SET-listed Thai Union Plc (TU), the world's biggest exporter of canned and frozen tuna, may miss its 5% sales growth target this year because of the baht's year-to-date appreciation.
But the company is committed to making an aggressive effort to shore up domestic market sales in order to maintain gross profit margin at the same level as last year.
In the second quarter, the company reported a net profit of 1.37 billion baht, down 3.7% year-on-year but up 57.5% from the previous quarter.
Sales were 34.14 billion baht between April and June, down 2% year-on-year, due to a decline in tuna sales and the stronger baht. But sales growth ebbed by 0.1% year-on-year when foreign exchange costs were excluded.
Sales in the first half logged 63.84 billion baht, down 3.6% year-on-year and down 1.5% when foreign exchange losses were omitted.
"An impediment to sales growth came from the baht's value strengthening by 9% against the US dollar in the first half and rising by 7% in the second quarter," said TU investor relations manager Bunlung Waiyanont. "Maintaining the sales target at 5%, similar to last year's growth, is unreasonable, as the company's sales are dominated by foreign markets at around 90% of the total sales."
He said the company has been trying to revive sales growth despite market challenges.
Gross profit margin is anticipated to be 14-15%, while selling, general and administrative expenses are targeted at 10.5% of sales, Mr Bunlung said.
He said prices of raw materials have stabilised, with tuna prices of US$1,667 (55,409 baht) a tonne. Shrimp is 41 baht per kilogramme, and salmon stands at 69 Norwegian krone (270 baht) per kg, keeping gross profit margins intact.
But foreign exchange risks cannot be controlled and have taken a toll on the company's competitiveness, Mr Bunlung said.
The company will maintain capital spending at about 4.8 billion baht after investing 2.5 billion during the first half to improve manufacturing efficiency, he said.
The figure excludes investment in a 45% stake in TUMD, the group's first tuna brand in Russia, and a 25% investment stake in Thammachart Seafood.
TU shares closed yesterday on the Stock Exchange of Thailand at 18.20 baht, up 20 satang, in trade worth 191.8 million baht.