analyst meeting for 2q20 results - investor.thaiunion.com · known as dpr group (dpr). •dpr is a...

Analyst Meeting for

2Q20 Results

Thai Union Group PCL.

August 13, 2020

Disclaimer

Slide 2

The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance.

These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that the assumptions are correct. Actual results may differ materially from those projected.

Analyst Meeting for 2Q20 Results

2Q20 Key Highlights

Analyst Meeting for 2Q20 ResultsSlide 3

With increasing global seafood

demand, Thai Union will

continue to work hard to ensure

business continuity and

maintain production capacity in

order to deliver safe and quality

products to consumers around

the world.Thiraphong Chansiri

President and CEO

“

”

Slide 4 Analyst Meeting for 2Q20 Results

+2.6% +12.4% +50.7% +1,440% (+13.4% normalized*)

+6.3% +19.6% +54.7% +68.9%

18.2% 7.2% 5.2%

2Q20: Record high operating profit and reported net profit up 15x YoY, amid COVID-19 pandemic

Slide 5

Sales Gross Profit Operating Profit Net Profit

33,051 6,027 2,366 1,716Top line improved from

growing sales volume YoY

GPM of 18.2%, up 159bps

YoY

Profit growth supported

by good cost control

Reported net profit up 15x

YoY

2Q20 sales up 2.6% YoY, mainly

driven by 10.1% volume growth:

• Ambient volume sales up

16.8% YoY as consumers

practice social distance.

• Frozen business saw a

decline of 14.0% as cities

lockdown during most of 2Q20

• Excluding FX impact, sales

still increased 2.5% YoY.

Gross margin improvement also

from shifting sales mix:

• Increased ambient business

sales improved margin

• PetCare benefited mostly

from stable raw material

prices

• Frozen business margin was

down from lower sales as a

result of city lockdown

Operating profit improved 51%

YoY on profitability improvement:

• Operating profit up 51% YoY

on profitability improvement,

• SG&A expenses decreased

3.5% YoY on prudent control

despite sales growth

• SG&A ratio was at 11.1%

(from 11.8% in 2Q19)

Adjusted for one-off during

2Q19, net profit up 13.4% YoY*:

• Absence of US legal

settlement in 2Q19, report

net profit up 1446% YoY.

• High share of loss from Red

Lobster as a result of

restaurant closures offset

part of the growth.

THB mn

YoY Chg.

QoQ Chg

% of sales

Remark: Excludes one-time accruals for US legal settlement and related tax credit, 2Q19 normalized net profit was THB 1,513mn


1,385

2,787

6,089

2,590

9,746

61,583

2,732 2,732

5,984

3,895

11,067

64,154

Reportednet profit

Net profit* EBITDA* Operatingprofit*

Gross profit Total sales

Financial Summary1

(THB million)

1H19 1H20

1H20 Highest revenue growth in 3 years, 1H20 reported profit up 97%, Debt ratio improved from profitable operation

Slide 6

1H20 Reported net Profit

Up 97% YoY to

THB 2,732 million

ND/E lowered from profitable

operation

2019 ND/E

1.07x2Q20 ND/E

0.96x

Share price movement

20202

(Jan – Apr 20)

-3.7%

20192

(Jan – Dec 19)

-16.7%

Remark: *Excludes one-time accruals for US legal settlement and related tax credit of THB 1,402mn in 2Q19

Source: 1TU; 2SET (Jan 2’19: THB16.2/share and Dec 30’19: THB13.5/share, Jan 2’20: THB13.6/share and Aug 10’20: THB13.1/share)


+4.2%

+13.6%

+50.4%

-1.7%

-1.9%+97%

2Q20: 2.6% revenue growth, record quarterly gross margin


30,95834,400 34,847 34,733

29,329

33,775 34,169 36,012

29,36932,214 31,838 32,854 31,103 33,051

14.8% 14.5% 14.2% 13.8%

11.6%

14.0%15.8%

14.9% 14.9%16.7% 15.9% 16.1% 16.2%

18.2%

4.6% 4.1%4.9%

4.1%3.0%

4.1%5.1%

3.4%4.3% 4.7% 4.3%

3.2% 3.3%

5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Total sales (THB mn) GPM NPM

-0.8 0.0 -0.6 3.0 -5.3 -1.8 -1.9 3.7 0.1 -4.6 -6.8 -8.8 5.9 2.6

-8.3 -9.0 0.3 6.1 -26.1 -4.6 9.2 11.4 29.3 13.1 -6.1 -1.3 15.0 12.4

16.3 -6.9 8.1 56.6 -39.3 -3.7 0.5 -13.4 46.5 10.6 -20.6 -13.6 -20.2 13.4

Remark: Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19) and THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and

TMAC investment impairment of THB 87mn (4Q18).

% GrowthYoY

Sales

Grossprofit

Net profit

Key Developments


Overall impact from COVID-19 has been positive for Thai Union’s operations during 1H20


Frozen to recover as cities resume

• Food service customers were

affected during shutdown

• City opening has kick-started

frozen business in late 2Q20

Ambient business is the beneficiary

• Ambient business saw strong sales

push in all regions during 1H20

• Increased demand for canned

seafood

With a global supply chain, our operations remained largely uninterrupted

Brands Joint venture Production plant Innovation center

Canada

USA

Ghana

Portugal

UK

Poland

Germany

Lithuania

Norway

UAE

IndiaVietnam

Thailand

Pacific Ocean

Atlantic Ocean Pacific Ocean

Indian Ocean

Seychelles

France


Placeholder for graphic

(paste graphic, crops to H19.05*W16.93)

(add TU logo)

All Red Lobster restaurants are now opened to serve great tasting seafood to American consumers

• All outlets are open for off-premise

(ToGo, curbside pickup, and delivery)

• 600+ restaurants (more than 80%) are

opened for dining halls with social

distancing measures, in accordance

with CDC guidelines and government

mandates

• Several restaurants started outdoor

service

• Most dining halls are currently at 50-75%

guest capacity

Slide 11

Placeholder for graphic

(paste graphic, crops to H19.05*W16.93)

(add TU logo)

COVID-19 measures to maintain safe, high quality guest experience

Focused on touchless customer experience

• Single-use, disposable paper menus

• QR code-enabled menus

• Contact-free payments via Apple Pay, credit

card on Presto tablets

• Regular sanitization

Operational fortification for second wave

ongoing, continued cash focus is paramount

Slide 12

Thai Union deepens commitment into leading Russian seafood enterprise


• Thai Union has increased its holdings into TUMD

Luxembourg S.a.r.l (TUMD) from 45% to 90% equity

stake in July 2020.

