TUF to widen market with Bt2-bn funds

Thai Union Frozen Products,  a major processor and exporter of canned and frozen seafood, has mobilised Bt2 billion to keep on the expansion path over the next few years after the third quarter showed an impressive sales performance.

"We haven't decided yet where the raised funds will be put. What we have to do is expand our market as widely as possible," TUF president Thiraphong Chansiri said yesterday.

The war chest might be spent on any investments or acquisitions, depending on the right timing, he said.

The company recently succeeded in placing Bt2 billion of baht bonds with local institutional investors despite a challenging capital market caused by the liquidity crunch.

HSBC was the firm's adviser on this issue. The bonds rated "A+" by Tris were divided into two tranches - one of two years worth Bt1.5 billion and the other five years worth Bt500 million.

"The objective of this issue is primarily to support our continual business expansion, diversify our source of financing and re-balance our short- and long-term funding at a time of uncertain financial markets," Thiraphong said.

The problem for businesses in the near future is that they could find it harder to seek bank loans to finance any of their investments or acquisitions, he said.

TUF would devote at least Bt1.2 billion on expansion next year after heavily investing some billions of baht a year for a few years.

The company also set a target to grow sales by 12 per cent annually after turning in solid results in the third quarter, as it has not yet felt the effect of the global economic crisis.

TUF's third-quarter net profit jumped by 116 per cent to Bt911.9 million on sales growth of 34 per cent to Bt18.43 billion, or 35 per cent to US$544.9 million, from the same quarter last year.

For the first nine months, the firm earned Bt1.38 billion, up 37 per cent, on sales rising by 26 per cent to Bt50.64 billion, or by 33 per cent to $1.54 billion in dollar terms.

"Despite the global economic slowdown, we are closely monitoring the situations here and abroad to make sure that we are ready to adjust whenever changes are needed," Thiraphong said.

"We have no plan to revise our sales target yet because we are still confident in our business and its growth potential. Our sales should reach $2 billion this year and we target it to grow by 12 to 13 per cent per year to attain $3 billion in 2012."

Tuna represented 46 per cent of TUF's total third-quarter sales, followed by frozen shrimp at 20 per cent, canned pet food at 9 per cent, other seafood at 9 per cent, shrimp feed at 6 per cent, domestic sales at 5 per cent, cephalopod products at 3 per cent, and canned sardine and mackerel at 2 per cent.

The biggest market for the company remained the United States with a share of 53 per cent, followed by the EU with 15 per cent, Japan 10 per cent, Africa 3 per cent, Oceania 3 per cent, Middle East 2 per cent, Asia 2 per cent, and Canada and South America 1 per cent each.

Apart from re-balancing its funding, TUF also continues managing to lower production costs, shift its products into markets with the most spending, and roll out new products for both domestic and overseas markets.