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TUF Q1 Dollar Sales Up 49%

TUF announced its 2011’s first-quarter results today with year-on-year growth in sales by 49% in US dollar term and 39% in Thai baht term. As anticipated, net profit easily surpassed that of 2010 fourth-quarter. The Company is now poised to realize its goals in full speed with strong confidence in meeting ongoing challenges and surpassing 30% year-on-year annual sales growth target this year.

Thiraphong Chansiri, president of Thai Union Frozen Products PLC (TUF), Thailand’s major producer and exporter of canned and frozen seafood products, revealed that, for the first quarter of 2011, the Company enjoyed handsome growth in sales both in US dollar and Thai baht terms. Net profit for the quarter was line with earlier expectations, essentially as a result of successful handling of challenges that emerged since late 2010. Quarterly net profit surged by as much as 114% to 753 million baht from 352 million baht in Q4/2010. Quarterly gross margin was also lifted to 14.8% against 11.8% recorded in Q4/2010. Meanwhile, quarter-on-quarter sales in US dollar term rose by 10% in Thai bath term. This performance clearly demonstrated the the strength of the company management and its growth potential.

In consideration of the figures on a year-on-year basis, the Company was capable of generating satisfactory sales growth. Quarterly sales in US dollar term jumped by 49% to 743 million USD when compared to 498 million USD generated in Q1/2010. In Thai baht term, robust sales growth was also observed at 39% to 22,706 million baht from 16,329 million baht reported in Q1/2010. Quarterly net profit declined by 9% year-on-year to 753 million baht from 831 million baht registered in Q1/2010, representing earning per share at 0.79 baht.

The operating results of Q1/2011 indicated strong performance across all product lines. Tuna products, in particular, reported significant sales growth both in volume and value term by 52% and 82% respectively, thanks to the acquisition of MW Brands. Shrimp products registered 3.7% and 20% sales growth in both volume and value respectively. Continual sales growth were still made possible although the Company was faced with unfavorable impacts from aggressive price hike of tuna and shrimp raw materials by up to 47% and 26% respectively during the quarter when compared with the corresponding period in 2010. On the contrary, Q1/2011 net profit fell by 9% year-on-year. This decline in net profit was considered insignificant given the Company expectation since Q4/2010 that the impacts of those ongoing challenges in Q4/2010 would inevitably persist into Q1/2011. The soaring raw material prices consequently drove up the cost base and depressed profit margins in the first quarter of this year. Although price adjustments had been made in response to escalating input costs, the intended outcome did not bear clear results yet during Q1/2011 because the implemented measure was then not fully effective across all product ranges yet.

However, the prices of most product ranges have been gradually revised upward since February and March 2011. Meanwhile, constantly volatile exchange rates also contributed in part to the decline in quarterly net profit. Thai baht appreciated by up to 6.9% during the quarter when compared to a year earlier period. In addition, there was an accounting impact to the margin due to the acquisition of MW Brands carried forward to Q1/2011. But the impact was one-off and would not affect any future quarter. At present, the Company is well equipped and positioned to meet those ongoing challenges effectively and, at the same time, expects greater opportunities ahead with a more promising business outlook in Q2/2011.

For this quarter, tuna products make up the largest share in the Company’s product portfolio at 52%, followed by frozen shrimp (17%), canned pet food (7%), products for domestic market (7%), canned seafood (4%), shrimp feeds (4%), canned sardines and mackerels (4%), frozen salmon (4%) and frozen cephalopod (1%). Main export markets include the US (37%), European Union (33%), Japan (9%), Domestic market accounts (9%), Australia (3%), Africa (2%), other Asia (2%), the Middle East (2%), South America (2%) and Canada (1%) of total sales.

According to Thiraphong, TUF will continue to achieve its business plans and initiatives without interruption after the acquisition of MW Brands. It is important that MW Brands successfully delivered satisfactory results in Q1/2011 with sales and profit margins well on track. In the meantime, the US-based subsidiaries, Tri-Union Seafoods and Tri-Union Frozen Foods, also reported on target quarterly results. Following MW Brands acquisition, revenues generated from the European markets rose to 33% from previously 11% and those derived from US market fell to 37% from previously 49%. At present, the major ongoing negative factors are shrimp and tuna raw material prices and Thai baht exchange rate, which started since last year and persisted into Q1/2011. In addition, there were a few unexpected disasters during the quarter, essentially floods in southern Thailand, earthquake and tsunami in Japan, and detection of radioactive material leakage into Pacific Ocean along Japanese coastal waters. Nevertheless, these disasters have not significantly affected the Company’s operations, as shown evidently from the quarter’s continued vibrant sales growth. Despite unfavorable and unforeseeable factors, the Company remains prepared and confident of overcoming those challenges. Furthermore, the second quarter each year is usually destined as the beginning of the high season. It is therefore expected that more robust performance is coming soon. Having considered this, it is highly likely that the Company’s 2011 consolidated annual sales could attain close to 3,000 million USD as planned.

Source: TUF Website


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