Bangkok-headquartered Thai Union Frozen Products (TUF) reported on February 27 that total sales in 2014 amounted to THB 121.4 billion (US $3.7 billion). The record high result was achieved thanks in no small part to the acquisition of MerAlliance and King Oscar, which were added to the company’s portfolio last November.
Annual net profit was THB 5.1 billion, up 78.5% year-on-year, retouching the record high in 2011. The performance was mainly driven by margin and earnings recovery across all business categories, especially in the tuna and pet food businesses.
EBITDA increased 39.8% compared to 2013, while earnings per share rose 76.7% to THB 1.099, compared to the previous year.
Fourth quarter results reflected a 7.7% increase in sales revenue from the previous quarter, realized from a number of actions, including strategic initiatives from branded business, continued productivity improvements related to company’s operational excellence activities, and positive contributions from the revenue consolidation of MerAlliance and King Oscar. TUF posted best-ever quarterly sales revenue of THB 32.8 billion (approximately $1 billion), compared to THB 30.8 billion in the fourth quarter of 2013.
Thiraphong Chansiri, TUF’s president and ceo, commented: “This is another great year with encouraging net profit and earnings. Our 2014 result demonstrates continued accelerated growth from our branded product portfolio and operational cost management initiatives. These activities remain a priority as well as leverage sourcing activity, operating and marketing synergies with the newly acquired MerAlliance and King Oscar companies, where we expect to see further results over time.”
One of the few vertically integrated seafood companies operating on a global scale, Thai Union ranks as the world’s largest canned tuna processor and is a major producer of frozen shrimp and other products. Its 2014 revenue stream in six core strategic product categories was reported as follows: tuna business, 44%; shrimp and shrimp-related sales, 24%; sardine and mackerel business, 5%; salmon sales, 5%; pet food; 7%; value-added and other products, 15%.
The company’s revenue share by markets was: USA, 44%; EU, 29%; Thailand, 7%; Japan, 7%; and other markets, 13%.
Profitability has recovered well in the tuna business. In addition, the company’s performance was particularly satisfactory with net sales growth in the salmon sector thanks to its consolidation of MerAlliance and the value-added and other products as a result of increased in lobsters’ sales generated by Chicken of the Sea Frozen Foods (COSFF), a US subsidiary company.
Following strong growth in 2014, TUF’s outlook for 2015 is unchanged.
“We are well positioned for another solid year in 2015, as we continue to serve customers in all markets around the world with a wide variety of product categories with premium quality,” said Chansiri. “We remain focused on generating superior returns for our shareholders and position TUF for the next stage of growth.”
The company is moving ahead toward reaching a sales target $5 billion per annum. This is expected to be achieved by a continued focus on growth opportunities, including an organic expansion across all business categories, and further emphasis on business integration.
“To pursue these opportunities, we perform with disciplined cost control and a focus on delivering highest quality products, innovation and ongoing commitment to sustainability across business units,” stated the president and ceo.
TUF will pay an annual dividend of THB 0.55 per share. This is a payout ratio exceeding 50% of the net profit and reaffirming the management’s confidence in business strength to continue its strong dividend distribution policy.
Capital Increase Planned
Meanwhile, Thai Union’s board of directors has approved a capital increase aimed to raise $400,000,000 (equivalent to THB 13,200,000,000) to be used principally to fund a part of the acquisition of Bumble Bee Foods, a leading packaged foods business in North America with presence across the shelf-stable seafood market in both the US and Canada.
TUF had previously announced the acquisition of San Diego, California-headquartered Bumble Bee, and is expecting finalization of the transaction within H2/2015, but such completion remains subject to clearance by the United States antitrust authorities and other closing conditions as set forth in the acquisition agreement. Subject to applicable securities laws in jurisdictions outside Thailand, the new shares will be offered to TUF’s eligible existing shareholders, whose names are on the register book as of the date to be determined by the board of directors, on a pro rata basis on their respective holdings (Preferential Public Offering).
This capital increase plan will be subject to the approval of the shareholders during the annual general meeting, scheduled on April 3.
