Seafood giant Thai Union Group PCL plans to divest its minority investment in US restaurant chain, Red Lobster.
Thiraphong Chansiri, chief executive of Thai Union Group stated, “The combination of COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders.
“After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.”
The John West maker reported a loss of THB 0.7 billion (€18 million) in the first nine months of 2023 from Red Lobster.
The group noted that it would incur a one-time estimated THB 18.5 billion (€480 million) non-cash impairment charge for its entire investment in Red Lobster, which will be included in its fourth quarter 2023 earnings.
After impairment, Thai Union’s balance sheet will remain 'strong' with a net debt/equity ratio of 0.84, the company noted.
The board has approved a share repurchase for financial management purposes not exceeding THB 3.6 billion (€93 million), or 200 million shares.
Thai Union reported net profit of THB 1.0 billion (€26 million) in the second quarter of its financial year, down 36.7% year on year, due to foreign exchange losses and the dilution effect on i-Tail’s net profit.
Revenue for the quarter decreased 12.6% year-on-year to THB 34.1 billion (€890 million), due to last year’s high baseline, high inventory levels among customers, logistics normalisation, and overall softer demand, the company added.