SET-listed Thai Union Group Plc (TU), the world's biggest producer of canned tuna, posted a net profit of 1.5 billion baht in the first quarter of 2017, a rise of 19.3% year-on-year, due to rising revenue from Red Lobster and foreign exchange gains.
Chief executive Thiraphong Chansiri said total sales revenue in the first quarter of this year was at 31.4 billion baht, up 0.7% from the same period of last year.
But gross profit declined by 13.3% from a year earlier to 4.3 billion, while the gross profit margin also dropped to 13.8%, compared with 16% from the same period last year, he said.
He added the fall in gross profit was largely due to higher raw material prices, particularly for tuna and shrimp, along with the baht's appreciation, which contributed to the weaker margin.
Sales contribution from Thai Union's frozen and chilled seafood business rose to 12.9 billion baht, up 5.6% over the same period last year, despite continued sluggish demand in Europe.
In addition, PetCare and value-added product sales grew 17.4% on year to 4.4 billion baht from new product launches and continued improvement in market penetration.
The sales contributions from TU's own brands remained stable at 42% in the first quarter, with the balance coming from the company's private label and food services.
The US remained the largest market with 40.3% of total sales in the first quarter of this year, followed by Europe at 31%, the domestic market at 8.1%, Japan at 6.4% and other markets at 14.2%.
"We're pleased with our strong profit growth, despite persistent challenges in raw material costs coupled with variable economic conditions in many markets," said Mr Thiraphong.
In December 2016, TU announced an ambitious strategy to ensure 100% of its branded tuna is sustainably sourced, with a commitment of achieving a minimum of 75% by 2020.
He said the company is investing US$90 million (3 billion baht) in sustainability initiatives, which include establishing 11 new fishery improvement projects around the world.
Additionally, TU in partnership with the Clinton Climate Initiative officially broke ground on a wastewater and biogas project at its Indian Ocean Tuna Seychelles facility.
The project aims to cut carbon emissions and reduce energy costs, while generating clean electricity and cleaner wastewater.
"We remain deeply committed to sustainable development. Everyday, TU is working to ensure the company values we embrace are being translated into real and demonstrable change for good," said Mr Thiraphong.