Gross profit declined by 12.4 per cent, while the gross profit margin was 14.1 per cent, compared to 17.3 per cent as reported in the third quarter of 2015.
Continued high salmon raw material prices and higher than expected tuna prices contributed to the weaker margin, while moderate foreign exchange losses of THB 30 million were recorded.
This was partly offset by stringent cost controls with third quarter 2016 Selling, General & Administration to sales ratio coming in at 8.7 per cent, the lowest level in four years as well as some positive one-time effects. As a result, net income remained stable with only 1.9 per cent year-on-year reduction to THB 1,594 million.
During the first nine months of 2016, sales in the US continued to play an important role in the company’s revenue, accounting for 39 per cent of total sales year-to-date. Thailand’s domestic market accounted for 8 per cent of total sales, while Europe contributed 33 per cent of sales, widening from 29.4 per cent in full-year 2015. Japan sales contributed 6 per cent of total sales.
Thiraphong Chansiri, CEO of Thai Union Group noted: “This quarter clearly shows that demand for our products is strong despite a challenging market for raw materials and continued difficult economic conditions in various markets around the world. We were able to deliver a very solid bottom line despite tighter market conditions.”
In the first nine months, the sales contribution from Thai Union’s brands remained stable at 43 per cent year-to-date, with the balance coming from the company’s private label sales.
Third quarter 2016 sales for the frozen and chilled seafood business rose to THB 15.1 billion, up 14.7 per cent over the same period last year. The increase in sales volume was due to the Chez Nous acquisition during the third quarter, improved domestic shrimp exports, and the consolidation of Rügen Fisch in Germany.
PetCare and Value-Added sales surged to THB 5,257 million, an increase of 28.3 per cent year-over-year.
In October, Thai Union made a $575 million strategic investment in Red Lobster, the world’s largest seafood restaurant chain, for a 25 per cent equity stake and 10-year convertible preferred units of another 24 per cent. The investment was well received by Red Lobster management and employees, in addition to positive response from industry analysts. Additionally, Thai Union acquired a minority interest of 18 per cent from its subsidiary Chicken of the Sea Frozen Foods. Thai Union now holds 100 per cent of the company.
