domestic market at 13 percent, and other markets at 18 percent.
With sales volume growth of 3.8 percent, Thai Union delivered reported sales of THB 31,838 million. Weak sales were partly attributed to the depreciating U.S. (-6.9 percent) and EU currencies (GBP -12 percent and EUR -11 percent).
The first nine months of the year showed the branded sales mix at 42 percent, compared to 41 percent during 2018, and private label sales contributing the remaining 58 percent.
Thai Union’s ambient seafood sales in 3Q2019 were THB 14,466 million. The section’s sales declined from the previous year largely due to falling tuna prices (-17 percent year-on-year) and the Thai baht’s appreciation against key trading currencies.
The frozen and chilled seafood business sales volume was up 15.2 percent to 73,084 tons during 3Q2019. However, due to the falling shrimp price (-9.5 percent YoY), the segment’s sales were THB 12,768 million, down 2 percent year-on-year amid an improving gross margin. PetCare and value-added product sales increased 6.3 percent to THB 4,604 million from the third quarter of 2018, with sales volume growth of 2.6 percent.
“Consumers continue to respond positively to our expanding product line-up, which helped lift our sales volumes during the third quarter,” said Thai Union CEO Thiraphong Chansiri. “However, volatile currency markets created challenging market conditions for Thai exports and put pressure on our bottom line. At Thai Union, we remain firmly focused on product diversification for our long-term growth, and committed to continuous improvements and the streamlining of our operations to help limit pressure on our margins.”
Recently, Thai Union declared that its business will not be impacted after the United States Trade Representative (USTR) announced that it was ending some trade preferences for Thailand. Thai Union’s subsidiary John West Foods also announced that it was found not guilty on all counts of doing business directly connected to illegal, unreported and unregulated (IUU) fishing. The verdicts are positive proof of Thai Union’s commitment to transparent business policy and practice.
Thai Union continues to invest in innovation. The company recently created a venture fund with an initial commitment of US$ 30 million. The first investment was announced into Flying Spark, an alternative protein producer. Another program that endorses startups is SPACE-F, the first global FoodTech in Thailand. After the launch of a partnership with the National Innovation Agency (NIA) and Mahidol University’s Science Faculty, the SPACE-F program successfully recruited 24 startup incubators and accelerators worldwide.
Thai Union’s commitment to building a more sustainable industry and business through its global sustainability strategy, SeaChange®, was recognized during the third quarter, highlighted by its ranking as number one in the world in the Food Products Industry Index of the Dow Jones Sustainability Indices (DJSI) for the second year in a row. The company achieved an industry best-in-class 100th percentile ranking for total sustainability score and has now been listed on the index for six consecutive years.
During the third quarter, Thai Union announced a new Combating Food Fraud and Food Defense Strategy to protect its food supply chains from intentional contamination through a series of robust programs to combat food fraud. The company officially opened its fourth preschool in Thailand’s Samut Sakhon province for the children of migrant workers.
Thai Union was awarded for its business governance, innovation and sustainability work, including Asia’s Best CEO and Best Investor Relations Company in Thailand at the 9th Asian Excellence Award 2019; best company in the decade since 2010 in the Best Managed Companies Awards by Asiamoney; Money & Banking’s “Best public company of the year 2018” in the agriculture and food category, and the DRIVE Award 2019 in the Agro & Food Industry category for the second straight year. Global Banking & Finance Review awarded Best Group CEO Thailand 2019 to Thai Union CEO Thiraphong Chansiri, and Best Group CFO Thailand 2019 to Thai Union CFO Joerg Ayrle in recognition of their dedication and commitment to providing strong group leadership. In addition, Dr. Darian McBain, Thai Union’s Global Director of Corporate Affairs and Sustainability, was named one of Asia’s Top Sustainability Superwomen by CSRWorks International.