“TUF” Maintained its Leadership With Sales Breaking Bt55 Billion mark and Net Profit near Bt2 billion
TUF managed to weather the appreciation of Thai Baht throughout 2006, achieving higher-than-expected export sales. Annual sales in US dollar term increased by10%. Frozen shrimp and shrimp feed were the main sales drivers. Full attention to cost and risk controls by the management is the key factor.
Thai Union Frozen Products Public Company Limited (TUF), Thailand’s largest processor and exporter of canned and frozen seafood, reported that in 2006, its sales and total revenues reached Bt55,039 million and Bt 55,444 million respectively with net earnings (before extraordinary items) amounting to Bt2,060.6 million and 2.24-Baht EPS. According to Thiraphong Chansiri, president of TUF, the firm’s 2006 sales hit Bt 55,039 million, representing 3% growth from Bt 53,643.5 million in 2005. Sales in dollar term indeed grew 10% from USD 1,330.3 million in 2005 to USD1,457 million in 2006. Frozen tuna loin, canned tuna, shrimp products and canned pet food contributed to the majority of sale. Reported net profit stood at Bt1,960.6 million. If adjusted for the extraordinary expenses incurred in investment projects, which were added up to Bt100 m, the net profit could have risen to Bt 2,060.6 million, only 1% less than Bt2,082.4-million in 2005. To achieve this, TUF has to navigate through various big challenges in the year, such as the volatile Thai Baht which also appreciated by more than 10%, keen price competition from domestic and abroad, rising domestic interest rates, the U.S. anti-dumping measures against Thai shrimp exports and related continuous bond requirement, and other international trade barriers imposed by importing countries to protect their domestic industries. With regards to 2006 sales, frozen tuna loin and canned tuna collectively accounted for up to 50% of the category, followed by frozen shrimp (20%), canned pet food (9%), canned seafood (7%), shrimp feed (5%), domestic sale (6%) and frozen cephalopod (3%). TUF products are shipped to various destinations around the globe. However, the European Union is the most vibrant and promising target at the moment due to its reinstatement of GSP privileges for Thai shrimp and canned tuna exports, which lowered the import duties. The new GSP scheme has been in place since January 1, 2006 and will last for 3 years. Thiraphong commented “Although we were affected by all these challenges all along through 2006, we managed to install proper measures to neutralize or lessen the impacts of some of these negative developments, in turning allowing us to maintain our gross margin at 15% in Q4. The fourth quarter turned out to be better than that of a year ago. We have to thank our staff and management team’s commitment to controlling costs, developing new distribution channels and new products.” He also added, “Because of this, we did start a new company in the US called Chicken of the Sea Frozen Food LLC. The new company is engaged in distributing frozen seafood products, including ready-to-eat food products under “the Chicken of the Sea” brand. With this new product line, we hope to add more value and variety to our existing core product lines, achieve more solid growth, and generate some decent income and returns on this investment.”
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Contact person: Lapat Khwanmongkhon