Seafood company Thai Union Group has reported a 5.5% year-on-year decline in 2018 first-quarter sales to THB 29.7 billion (€0.7 billion)
The group, which produces brands such as Chicken of the Sea and John West, said that the decline was mainly due to the impact of declining tuna sales.
Volatile Market
Net profit was THB 869 million(€22.8 million) which is down 39.3% from the same period last year.
Gross profit declined 26.2% from a year earlier to THB 3.36 billion (€0.08 billion) while the company's gross profit margin was 11.3% compared to 14.5 % year-to-year.
Inventories of higher-priced raw materials, particularly in the tuna business, along with Thai baht currency appreciation, contributed to the weaker margin.
Thiraphong Chansiri, the chief executive of Thai Union, said, “Despite pressures from high raw material inventory costs and challenging market environments, our net profit was supported by other incomes and prudent foreign exchange management.”
“Thai Union will continue to work harder to weather the industry’s volatility. Currently, the pressure from rising raw material prices is beginning to relax as tuna product prices show signs of a more moderate increase.”
Opportunities To Expand
Thai Union has continued its focus on expansion with an agreement to acquire 45% of TUMD Luxembourg S.a.r.l (TUMD). TUMD wholly owns three Russian companies, collectively known as the DPR Group (DPR).
Thai Union said that its manufacturing and distribution platforms offer significant opportunities for growth and development.
The retailer added that it expects to increase its shareholding to 51% initially, and then further to 80% over the next three years. The transaction is subject to shareholders agreement and approved by the Russian Federal Anti-Monopoly Service.
In February, Thai Union posted record profits for the 2017 fiscal year, where it reported that sales rose 1.6% to THB 136.53 (€3.51) billion in 2017, with net profit surging 14.6% to a record THB 6.02 (€0.15) billion.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Aidan O'Sullivan. Click subscribe to sign up to ESM: European Supermarket Magazine.
