Thai Union Group PCL

Editorial Staff

Thai Union records 1Q23 net profit of one billion baht as Red Lobster bounces back to profit

Thai Union Group PCL reported earnings for the first quarter of 2023 and revealed that its turnaround business plan for the Red Lobster seafood restaurant chain has shown positive progress, with a share of profit from operations of 121 million baht compared to a 243 million baht loss in the first quarter of 2022.

Red Lobster seafood restaurant

The Group recorded a first-quarter net profit of 1 billion baht, a 41.5 % decrease from 1.7 billion baht in 1Q22 which included two non-comparable items:

In the first quarter of 2022, Thai Union booked preferred interest of 239 million baht (after tax) from Red Lobster (vs. no preferred interest in the first quarter of 2023 due to interest rate hike),

The 200 million baht net profit dilution effect from Thai Union’s shares reduction in i-Tail from 99.5 % to 77.8 % following i-Tail’s listing on the Stock Exchange of Thailand last December 2022.
Excluding those two non-comparable items, Thai Union’s quarterly net profit declined 21.8%.

Thai Union recorded first-quarter sales of 32.7 billion baht, a 10 percent decrease from the high baseline last year. The decline was anticipated as demand for our products softened across all markets as customers managed their high inventory levels by reducing orders, while high raw materials prices also prompted a slowdown in purchases.

Thiraphong Chansiri, CEO of Thai Union Group

“We expect the first quarter to be the softest period of this year as a result of a high sales baseline from the first quarter of 2022 together with high inventory level at our customers, and logistic normalization,” said Thiraphong Chansiri, CEO of Thai Union Group. “However, we remain optimistic about 2023 growth as we have already seen signs of improvement in the second quarter and expect normalization in the latter half of the year as the trend towards the consumption of seafood and healthier proteins continues to rise globally.”

The first quarter results showed improvement in selling and administrative expenses which decreased 12.1 % to 4.12 billion baht, following an improvement in freight costs and logistic normalization.

High levels of inventory across global markets and high fish prices resulted in softer demand, pushing down sales in Thai Union’s ambient business by 1.9 percent year-on-year to 15.2 billion baht and PetCare business sales declined by 21.9 % to 3.5 billion baht.

However, the Group expects demand to return as customer inventories are depleting gradually.

Meanwhile, the frozen and chilled seafood business reported a15.3 % decrease in sales to 11.7 million baht, due to high baseline last year and seafood market price normalization.

For the value-added & others business unit, sales were down 9.5 % to 2.2 billion baht, although gross profit margin stayed healthy at 27.3 %. The group continues to introduce new and innovative products that appeal to a broader range of consumers, such as the Vegan Tuna launched by John West in the Netherlands, and Red Lobster’s first ever frozen retail product line which are available in more than 5,000 stores and online in the U.S.

In terms of geographical diversity, sales in the North America accounted for 43 % of total revenue in the first quarter, followed by 26 % from Europe, 12 % from Thailand and 19 % from others.

Thai Union has continued investment projects to expand capacity across various business categories under a 6-6.5 billion baht investment budget.