2Q19 Opportunity Day Thai Union Group PCL. 9 August, 2019 2Q19 Opportunity Day
Disclaimer The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance. These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that the assumptions are correct. Actual results may differ materially from those projected. 2Q19 Opportunity Day
Innovation: Strategic Cornerstones A key pillar at Thai Union 2Q19 Opportunity Day
Official opening of new Global Innovation Center Innovation Rising to the Future State-of-the-art research and product development center Established in 2015, Global Innovation Center (GIC) seeks to find new innovative solutions to seafood that meet needs of consumers. In June 2019, Thai Union celebrated official opening ceremony of Global Innovation Center (GIC) by Princess Maha Chakri Sirindhorn Facility has been expanded to +5,000 m 2 , and houses more than 160 scientists and researchers from around the world. It is now located at SM Tower, Bangkok. 2Q19 Opportunity Day
Slide 5 2Q19 Opportunity Day
Thai Union ’ s 2Q19 key highlights Key Highlights 2Q19 Opportunity Day
“ Thai Union remains focused on operational excellence and profitability. We continue to invest in new product innovations to promote sustainable business growth. ” Thiraphon iraphong g Chansiri nsiri President esident and CEO 2Q19 Opportunity Day
2Q19: Solid underlying operation improvement amid additional legal expenses (THB mn) Operating Sales Gross Profit Net Profit Profit 32,214 1,513* 5,364 1,570* Sales dropped on lower raw GPM of 16.7%, highest since Solid operation recovery Recovery partly offset by material prices YoY 2015 non-operating items 2Q19 sales down 2.2% YoY Gross profit improved 13.1% Normalized operating profit Normalized net profit up excluding FX impact: YoY from 14.0% in 2Q18 to up 29.6% YoY, 10.6% YoY: • Thai Baht appreciated • Marketing expense • Lower FX gains and higher 16.7%, driven by: • Focus on high-margin against major trading currencies increased tax expenses during 2Q19 • Focus on higher-margin sales • SG&A ratio still high at • Share of profits improved businesses • Raw material prices and lower less-profitable 11.8% (from 10.4% in mostly from Red Lobster businesses dropped 2Q18) operation improvement • Lower sales volumes • Excluding labour retirement expenses, GPM would be at 17.0% -4.6% +13.1% +29.6% ** +10.6% ** YoY Chg. QoQ Chg +9.7% +22.4% +53.9% +18.8% % of sales 16.7% 4.9% 4.7% Remark: * Based on normalized operating figures. 2Q19 reported operating losses of THB 288mn and reported net profit of THB 111mn, including one-time majority accrual for US legal settlement of THB1,858mn and related tax credit of THB 456mn Slide 8 2Q19 Opportunity Day ** Based on normalized operating figures. 2Q18 reported operating losses of THB 285mn and reported net profit of THB 10mn.
1H19 Improved profitability 1H19 Net Profit Financial Summary 1 1H18 1H19 -2.4% up 24.6% YoY to (THB million) +19.9% THB 2,787 million 63,104 61,583 9,746 8,129 Share price movement +20.3% 2019 2 2018 2 6,089 (Jan – 5 Aug 19) (Jan – Dec 18) [CELLREF] +16.7% -21.7% +24.6% +98.4% Strong cash flow and debt 2,787 2,589 2,237 repayment improve debt ratio 1,305 2018 ND/E 2Q19 ND/E 1.39x ** 1.38x Net profit EBITDA Operating profit Gross profit Total sales Source: 1 TU; 2 SET (Jan 3 ’ 18: THB20.7/share and Dec 28 ’ 18: THB16.2/share, Jan 2 ’ 19: THB16.2/share and Aug 5 ’ 19: THB18.9/share) **Net debt to equity of 1.35X, before adoption of TFRS 9 and 16 Remark: Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19) and THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18). Slide 9 2Q19 Opportunity Day
2Q19: Record quarterly margin since 2015 despite one time labor retirement benefit provision Total sales (THB mn) GPM NPM 16.7% 18.0% 15.8% 60,000 14.9% 14.8% 14.9% 14.5% 16.0% 14.2% 14.0% 13.8% 50,000 14.0% 11.6% 12.0% 36,012 40,000 34,400 34,733 33,775 34,169 34,847 32,214 30,958 10.0% 29,369 29,329 30,000 8.0% 5.1% 4.9% 4.6% 4.7% 4.3% 6.0% 20,000 4.1% 4.1% 4.1% 3.4% 3.0% 4.0% 10,000 2.0% 0 0.0% % Growth 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 YoY Sales -0.8 0.0 -0.6 3.0 -5.3 -1.8 -1.9 3.7 0.1 -4.6 Gross profit -8.3 -9.0 0.3 6.1 -26.1 -4.6 9.2 11.4 29.3 13.1 Net profit 16.3 -6.9 8.1 56.6 -39.3 -3.7 0.5 -13.4 46.5 10.6 Remark: Excluding one-time net accrual for US legal-related settlement of THB1,402mn (2Q19) and THB1,359mn (2Q18), ESCo business closure-related expenses of THB489mn (2H18) and TMAC investment impairment of THB 87mn (4Q18). Slide 10 2Q19 Opportunity Day