• TUMD owns three Russian companies, collectively

known as DPR Group (DPR).

• DPR is a retail focused fish and seafood business,

and it is Russia’s number one canned tuna producer.

• DPR Group has annual sales of around USD 20mn

and operates in the ambient seafood segment, with

leading Russian brands such as Maguro, Captain of

Tastes and Rybar.

Thai Union Europe has placed a focus on growth and fully unlocking our potential and this transaction is a key part

of our roadmap of continued expansion. We’re pleased to be further consolidating our business in Russia and

continuing our work in the country.

“

”Paul Reenan

President, Thai Union Europe

Slide 13

We increase our commitment to innovation

Slide 14

• SPACE-F announces leading Thai

beverage company, ThaiBev as new

corporate partner, Betagro and

Deloitte are new supporting partners in

2nd year of operation

• Opens for 2nd batch of start-ups

(BATCH II)

• SPACE-F is the first food-tech

incubator and accelerator program

in Thailand, co-founded in 2019 by

Thai Union, National Innovation

Agency (NIA), and Mahidol University


Qfresh rebranded as the online channel becomes a key opportunity

Slide 15

During COVID-19, online channels have

become more important for the retail grocery

industry

Through our collaboration with Thammachart

Seafood, Qfresh has been rebranded to

appeal to younger, tech-savvy consumers


Thai Union releases 7th annual Sustainability Report

Slide 16

• Thai Union’s seventh annual Sustainability Report details its performance against KPIs outlined in the global sustainability strategy, SeaChange®.

• The 2019 report was prepared in accordance with Global Reporting Initiative (GRI) Standards: Core Option and Food Processing Sector Supplement (FPSS).

• The 2019 Sustainability Report can be downloaded here or visit: www.thaiunion.com/en/sustainability/report


https://www.thaiunion.com/en/sustainability/report

With reported net profit recovery, TU announced 1H20 interim dividend of THB 0.32/share


0.30 0.28 0.28 0.32 0.48 0.40 0.39 0.53 0.15 0.30 0.32 0.32 0.32 0.25 0.25 0.32

0.22

0.250.31 0.31 0.34

0.15 0.22

50% 50%53%

51% 51% 50%

29%

51%

60%

50%

57% 57%

52%

59%* 59% 59%

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

THB/Share

DPS (LHS) Payout Ratio (RHS)

Interim dividend for the period: 1 January

to 30 June, 2020

DPS THB 0.32

Record Date 26 August, 2020

Payment date 8 September, 2020

Financial Results:2Q20 - Consolidated



Cash preservation and crisis

management makes us think

in minutes, rather than

quarters.

Joerg Ayrle

Group CFO

“

”

2Q20: Key Takeaways

Share of loss from

Red Lobster

• Share of loss offsets part of the strong operation result

• Net profit still up 13.4% YoY on lower interest expenses, lower tax and higher

FX gains while interest income on RL investment remained stable

Record operating

profit

• SG&A expenses declined 3.5% YoY despite sales growth, SG&A-to-sales ratio

was at 11.1% (vs 11.8% in 2Q19)

• Quarterly operating profit was at record THB2.4bn, up 51% YoY (+37%

excluding labor law provision in 2Q19)

Record

quarterly gross

margin

• Record high level GPM of 18.2%, vs 16.7% during 2Q19.

• A higher-margin Ambient business sales mix improved, resulting in higher

overall gross margin

Strong top line

growth

• 2.6% sales growth YoY driven by ambient business in US and Thailand

• The growth was partly offset by declining frozen sales and European ambient

business normalization

Reported net

profit

• Excluding legal-related expenses occurred in 2Q19, 2Q20 net profit increased

13.4% YoY on normalized operating basis.

• 2Q20 reported net profit increased 15x YoY, enabling higher dividend payment

Analyst Meeting for 2Q20 ResultsSlide 20Slide 20

1Q171,633

2Q171,763

3Q172,010

4Q172,033

1Q181,577

2Q181,667 3Q18

1,467 4Q181,408

1Q191,453 2Q19

1,217 3Q191,217 4Q19

950

1Q201,442 2Q20

1,267

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Jan

-17

Fe

b-1

7

Ma

r-17

Ap

r-1

7

Ma

y-1

7

Jun

-17

Jul-

17

Au

g-1

7

Se

p-1

7

Oct-

17

No

v-1

7

De

c-1

7

Jan

-18

Fe

b-1

8

Ma

r-18

Ap

r-1

8

Ma

y-1

8

Jun-1

8

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

De

c-1

8

Jan

-19

Feb-1

9

Ma

r-19

Ap

r-1

9

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

No

v-1

9

De

c-1

9

Jan

-20

Fe

b-2

0

Ma

r-20

Apr-

20

Ma

y-2

0

Jun

-20

Jul-

20

Quarterly average Monthly average

Tuna prices remained within a manageable range

Slide 21

8.3% 8.0% 14.0% 1.2% -22.5% 5.7% -12% -4.0% +3.2% -16.3% +0% -21.9% +51.8% -12.1%

30.0% 17.3% 40.2% 34.8% -3.5% -5.4% -27% -31.0% -7.8% -27.0% -17.0% -32.5% -0.8% +4.1%

Tuna raw material price

(USD/ton)

%Change

QoQ

%Change

YoY


• 2Q20 sales improved 2.6% YoY, or a 2.5%

growth if excluding FX impact, driven by:

• Sales growth driven mainly by ambient seafood

sales (+16.8% YoY) and volume (+29.6%)

growth, as consumers practice social

distancing and home cooking.

