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Seafood producer Thai Union's FY profit jumps, beats estimate

[BANGKOK] Thai Union Group Pcl on Tuesday posted a nearly 15 per cent rise in 2017 net profit and beat analysts' expectations, underpinned by strong sales, higher income from restaurant chain Red Lobster, and better cost management.

The world's largest producer of canned tuna said its net profit came in at 6.02 billion baht (S$251.89 million) in 2017, beating expectations of 5.8 billion baht in a Reuters survey of 12 analysts.

Sales in 2017 came in at 136.5 billion baht, up 1.6 percent from 5.3 billion baht a year ago.

"Growth was mainly organic and driven by product repricing," Thai Union said.

The company targets a sales growth of 5 per cent this year.

Gross profit margin fell to 13.3 per cent in 2017 from 14.8 per cent a year ago, as tuna prices rose 30 per cent from a year earlier. The company targets a gross profit margin of below 15 per cent this year.

Europe and North America accounted for 70 per cent of the revenue, while contribution from emerging markets, including China, grew in line with strategy to expand contribution from Asia.

Thai Union cited international regulation that could ban seafood trade as a potential risk factor. The European Union in 2015 threatened to ban fish imports from Thailand unless it cleans up the industry.

A rise in raw material costs and appreciation of the baht against major currencies were a challenge in 2017, the company said in a statement.

The pressure on prices have subsided as tuna rates dropped since the fourth quarter, Chief Executive Thiraphong Chansiri said in a statement.

The canned tuna producer planned capital expenditure of around 4.8 billion baht and dividend payout of at least 50 per cent this year.