Thai Union Group Public Company Limited (SET: TU) reported its 2Q23 earnings on Monday that was relatively close to market expectations despite a decline in revenue and net profit.
Revenue of the leading canned tuna producer decreased 12.6 percent year-on-year in the second quarter of 2023 to THB 34.1 billion, due to last year’s high baseline, high inventory levels among customers, logistics normalization, and overall softer demand. Net profit declined 36.7 percent to THB 1.0 billion, mainly because of significant foreign exchange losses and the dilution effect on i-Tail’s net profit. However, Thai Union recorded a gross profit margin at 16.9 percent stable from last year despite higher raw material prices.
Despite the decline, its net profit was still higher than the consensus by 8.5%, while revenue was slightly lower than expectations by 1.5%, according to Refinitiv.
Seven Thai brokerage firms have published a research paper after the announcement of TU’s earnings results with five recommended ‘BUY’ and two recommended ‘Hold’ at a consensus target price of THB 16.78 per share.
In the meantime, Refinitiv has nine ‘BUY’, four ‘Hold’ and one ‘Sell’ at a consensus target price of THB 16.15 per share.
Trinity Securities, which gave a ‘BUY’ recommendation at THB 17.00 per share, stated that it expects raw tuna material prices to ease to $1,800-1,900 per ton in the second half of this year, resulting in a recovered orders for canned seafood, while foreign exchange should improve. However, due to an unclear 2H23 outlook, the firm revised down TU’s net profit forecast for 2023 by 12% to THB 4,745 million.
Thiraphong Chansiri, CEO at Thai Union, said, “The first half of 2023 has not been easy, but we are starting to see early signs of a recovery in various markets in the latter half of 2023. Moreover, our balance sheet is still strong, with a net debt to equity ratio at 0.64 times in the second quarter, well below our target of 1.0x times. We have a healthy dividend payout rate of 70.3 percent of our net profit.”
Red Lobster’s performance also improved in the second quarter as the company’s turnaround strategies continued to have a positive impact, booking a THB 94 million share of loss from operations compared to that of THB 281 million in the same period in 2022.
“Looking ahead to the remainder of 2023, Thai Union will reinforce its profit protection plan measures globally to improve profitability, targeting cost savings and greater cost efficiencies in all operations. We remain optimistic about the longer-term outlook. We’re also excited about maintaining our position as a sustainability leader in the global seafood industry following the recent launch of SeaChangeâ 2030, our sustainability strategy which we are dedicating USD 200 million between now and 2030 to reshape the seafood industry with a focus on people and planet,” added Chansiri.