• Frozen seafood saw a sales decline from

hospitality sector facing lockdown, resulting in

sales (-14.0%) and volume (-10.5%) decline.

• Baht movement vs major currencies were

stable YoY. Excluding FX, sales would grow

2.5% YoY.

• 1H20 sales improved 4.2% YoY on strong

volume sales (+8.4% YoY).

Sales growth driven by strong growth in ambient business

Slide 22

USD mn

32,214 31,838 32,854 31,103 33,051

2Q19 3Q19 4Q19 1Q20 2Q20

SalesTHB mn

+6.3% QoQ

+2.6% YoY+2.5% YoY

Before currency impacts

1,0351,020 1,037 1,085 994

134,375 134,937 133,285 126,275

1H1961,583

64,154

2016 2017 2018 2019 1H20

7.3% 0.4% -1.2%YoY

Growth -5.3%

+4.2%

YoY


Growth mainly driven by ambient seafood and PetCare businesses

Slide 23

2Q19 2Q20

+2.6% YoY

+2.5% YoYBefore currency impacts

33,051

32,214

+1,686

Tuna Shrimp

&

related

business1

Sardine

&

Mackerel

Salmon-

AmbientPet Care

Value

added

& other

products2

USD

effect

EUR

effect

LobsterOther

seafood -

Ambient

Salmon-

FrozenOther

seafood -

Frozen

+414+212 +79 -1,286

-345

-341

+22

+398 -43 +126 -85

+15%

+18%

+32%+36%

-16%

-33%

-20% +1% +15%

-2% +1% -1%

Revenue growth component

THB mn

Remark: 1Shrimp & related business comprises of frozen shrimp and shrimp feed. 2Value-added & other products includes ready-to-eat products, frozen cephalopod, canned seafood, local products, bakery products, and sales of scraps


• 1H20 Sales contribution in US and Europe

increased slightly.

• US and European sales increased 8% and 5%

respectively from growing ambient seafood

demand.

• Domestic Thailand sales was down to 10% of

total sales from lower tourism activities.

• 1H20 branded sales outgrow private label

business, with sales mix at 43% and 57%,

respectively.

• 1H20 total branded sales increased 4.5% YoY,

as European and US ambient business sales

improved YoY.

• 1H20 private label sales still reported sales

growth of 3.9%. While many food service

customers reduce purchases, the segment

sales decline was more than offset by private

label ambient business sales.

Revenue structure remained well-diversified


42% 39% 39% 38% 40% 41%

29% 33% 31% 31% 28% 29%

8% 8% 9% 11% 12% 10%6% 6% 6% 6% 6% 5%

14% 13% 15% 15% 15% 14%

0%

20%

40%

60%

80%

100%

2015 2016 2017 2018 2019 1H20

Sales Breakdown by Geographic

Others

Japan

Domestic

Europe

USA

Brand35%

Food Service: Brand

6%

Food Service: Private Label

6%

Private Label53%

Remark: Others represent Asia, Australia, Middle East, Canada, Africa and South America

Sales Breakdown by Business

THB 126.3bn

2019

Brand39%

Food Service: Brand

4%

Food Service: Private Label

4%

Private Label53% 1H20

THB 64.1bn

19,927 19,310 18,892 20,110

1H199,746

(15.8%)

11,067 (17.3%)

-

5,000

10,000

15,000

20,000

25,000

2016 2017 2018 2019 1H2014.8% 14.3% 14.2% 15.9%

+13.6% YoY

5,364 5,077 5,288 5,0406,027

16.7%15.9% 16.1% 16.2%

18.2%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

2Q19 3Q19 4Q19 1Q20 2Q20

Gross ProfitTHB mn • 2Q20 Gross profit margin was at a quarterly

record level of 18.2% due to:

• A higher-margin Ambient business sales mix

improved, resulting in higher overall gross

margin.

• Frozen and chilled business gross margin

lowered on weaker sales as many food service

operators was temporarily closed during the

lockdown.

• Thai Union’s facilities around the world were

largely not disrupted, thanks to stringent

hygiene measures.

• 1H20 gross profit was up 13.6% YoY.

2Q20 record quarterly gross profit margin

Slide 25

GPM

1,0341,020 1,037 1,085 994


+12.4% YoY

+19.6% QoQ

GPM

6,805

4,921 4,669 5,642

1H192,590 (4.2%)

3,895 (6.1%)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2016 2017 2018 2019 1H20

+50.4% YoY

1,570 1,516 1,537 1,529

2,366

4.9% 4.8% 4.7% 4.9%

7.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2Q19 3Q19 4Q19 1Q20 2Q20

Operating Profit*THB mn

5.1% 3.6% 3.5% 4.5%

• 2Q20 Operating profit was up 50.7% YoY to

THB 2,366mn:

• Continued cost control prompt SG&A

expenses to decline 3.5% vs sales growth of

2.6%, resulting in SG&A ratio of 11.1% versus

11.8% during 2Q19.

• Operating profit improved mainly from sales

growth and margin enhancement.

• 1H20 operating profit was up 50.4%, largely

driven by continued strong core business

operation.