Corporate, innovation, sustainability, and brands around the world Recent Developments 2Q19 Opportunity Day
Thai Union ’ s sustainability efforts Thai Union Reinforces SeaChange with #GhostGearReborn Kickoff on World Oceans Day • Thiraphong Chansiri, Thai Union’s President and CEO, participated in dive along with 40 other experienced divers. • Thai Union also partnered with Royal Thai Navy and Pattaya City in a beach cleanup and ghost gear diving activities. Thai Union remains constituent to FTSE4Good Emerging Index by FTSE Russel, for 4 th consecutive year • The index identifies companies that demonstrate strong ESG practices and better manage ESG risks. Slide 12 2Q19 Opportunity Day
Refined tuna oil: Remains key value- added initiative Fire incident at tuna oil refinery plant Tuna oil is a good source of omega fatty acids, including DHA. Refined tuna oil for infant • A fire occurred at Thai Union Thai Union continues to focus on high quality, premium tuna oil formula for infant formula milk powder to maximize full value of fish Ingredients Tuna Oil Refinery from by-products. Plant in Rostock, Germany on Saturday 1 June, 2019. • The plant was not in operation Thai Union has started a project to rebuild the tuna oil refinery, Refinery to be rebuilt by at the time, and no staff were with an aim to have the plant commissioned by July 2020. 2020 scheduled to be on site. There have been no reports of injuries. • Thai Union has written off Refinery to be rebuilt similar to previous manufacturing process, Minor plant improvements assets associated to the tuna oil with minor improvements after 6 months of operations. refinery plant valued EUR 16mn during 2Q19 together with a receivable from insurers of the same amount. Net impact is High quality crude tuna oil We continue to produce and sell high quality crude tuna oil in production continues almost neutral in 2Q19. Bangkok. Slide 13 2Q19 Opportunity Day
Thai Union ’ s Group CFO: Joerg Ayrle on talks about ethical return on investment • Joerg Ayrle, Thai Union’s Group CFO, gave a closing speech at SeaWeb Seafood Summit 2019 in Bangkok about ethical return on investment and seafood companies in the emerging blue bond trend. • Separately, he was key speaker at 5 th CFO Innovation Forum in Bangkok on 4 July, 2019, on integrating sustainability to unravel capital benefits and boost investor confidence. Source: Presentation by Joerg Ayrle, Thai Union’s Group CFO at the 5 th CFO Innovation Forum Thailand on 4 July, 2019. Joerg Ayrle Becomes Council Member of CNBC’s Global CFO Council The Council comprises of 100+ CFOs from Fortune 500 companies in countries around the world, who collectively manage market Caption: Joerg Ayrle during his closing speech Caption: Thai Union’s Group CFO at 5 th CFO capitalization of more at SeaWeb Seafood Summit in Bangkok. Innovation Forum Thailand on 4 July, 2019. than $4 trillion. For more information, visit CNBC. Photo Credit: Intrafish, Lola Navarro (Twitter: @IntrafishLola) Slide 14 2Q19 Opportunity Day
Thai Union ’ s global brand footprint New product initiatives and innovations from brands around the world China Germany United United States Kingdom Italy Thailand New innovative packaging New, healthier product John West Mareblu lu Fridge e Pot Leggero ro with 60% less fat 60 1 st branch launched in Beijing New premium product Located ed in Ready Ready-to to-ea eat t Taikoo o Li premium um shrimp shrimp New premium product New lobster product New innovative packaging Chicken en of Orion Cooked Brislin ing g the Sea Wild Lobster er Meat Sardine nes s in Catch Catch Retail l Pack see see-thr hrou ough gh lid lid New ready-to-eat tuna varieties Expanded to Thai market • Tuna Salad (Couscou ous) s) Chicken en of t the Sea Infusions ns • Tuna Infusions ns Slide 15 2Q19 Opportunity Day
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