TUF allots B18bn for expansion

Thai Union Frozen Plc (TUF) is doubling its annual capital expenditure to 6 billion baht per year over the next three years to expand its production capacity and penetrate more Asean markets.

Acold storage facility with a capacity of 30,000 tonnes will be built, with 20,000 tonnes operational this year and another 10,000 tonnes in 2014, says Mr Thiraphong. He added mergers and acquisitions will also play a part. TAWATCHAI KEMGUMNERD

President Thiraphong Chansiri said the investment of 18 billion baht is vital for the world's largest tuna firm to achieve total revenue of US$5 billion by 2015. The SET-listed company targets revenue growth of 15-16% to $4 billion this year.

Normally TUF spends 3 billion baht annually, mainly for maintaining production efficiency.

TUF is building a new frozen shrimp factory in Samut Sakhon to replace the one damaged by fire in February last year, with capacity doubling to 200 tonnes a day. The new factory is scheduled to start production in the second quarter of next year.

The company has 240 rai of land available near the existing site in Mahachai town for expansion. The new salmon and squid plant will be built where the shrimp factory was formerly located, with a daily capacity of 70 tonnes.

A cold storage facility with a capacity of 30,000 tonnes will be built, with 20,000 tonnes operational this year and another 10,000 tonnes in 2014, he added.

"Our business plan emphasises investments for growth," said Mr Thiraphong, adding mergers and acquisitions will also play a part.

TUF is expanding to Vietnam, Myanmar and Laos this year.

The US is the largest market for TUF, at 36% of exports, followed by 30% to the EU, while the domestic and Japanese markets sit at 10% and 9%, respectively.

Tuna generates 49% of sales, followed by shrimp (23%), value-added products (11%), pet food (7%), sardines and mackerel (6%) and salmon (4%).

Last year TUF reported revenue of $3.44 billion, up 6% in dollar terms from 2011. In baht, turnover grew 8%, surpassing 100 billion baht for the first time at 106.69 billion, while net profit dropped 8% to 4.69 billion.

In the fourth quarter, net profit decreased by 60% year-on-year to 612 million baht while quarterly sales rose 1.1% to 26.3 billion baht.

Mr Thiraphong admitted revenue growth fell short of its 10-12% goal because of several challenges, including the fire at the shrimp factory and skyrocketing shrimp prices caused by an outbreak of Early Mortality Syndrome. In addition, a sharp drop in tuna prices from the historical peak of $2,350 per tonne in September to $1,900 in December resulted in inventory loss.

Shares of TUF closed yesterday on the SET at 67 baht, up 75 satang, in trade worth 196.89 million baht.

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Writer: Nareerat Wiriyapong
Position: Business Reporter