Record quarterly operating profit, up 51% YoY, cost control further supported profit growth


OP Margin

+50.7% YoY

+54.7% QoQ

OPM

11.8% 11.2% 11.4% 11.3% 11.1%SG&A%

Remark: Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19)

11,269 11,579 11,016 12,033

1H196,089 (9.9%)

5,984 (9.3%)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2016 2017 2018 2019 1H20

-1.7% YoY

3,271 3,1822,761 2,634

3,350

10.2% 10.0%8.4% 8.5%

10.1%

3.0%

8.0%

13.0%

18.0%

23.0%

28.0%

2Q19 3Q19 4Q19 1Q20 2Q20

EBITDA*THB mn

8.4% 8.6% 8.3% 9.5%

• 2Q20 EBITDA at THB3.4bn, an increase of 2.4% YoY, due to:

• 2Q20 share of loss was at THB 579mn (vs THB110m share of profit during 2Q19) due mainly to Red Lobster operation facing difficulty during shutdown across the US.

• Excluding share of loss from Red Lobster, EBITDA would be at THB 4,052mn, growth of 23.6% YoY.

• On reported basis, 2Q20 EBITDA represents an increase of 137% YoY increase from 2Q19 reported EBITDA including US legal fees.

• TU continued to record consistent interest income from an investment in Red Lobster preferred units.

• TU reported 2Q20 FX gains of THB 206mn, up from THB 164mn recorded in 2Q19.

• Including the US legal fee happened in 2Q19, the 1H20 EBITDA would represent a growth of 41% YoY on reported basis. (1H20 EBITDA slightly decline 1.7% YoY on normalized basis excluding such fee)

2Q20 EBITDA stable YoY, strong core operation offset by share of loss from affiliate


EBITDA Margin

+2.4% YoY

+27.2% QoQ

EBITDA

MarginRemark: Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19)

5,254 5,989

5,191 5,218

1H192,787 (4.5%)

2,732 (4.3%)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2016 2017 2018 2019 1H20

1,5131,374

1,057 1,016

1,716

4.7% 4.3%3.2% 3.3%

5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2Q19 3Q19 4Q19 1Q20 2Q20

Net ProfitTHB mn

3.9% 4.4% 3.9% 4.1%

• 2Q20 reported net profit was THB 1,716mn, up 1,440% YoY

• This is mainly accounted for the absence of net US legal fee of THB1,402mn happened during 2Q19.

• On normalized basis, 2Q20 net profit still demonstrate a growth of 13.4% YoY.

• Aside from share of loss during the quarter, TU also recorded positive non-operating items as follow:

• Lower finance cost of THB 438mn (vs THB516mn a year ago) due to an issuance of perpetual bond during 4Q19.

• Lower tax expense of THB 140 (vs THB 196mn a year ago) due partly to the tax credit from affiliate investment.

• Discontinued operation expense was THB 14mn (vs THB 29mn) as those entities are no longer active.

• Excluding share of loss from Red Lobster, net profit would be at THB 2,418mn, a growth of 59% YoY.

2Q20 Reported net profit up 15x on absence of legal fee


NPM

+13.4% YoY

+68.9% QoQ

NPM


-1.9%

YoY

1,7181,374 1,230

1,016

1,716

5.3%4.3% 3.7% 3.3%

5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2Q19 3Q19 4Q19 1Q20 2Q20

Adjusted Net ProfitTHB mn

• Excluding one-off negative item during 2Q19

amounted THB 205mn (provision on

retirement benefit from the new labor law),

the 2Q20 adjusted profit was stable YoY.

• However, with an inclusive of the US legal fee

during 2Q19, the 2Q19 adjusted net profit

would be at THB316. Therefore, the 2Q20 net

profit of THB1,716 would imply an adjusted

net profit growth of 443% YoY.

2Q20 Adjusted net profit was stable YoY on adjusted basis


Adjusted NP Margin

-0.1% YoY

+68.9% QoQ


1.101.26

1.09 1.09

1H190.58

0.54

2016 2017 2018 2019 1H20

0.320.29

0.22 0.20

0.34

2Q19 3Q19 4Q19 1Q20 2Q20

Earning per Share (EPS)*THB

Remark:

Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19)

*EPS in this slide represents fully diluted EPS based on current number of shares of 4,771,815,496

• According to the consolidated financial

statement, 2Q20 EPS was at THB 0.34, up

1376% YoY, along with the reported net profit

growth trajectory.

• However, excluding the one-off US legal fees

from 2Q19 EPS, 2Q20 EPS of THB0.34 would

imply a 8.5% growth YoY.

• A slight discrepancy between net profit and

EPS decline was due to the accounting of

interest paid for perpetual bond holders.

• The increase in reported EPS enabled the

company to resume high interim dividend

payment of THB0.32 for the 1H20 operation

result.

EPS: 2Q20 reported EPS was up 15x YoY


+8.5% YoY

+74.6% QoQ

-7.3% YoY

2Q20: A crisis like COVID-19 has never been seen in the hospitality industry


Key initiatives since onset of the pandemic:

• Improved COVID-19 guest safety measures with

touchless delivery, QR-enabled menus, and outdoor

dining

• Off-premise business has seen up to 3x growth,

with focus on improved packaging, simplified order

system, Family Feasts

• Simplified business model: Menu evolution into

one-paged menu reduces food cost and improves

cost efficiency

• Reduced marketing and SG&A costs by eliminating

large events, shift to digital marketing channels, and

technology for travel expenses

• Red Lobster is negotiating rent abatements with

all landlords to reduce cash burn.

• Red Lobster is starting discussions to refinance

its existing loans.

THB mn 2Q20 1Q20 4Q19 3Q19 2Q19

Share of

profit -702 -111 -243 -34 -9

Other income 249 243 252 242 249

Interest

expense-123 -119 -136 -139 -146

Income tax 221 42 -38 63 73

Net income -355 55 -165 132 168

EPS

(THB/share)-0.07 0.01 -0.03 0.03 0.04

Amid Covid-19 crisis, total financial impact from RL investment

remains manageable, thanks to the prudent investment structure

5,544

2,938

8,401 7,143 6,687

2016 2017 2018 2019 1H20

Annual Free Cash FlowTHB mn

1,178 1,085

3,621

1,078

5,609

2Q19 3Q19 4Q19 1Q20 2Q20

Quarterly Free Cash FlowTHB mn

0.67 0.33 1.04 1.01

• Higher free cash flow was driven by both

strong operation profitability and strong cash

conversion ability.

