Seafood giant Thai Union has reported a 41.5% decline in net profit to THB 1 billion (€27 million) in the first quarter of its financial year.
Excluding two non-comparable items, including the effect of share reduction in i-Tail, the quarterly net profit fell by 21.8%.
However, the turnaround business plan for its Red Lobster seafood restaurant chain showed progress, with profit from its operations amounting to THB 121 million (€3.2 million) compared to a loss of THB 243 million (€6.5 million) in the same period last year.
The John West maker saw a 10% year-on-year drop in sales during the quarter to THB 32.7 billion (€880 million) as demand for its products softened across all markets.
Its 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 commented, "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 normalisation.
"However, we remain optimistic about 2023 growth as we have already seen signs of improvement in the second quarter and expect normalisation in the later half of the year as the trend towards the consumption of seafood and healthier proteins continues to rise globally."
Thai Union's selling and administrative expenses declined 12.1% to THB 4.1 billion, following an improvement in freight costs and logistic normalisation.
High fish prices and inventory levels pushed sales down in Thai Union’s ambient business by 1.9% year-on-year to THB 15.2 billion (€410 million).
The pet care business saw sales drop 21.9% during the quarter to THB 3.5 billion (€94 million).
Elsewhere, its frozen and chilled seafood business reported a 15.3% decrease in sales to THB 11.7 million (€310 million), due to a high baseline last year and seafood market price normalisation.
The company's value-added and other business unit, saw sales decline of 9.5%, to THB 2.2 billion (€59 million), although the gross profit margin remained at 27.3%.
Thai Union continued to introduce new products, including Vegan Tuna by John West in the Netherlands, and Red Lobster’s first-ever frozen retail product range in more than 5,000 stores and online in the US.
Sales in North America accounted for 43% of total revenue in the first quarter, followed by 26% in Europe, 12% in Thailand, and 19% in other markets.
"We continue to focus on profitability, operational excellence and financial discipline while navigating our business through the year. Thai Union’s balance sheet remains strong, with net debt to equity at 0.57 times, which is below our target of 1.0-1.1 times. Going forward, this will allow us to prioritise mergers and acquisitions, focusing on businesses that are a strategic fit for the group," Chansiri added.
© 2023 European Supermarket Magazine – your source for the latest A-brand news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.