The Thai Union Group has announced its intention to “pursue an exit” from the company’s minority investment in Red Lobster, the leading casual seafood restaurant operator in the United States. The Bangkok-headquartered producer of frozen shrimp, tuna and other seafood products has been a supplier to the chain for many years, and since 2016 has been a strategic partner as well as minority investor in the business.
After both companies initiated a review of Red Lobster operations last year to identify areas for operational and financial improvement, Thai Union CEO Thiraphong Chansiri on January 16 stated: “The combination of the Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders. After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.”
Thai Union posted a share of loss of THB 0.7 billion (US $19 million) in the first nine months of 2023 attributed to Red Lobster’s performance. While continuing to explore available exit options, it will record a one-time estimated THB 18.5 billion (US $530 million) non-cash impairment charge for its whole investment in Red Lobster, which will be included in the Group’s fourth quarter 2023 earnings.
After impairment, Thai Union reported that its business and financial position remains strong with a low net debt/equity ratio of 0.84. As such, the company’s board of directors has approved a share repurchase for financial management purposes not exceeding THB 3.6 billion or 200 million shares.
The Group continues to deliver improvements in profitability and gross profit margin across all core business categories. Thai Union is in the process of finalizing its Corporate Strategy 2030, which will focus on its core business, centered around ambient and frozen seafood, as well as PetCare products. Through this, management aims to advance ongoing strategies that strengthen overall profitability and deliver long-term enhanced value for the Group’s shareholders.
In business for 46 years, Thai Union is regarded as one of the world’s leading seafood producers, ranking as a major packer of frozen shrimp and one of the largest producers of shelf-stable tuna products. Sales exceeded THB 155.6 billion (US $4.4 billion) last year, and the company’s global workforce numbered more than 44,000 employees.