• Amid growing sales, TU maintain strong

receivable collection and inventory

management programs resulting in both

inventory (THB 2.4bn) and lower receivable

(THB 1.5bn) YoY.

• Inventory is expected to pick up during 2H20

2Q20: Record high free cash flow from improving profitability and low net working capital level


Remark: Change definition of Free Cash Flow; 1Cash Conversion Rate =

FCF / EBIT; FCF= EBITDA-Changes in net working capital – Change in other

assets& Liabilities + non-cash expenses – CAPEX

FCF is based on reported financial statement basis

0.59 0.67 2.27 1.07 2.54

Cash

Conversion

Rate1

Cash

Conversion

Rate1

Remark: *Included 1) change in loans to associates & other companies 2) change in investments in associates and other long-term investments 3) proceeds from sale of assets 4) dividend received and 5) change in non-controlling interest

1H20: THB 3.7bn net debt reduction, from strong cash flow generation and inventory level reduction

Slide 33

THB mn


-201 -165

2,029 261 -114

443

1,060

Free Cash Flow THB 6,687 mnND/E 1.07x

Kd = 3.27%

ND/E 0.96x

Kd = 3.07%

51,524

930

-2,366

-5,984

55,215

Net Debt

as of

31 Dec

2019

Net Debt

as of

30 Jun

2020

417

Other Investing

& Financing activities*

CAPEXOther non-

cash

expenses

Tax payments Net interest

paid

Dividend

received

Change in

other assets

and liabilities

EBITDA Change in

net working

capital

Income tax paid and other investing & financing

activities

Payments on

treasury share

repurchase

Dividend

paid to

shareholder

s and NCI

2019 2Q20

Majority THB funding, reducing risk associated to currency volatility


98.7% 98.5%

0.0%

1.3% 1.5%

2019 2Q20

Interest-bearing debts of THB 56,846mn

Long-term loan by maturity

THB 43,746mn

By Maturity

2023 onwards2022

2021

Long-term debt

Current portion

of long-term

debt & finance

lease

Short-term loan 19%

75%

6%

EUR

By Currency

USD

THB

THB 59.9bn THB 56.8bn

21%

75%

4%

Debt ratio target achieved, improved NWC management


37,126 36,951 36,873 35,720 34,696

124 127 128122 120

2Q19 3Q19 4Q19 1Q20 2Q20

INV (THB mn) INV Day

Net WC

8.3%8.3%8.4%8.8%8.7%

2Q201Q204Q193Q192Q19

ROCE

ROE Net Debt to EBITDA

11.9%

11.5%12.3%12.8%13.4%

2Q201Q204Q193Q192Q19

INV Days

4.324.644.595.385.27

2Q201Q204Q193Q192Q19

38,383 38,928 37,561 39,046 36,720

109 111 109 109 105

2Q19 3Q19 4Q19 1Q20 2Q20

WC (THB mn) WC Day

0.96x1.05x1.07x

1.43x1.38x

2Q201Q204Q193Q192Q19*

ND/E

Target

4.0-4.5

Target

1.0-1.1


Financial Results:2Q20 – Business Units


1Q1766

2Q1767 3Q17

59 4Q1753

1Q1860

2Q1869 3Q18

58 4Q18

58

1Q1964

2Q1965 3Q19

55

4Q1959

1Q2070 2Q20

61

40

45

50

55

60

65

70

75

80

85

90

Salmon raw material price (NOK/kg)


In July 2020, raw material prices closed at:

• Tuna - USD 1,550/ton, Shrimp - THB 158/kg,

Salmon - NOK 56/kg

In 2Q20, average raw material prices closed at:

• Tuna: USD 1,267/ton (+4.1% YoY, -12.1% QoQ)

• Shrimp: THB 146/kg (+4.5% YoY, -2.5% QoQ)

• Salmon: NOK 61/kg (-6.5% YoY, -13.3% QoQ)

1Q17212

2Q17169

3Q17176

4Q17175

1Q18183

2Q18141

3Q18158

4Q18145

1Q19167 2Q19

139

3Q19143

4Q19145

1Q20149

2Q20146

70

90

110

130

150

170

190

210

230

Shrimp (60pcs/kg) (THB/kg)


1Q171,633

2Q171,763

3Q172,010

4Q172,033

1Q181,577

2Q181,667 3Q18

1,467

4Q181,408

1Q191,453 2Q19

1,217 3Q191,217 4Q19

950

1Q201,442 2Q20

1,267

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400 Tuna (USD/ton)


Key raw material prices remained stable


Tuna prices dropped but

remains within a

manageable range

Fluctuation in the

range of 140-160

THB/kg since

2018

Declined after reaching

a peak level last quarter

1Q1743.5

2Q17

43.93Q1743.7

4Q17

43.7

1Q1843.9

2Q1843.4

3Q1843.0

4Q1842.2

1Q1941.2

2Q1940.6 3Q19

37.9

4Q1939.0

1Q2039.8

2Q2039.6

36.0

38.0

40.0

42.0

44.0

46.0

48.0GBP/THB


1Q1735.1

2Q1734.3

3Q1733.4

4Q17

32.9 1Q1831.5

2Q1831.9

3Q1833.0

4Q1832.8 1Q19

31.62Q1931.6

3Q1930.7

4Q1930.3

1Q2031.6

2Q2031.9

28.0

30.0

32.0

34.0

36.0

38.0USD/THB


1Q1737.4

2Q1737.7

3Q1739.2

4Q1738.8

1Q1838.8

2Q1838.1

3Q1838.4 4Q18

37.4 1Q1935.9

2Q1935.5 3Q19

34.14Q1933.5

1Q2035.0

2Q2035.2

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0 EUR/THB


In July 2020, average FX rates closed at:

