Thai Union Frozen Products Plc (TUF) said its first-quarter net profit fell by 54% year-on-year on the impact of high raw material costs, shrimp disease and the stronger baht.
The world's largest tuna firm posted a net profit of 674 million baht in the quarter, down from 1.47 billion a year earlier.
Sales in US-dollar terms rose to $824 million from $822 million in the same quarter last year.
In baht terms, sales fell by 3% to 24.4 billion due mainly to a 3.5% rise in the local currency from a year ago.
President Thiraphong Chansiri acknowledged the continued challenges faced by TUF in the period while noting that net profit grew by 10% from last year's fourth quarter.
A shrimp disease called early mortality syndrome has driven losses, while the volatility of raw material prices remains a concern.
The market price of tuna ingredients stood at $2,350 a tonne last September before sharply declining to $1,900 by year-end. Then the price rose again and hit $2,325 in March.
Such volatility hurts exporters and customer confidence. Purchase orders slow as buyers decline to pay soaring prices, shaving gross profit margins.
Nonetheless, TUF's international brands performed well, especially Chicken of the Sea.
The US tuna brand regained profitability after underperforming last year amid intense price competition.
As well, the US pet food business shows renewed signs of life following the previous quarter's malaise.
"In the overall picture, our global business has shifted in a good direction," said Mr Thiraphong.
"Regardless, the company still believes the volatility of raw material prices will decrease in the second half of this year."
Mindful of the strong baht, TUF has zeroed in on risk management, hedging to cover some losses.
"The baht is soaring rapidly now," said Mr Thiraphong.
"Compared with the currencies of neighbouring countries, it is the strongest in the region. Therefore, the company must keep an eye on the situation at all times."
He said TUF expects the government to monitor the issue closely and enact measures if needed, leading to a return to normal by the second half.
Shares of TUF closed yesterday on the SET at 57.50 baht, unchanged, in trade worth 191 million baht.
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- Writer: Post Reporters