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TUF foresees Japan demand pushing up revenue

Thai Union Frozen Products (TUF), the country’s largest exporter of frozen and canned seafood, projects its first-quarter revenue will grow by at least 30% year-on-year as destruction from massive quakes may prompt more orders from Japan.

Sendai, which was hit by the tsunami last Friday, is a port town where a number of seafood factories processing tuna, sardines and salmon are located, said TUF president Thiraphong Chansiri.

“After the tsunami, it will take at least two weeks to rehabilitate. This will lead to higher imports from Thailand to support domestic demand,” he said.

Japan is currently the third-largest export market of TUF after the US and Europe, contributing about 12% to the group’s total revenue. Tuna dominates, accounting for 40% of TUF’s sales, followed by frozen shrimp (23%) and canned seafood (8%).

Mr Thiraphong forecast revenue for the full year at about US$3 billion, an increase of more than 30% over 2010, on the back of whole-year consolidation of MWBrands (MWB), which TUF acquired in October last year.

The SET-listed company is aiming for average annual growth of 10% in turnover over the next four years to $4 billion by 2015, he added.

In 2010, sales rose 12.7% in dollar terms to a record $2.2 billion but slid 3.6% in local currency from 71.5 billion baht to 68.99 billion. Net profit was down 14.1% to 2.87 billion as the baht gained against the greenback by nearly 9% over the same period of 2009.

“Last year’s net profit was not as satisfactory as that of 2009 due to the coincidence of various unfavourable factors during the year,” Mr Thiraphong said. “Among them were [higher] tuna nad shrimp prices, Thai baht volatility, loan interest burden and the purchase of MWB.”

But this year, prices of raw materials and oil have been less volatile than in 2010 and TUF has partly switched to coal to run its plants. Besides, product prices will be adjusted to reflect higher production costs, he added.

Meanwhile, MWB will enhance the TUF business in Europe in terms of higher profit margins, and provide access to new markets such as eastern Europe, Russia and northern Africa..

In the US, US Pet Nutrition LLC, which was established in Georgia to manufacture seafood-based pet food will be operational in the third quarter, generating revenue of $15 million to TUF this year. The new US factory is expected to generate annual revenue of $50 million within three years, he said.

Mr Thiraphong said TUF’s debt-to-equity ratio was 1.6 times, lower than its previous expectation of 1.8 times. It plans to seek shareholder approval at the meeting next month to issue up to 15 billion baht in debentures to repay 3.2 billion baht in bonds due to be redeemed in June and other existing debts.

TUF shares closed yesterday on the SET at 47 baht, down 25 satang, in trade worth 292.9 million baht. (Bangkok Post)


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