• USD/THB – THB 31.41, EUR/THB – THB 35.92,

GBP/THB – THB 39.73

In 2Q20, average FX rates closed at:

• USD/THB: THB 31.95 (+1.1% YoY, +1.1% QoQ)

• EUR/THB: THB 35.15 (-0.9% YoY, +0.5% QoQ)

• GBP/THB: THB 39.64 (-2.4% YoY, -0.5% QoQ)

Thai Baht was relatively stable against key currencies YoY


Remained stable after

gaining strength since

end of 2019

USD gained strength

against THB since

2019 year-end

Started to decline after

gaining strength since

3Q19

3 strategic business segments


Total 1H20 sales: THB 64,154 mn

Sales: THB 32,025 mn

Ambient seafood

50% 59%

41%

Sales Split

Brand

Private label

Sales: THB 22,498 mn

Frozen & chilled seafood and related

Sales: THB 9,631 mn

PetCare, value-added and others

35%36%

64%

7%

93%

15%

Sales Split Sales Split

Brand

Private labelBrand

Private label

41% 43% 52% 40% 43%

59% 57% 48% 60% 57%

14,031 14,466 13,268 15,631 16,394

2Q19 3Q19 4Q19 1Q20 2Q20

Sales (THB million)

• 2Q20 ambient sales increased 16.8% YoY, due largely to

volume growth of 29.6% YoY, keen focus on higher margin

products and stable raw material prices

• Increased ambient sales, in both branded (+13.0% YoY) and

private label (+22%), was attributable mainly to social

distancing and increased home cooking

• Gross profit was up 22% YoY to THB 3.8bn, driven by both

strong sales growth and margin enhancement due to

strong growth in higher-margin branded business.

• 1H20 ambient business sales was at THB 32bn, up 16.5%

YoY, while gross profit increased 21.5% YoY.

Ambient Seafood: Delivering strong growth with stable raw material prices


Brand

Private label

+16.8% YoY

+4.9% QoQ

Total

Brand

Private

label

22%18% 19%

19%

23%

2Q19 3Q19 4Q19 1Q20 2Q20

Gross Profit Margin (Percent)

48% 51% 62% 50% 53%

52%49% 38% 50% 47%

- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00 13,000.00 14,000.00 15,000.00 16,000.00 17,000.00 18,000.00 19,000.00 20,000.00 21,000.00 22,000.00 23,000.00 24,000.00 25,000.00 26,000.00 27,000.00 28,000.00 29,000.00 30,000.00 31,000.00 32,000.00 33,000.00 34,000.00 35,000.00 36,000.00 37,000.00 38,000.00 39,000.00 40,000.00 41,000.00 42,000.00 43,000.00 44,000.00 45,000.00 46,000.00 47,000.00 48,000.00 49,000.00 50,000.00 51,000.00 52,000.00 53,000.00 54,000.00 55,000.00 56,000.00 57,000.00 58,000.00 59,000.00 60,000.00 61,000.00 62,000.00 63,000.00 64,000.00 65,000.00 66,000.00 67,000.00 68,000.00 69,000.00 70,000.00 71,000.00 72,000.00 73,000.00 74,000.00 75,000.00 76,000.00 77,000.00 78,000.00 79,000.00 80,000.00 81,000.00 82,000.00 83,000.00 84,000.00 85,000.00 86,000.00 87,000.00 88,000.00 89,000.00 90,000.00 91,000.00 92,000.00 93,000.00 94,000.00 95,000.00 96,000.00 97,000.00 98,000.00 99,000.00 100,000.00 101,000.00 102,000.00 103,000.00 104,000.00 105,000.00 106,000.00 107,000.00 108,000.00 109,000.00 110,000.00 111,000.00 112,000.00 113,000.00 114,000.00 115,000.00 116,000.00 117,000.00 118,000.00 119,000.00 120,000.00

2Q19 3Q19 4Q19 1Q20 2Q20

Quantity (tons)

101,136

78,01887,580

99,59990,353

+29.6% YoY

+1.5% QoQ

Brand

Private label

10%

12% 12% 12%

9%

9%

11% 11%

6%7%

9%

11% 12%

8%7%

2Q19 3Q19 4Q19 1Q20 2Q20

29% 29% 32% 27% 29%

71% 71% 68%73% 71%

68,504 73,084 74,436 61,179 61,284

2Q19 3Q19 4Q19 1Q20 2Q20

62% 64% 64%62% 66%

38% 36%36%

38% 34%

13,435 12,768 14,691

10,944 11,554

2Q19 3Q19 4Q19 1Q20 2Q20

• While 2Q20 frozen and chilled seafood sales was down

14.0% YoY with sales volume was down 10.5% YoY.

• Food service businesses were affected, which in term affect

sales of the frozen businesses.

• TU started to see some sales recovery toward the end of

2Q20 as more food service operators were gradually opening

• During 1H20, frozen, chilled seafood and related

businesses saw sales declined by 9.9% YoY to THB

22.5bn.

Frozen, chilled seafood and related: Lower sales from shutdown


Brand

Private label

-14.0% YoY

+5.6% QoQ

Total

-10.5% YoY

+0.2% QoQ

Brand

Private label

Sales (THB million) Quantity (tons)


20% 22% 22%25% 26%

2Q19 3Q19 4Q19 1Q20 2Q20

95% 95% 95% 95% 95%

5% 5% 5%5%

5%

2Q19 3Q19 4Q19 1Q20 2Q20

87% 92% 94% 92% 94%

13% 8% 6% 8%6%

4,747 4,604 4,896 4,528 5,103

2Q19 3Q19 4Q19 1Q20 2Q20

• 2Q20 PetCare and value added sales increased 7.5%

on the back of increasing volume, which is

attributable to a keen focus on higher margin

products.

• Gross margin improved to 26%, which is partly due to

low raw material price in recent quarters.

