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TUF looks to big profit rise this year

THAI UNION Frozen Products (TUF) expects to post a big increase in profits this year, although the figure might still not match the normal profitability level of about Bt5 billion per annum recorded before its worst year in 2013, the company's chief executive said yesterday.

Thiraphong Chansiri said the global seafood company was maintaining its sales revenue target at US$4 billion (Bt130 billion) and gross profit margin at more than 14 per cent for this year.

Still, compared with its normal gross profit margin of 15-16 per cent recorded before 2013, the company will still not fully recover this year.

A drag-down factor is that the shrimp sector is still feeling the effects of early mortality syndrome (EMS), resulting in a slow recovery of domestic shrimp output, he said.

Profit of "Bt5 billion should be a target to go for, because that would be the normal situation. But with some negative factors, we may not reach it," he said.

The listed company reported a net profit of Bt2.85 billion last year, down 39 per cent from the 2012 level.

Nevertheless, Thiraphong said he was confident that US Pet Nutrition, its pet-food subsidiary in North America whose huge losses were equivalent to 30 per cent of the group's net profit in 2013, would at least break even this year.

Stock analysts' median consensus estimates TUF's earnings per share will rise 64.5 per cent to Bt4.37 this year.

During the first quarter, the company booked a consolidated net profit of Bt949.52 million, or Bt0.83 per share, up 40.8 per cent from the same period last year.

The chief executive said that in regard to the outlook for supply and demand, tuna prices were expected to become more stable this year and would certainly average less than last year's $1,950 per tonne. The price of tuna bottomed out at $1,200 in April, and has recovered since then.

Tuna contributed 48 per cent of TUF's revenues of $3.6 billion last year, followed by shrimp (23 per cent), pet foods (8 per cent), sardines and mackerel (6 per cent) and salmon (4 per cent). Valued-added products and other sales accounted for the remaining 11 per cent.

Thiraphong said the company this year would focus on investing on its US and European brand assets, while keeping its annual capital expenditures to a low level of Bt3.5 billion during this year and next, and further lowering its debt-to-equity ratio from 0.83 time at the end of the first quarter to between 0.73 and 0.75 time at year-end.

Thailand's political turmoil has had no direct impact on TUF, which last year earned 43 per cent of its income from the US market, 30 per cent from Europe, 5 per cent from Japan, and only 7 per cent from the domestic market, he added.


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