PetCare, value-added and others: Strong growth with a focus on higher margin business


Brand

Private label

+7.5% YoY

+12.7% QoQ

Total

+8.6% YoY

+16.7% QoQ

Brand

Private label

Sales (THB million) Quantity (tons)


67,508 68,87474,452

62,85273,322

Geographic diversity: Sales


Pacific Ocean

Atlantic Ocean

Pacific Ocean

Indian Ocean

United States

and Canada

42%

Europe

30%

Thailand

10%

Others

18%(Asia, Australia, Middle East, Africa and South America)

12,792 12,14314,418 13,175 13,925

2Q19 3Q19 4Q19 1Q20 2Q20

SalesTHB mn

• 2Q20 North America sales increased by 8.9% YoY in

Thai Baht term.

• US ambient seafood business has delivered a 48% sales

growth YoY,

• US Frozen businesses sales, while affected from food

service shutdown, was affected by 9% YoY.

• Red Lobster operation was affected from the shutdown

US & Canada: Strong growth in ambient seafood partly offset by weak food service channel


+8.9% YoY

+5.7% QoQ

9,726 9,1647,986

9,417 9,430

2Q19 3Q19 4Q19 1Q20 2Q20

SalesTHB mn

Europe: Seafood sales normalized as Covid-19 is under control


-3.0% YoY

+0.1% QoQ

• 2Q20 EU sales declined 3.0% YoY,

• Ambient seafood under brand John West, Petit Navire

and Mareblu reported sales normalized at similar level

seen last year as European initiatives to control Covid-

19 have been successful.

• The smoked salmon business showed sales recovery

compared to 1Q20 as European cities gradually opened

during 2Q20.

3,562 4,003 4,039 3,460 3,187

2Q19 3Q19 4Q19 1Q20 2Q20

SalesTHB mn

Thailand: Affected by lower tourism activities


-10.5% YoY

-7.9% QoQ

• 2Q20 Thailand sales was down 10.5% YoY.

• Food service is the key business for domestic sales and

was affected by lower tourism activities.

• Increased sales to retail distribution has partially offset the

lost sales to food service customers.

• Sealect and Qfresh both continued to see strong sales

growth of 40% during 2Q20.

6,134 6,529 6,4115,052

6,509

2Q19 3Q19 4Q19 1Q20 2Q20

SalesTHB mn

EM and rest of the world: Strong demand for seafood


+6.1% YoY

+28.9% QoQ

• 2Q20 sales saw a strong increase in both South

America and Middle East markets, which were mostly

contributed by ambient business. • Japan and China markets continued to deliver sales

growth as city reopened during 2Q20.

2Q20 Segment profitability

Slide 48

Remark: 1Shrimp & related business includes frozen shrimp, shrimp feed and value-added shrimp2Other seafood includes frozen cephalopod, crab, scallop, shellfish and other fish3Value-added business includes ready-to-eat products, maguro & cephalopod sashimi, local products, bakery products and snack4Other products include scrap, fishery and others

Business segment

6,027

Ambient seafood

• Tuna

• Sardine and mackerel

• Ambient and pouch salmon

3,828

Frozen, chilled seafood and related

• Shrimp and related 1

• Lobster

• Frozen, chilled and smoked salmon

• Other seafood2

856

PetCare, value-added and others

• PetCare

• Value-added and others1

• Other products2

1,343

Total

16,394 23.3

11,554 7.4

5,103 26.3

33,051 18.2


SalesTHB mn

Margin%

Gross profitTHB million

Business Outlook


During the current situation, our key focus is on cash preservation, capturing opportunities and managing daily operations, with health and safety as our no. 1 priority. There is not sufficient information to provide an update on the business outlook.

“

”

Bloomberg/ Reuters TU TB/ TU.BK

Share price (10 August, 2020) THB 13.10

Historical price

52-week high THB 18.30

52-week low THB 11.90

No. of paid up shares 4,771.8mn

Par value THB 0.25

Market Capitalization THB 62.5bn

Share capital information

Slide 51

0

500

1,000

1,500

2,000

0

5

10

15

20

25

2013 2014 2015 2016 2017 2018 2019 2020

TU SET

Minimum 50% payout of our net profit with semi-annual payments

THB

Chansiri Family19.4%

Thai NVDR11.0%

Mitsubishi Corporation 7.3%Niruttinanon Family 6.9%

Social Security Office 4.9%

Others50.6%

Source: SET and TU

As of 30 June, 2020

Free float 66.9%

Foreign ownership/ Foreign limit 29.4%/ 45.00%

Stock Performance at a Glance Major Shareholders

Dividend Policy

DPS (THB per share)

Period 1H20 2H19 1H19 2H18 1H18 2H17 1H17 2H16

DPS 0.32 0.22 0.25 0.15 0.25 0.34 0.32 0.31


2Q20 Income statement


*

2Q20 2Q20

2Q19 1Q20

Change Change

Sales 33,051 100% 32,214 100% 31,103 100% 2.6% 6.3%

Cost of sales (27,024) -81.8% (26,850) -83.3% (26,063) -83.8% 0.6% 3.7%

Gross profit 6,027 18.2% 5,364 16.7% 5,040 16.2% 12.4% 19.6%

SG&A expenses (3,661) -11.1% (5,652) -17.5% (3,511) -11.3% -35.2% 4.3%

FX gain (loss) 206 0.6% 164 0.5% (262) -0.8% 25.0% -178.5%

Other income 378 1.1% 498 1.5% 418 1.3% -24.1% -9.7%

Share of profits from investments in assoc. & Jvs (579) -1.8% 110 0.3% (18) -0.1% -627.7% 3155.3%

EBIT 2,370 7.2% 484 1.5% 1,668 5.4% 390.1% 42.1%

Finance cost (438) -1.3% (516) -1.6% (434) -1.4% -15.0% 0.9%

EBT 1,932 5.8% (32) -0.1% 1,233 4.0% -6075.3% 56.7%

Tax (140) -0.4% 260 0.8% (149) -0.5% -154.0% -5.6%

Profit (Loss) from discontinued operarion (14) 0.0% (29) -0.1% (6) 0.0% -51.7% 115.9%

Net income 1,778 5.4% 199 0.6% 1,078 3.5% 794.0% 64.9%

Net income (loss) attributable to:

Equity holders of the Company 1,716 5.2% 111 0.3% 1,016 3.3% 1439.5% 68.9%

Non-controlling interests of the subs 62 0.2% 87 0.3% 62 0.2% -29.5% -0.4%

Earnings per share

Basic earnings per share 0.34 0.02 0.20 1373.1% 74.6%

Exchange rate

THB/USD 31.95 31.59 31.29 1.1% 2.1%

Consolidated

(Unit: THB mn) 2Q20%

to sales2Q19

%

to sales1Q20

%

to sales

2Q20 Income statement (excluding US legal expenses)


*

2Q20 2Q20

2Q19 1Q20

Change Change

Sales 33,051 100% 32,214 100% 31,103 100% 2.6% 6.3%

Cost of sales (27,024) -81.8% (26,850) -83.3% (26,063) -83.8% 0.6% 3.7%

Gross profit 6,027 18.2% 5,364 16.7% 5,040 16.2% 12.4% 19.6%

SG&A expenses (3,661) -11.1% (3,794) -11.8% (3,511) -11.3% -3.5% 4.3%

FX gain (loss) 206 0.6% 164 0.5% (262) -0.8% 25.0% -178.5%

Other income 378 1.1% 498 1.5% 418 1.3% -24.1% -9.7%

Share of profits from investments in assoc. & Jvs (579) -1.8% 110 0.3% (18) -0.1% -627.7% 3155.3%

EBIT 2,370 7.2% 2,341 7.3% 1,668 5.4% 1.2% 42.1%

Finance cost (438) -1.3% (516) -1.6% (434) -1.4% -15.0% 0.9%

EBT 1,932 5.8% 1,825 5.7% 1,233 4.0% 5.8% 56.7%

Tax (140) -0.4% (196) -0.6% (149) -0.5% -28.5% -5.6%

Profit (Loss) from discontinued operarion (14) 0.0% (29) -0.1% (6) 0.0% -51.7% 115.9%

Net income 1,778 5.4% 1,601 5.0% 1,078 3.5% 11.1% 64.9%

Net income (loss) attributable to:

Equity holders of the Company 1,716 5.2% 1,513 4.7% 1,016 3.3% 13.4% 68.9%

Non-controlling interests of the subs 62 0.2% 87 0.3% 62 0.2% -29.5% -0.4%

Earnings per share

Basic earnings per share 0.34 0.32 0.20 8.5% 74.6%

Exchange rate

THB/USD 31.95 31.59 31.29 1.1% 2.1%

Consolidated

1Q20(Unit: THB mn) 2Q20%

to sales2Q19*

%

to sales

%

to sales

Remark: *Based on normalized basis

Statement of Financial Position as of 30 June 2020


Remark: *Including short-term investments

Cash and cash equivalents* 5,322 3.8% 4,689 3.3% 13.5%

Trade and other receivables - net 13,904 10.0% 14,869 10.5% -6.5%

Inventories - net 34,696 24.9% 36,873 26.0% -5.9%

Other current assets 2,288 1.6% 3,115 2.2% -26.5%

Total current assets 56,211 40.3% 59,547 42.0% -5.6%

Fixed assets 27,863 20.0% 27,500 19.4% 1.3%

Investments 22,309 16.0% 22,031 15.5% 1.3%

Goodwill and other intangible assets 28,417 20.4% 27,899 19.7% 1.9%

Other non-current assets 4,524 3.2% 4,932 3.5% -8.3%

Total Assets 139,323 100% 141,909 100% -1.8%

Bank overdrafts and short-term loans 11,721 8.4% 11,277 7.9% 3.9%

Trade and other payables 18,072 13.0% 19,323 13.6% -6.5%

Current portion of long-term loans 2,085 1.5% 4,003 2.8% -47.9%

Other current liabilities 1,155 0.8% 1,205 0.8% -4.1%

Total current liabilities 33,032 23.7% 35,808 25.2% -7.8%

Long-term loans 43,040 30.9% 44,625 31.4% -3.6%

Other non-current liabilities 9,773 7.0% 9,681 6.8% 0.9%

Total Liabilities 85,846 61.6% 90,114 63.5% -4.7%

Non-controlling interests of the subsidiaries 3,513 2.5% 3,372 2.4% 4.2%

Total Shareholders’ Equity 44,015 31.6% 42,474 29.9% 3.6%

Total liabilities and shareholders’ equity 139,323 100% 141,909 100% -1.8%

(Unit: THB mn) 2Q20% to total

assets2019

% to total

assetsChange

Remark: *Figures as reported in August 2020

2Q20 Statement of cash flow


(Unit: THB mn) 1H20 1H19 Change

Profit before income tax 3,145 1,349 1,796

Adjustments for depreciation & amortisation expenses 1,946 1,803 143

Other adjustments 1,058 970 88

Changes in operating assets and liabilities 2,568 484 2,084

Cash flows receipts from operating activities 8,717 4,606 4,111

Net cash receipts (payments) from operating activities 8,456 4,654 3,802

Net cash payments for investing activities (1,861) (2,307) 446

Net cash receipts (payments) for financing activities (6,039) (3,004) (3,035)

Net increase (decrease) in cash and cash equivalent 556 (657) 1,213

Cash and cash equivalents - opening balance 4,483 1,311 3,173

Exchange gain (loss) on cash and cash equivalents (39) (59) 20

Cash and cash equivalents - closing balance 5,000 594 4,406

CAPEX 2,169 2,029 140

Management Est. Free Cash Flows* 6,687 2,437 4,250

Consolidated

analyst meeting for 2q20 results - investor.thaiunion.com · known as dpr group (dpr). •dpr is a...

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