TU targets $8bn in revenue by 2020

TU targets $8bn in revenue by 2020

Exporter interested in M&A for leverage

Thiraphong Chansiri, chief executive of Thai Union Group
Thiraphong Chansiri, chief executive of Thai Union Group

SET-listed Thai Union Group Plc (TU), the world's biggest canned and frozen tuna exporter, aims for revenue of US$8 billion (260 billion baht) by 2020, driven by the company's organic growth structure and two key strategies: innovation and sustainability.

Gross profit margin is expected to rise to 20% in 2020 from the current 13-14%, while the annual investment budget will be set at 3.5-4 billion baht, said TU chief executive Thiraphong Chansiri.

Major merger and acquisition (M&A) deals worth billions of dollars are not on the negotiation table right now, as existing businesses have the potential to meet the $8 billion target.

"We continue looking for M&A opportunities and target value-added products with an investment size not exceeding $100 million," Mr Thiraphong said. "This would enable the company to keep its debt-to-equity ratio at around one."

The milestone of a twofold growth in total sales revenue was announced yesterday, when the company celebrated its 40th anniversary.

TU currently has more than 49,000 employees around the world with total revenue of more than $4 billion.

Over the past two years, the company's gross profit declined from a level of 16-17% to 13-14% as tuna prices increased.

Mr Thiraphong said this year's revenue may not increase much as the stronger baht negatively impacted consolidated revenue.

He said gross profit margins are likely to increase to 14.5-15% next year as tuna prices have started to decline.

By 2020, the margin is expected to improve with innovations as the company has just set up three new business units including a focus on the Chinese and Middle Eastern markets, the food service business that collaborates with global restaurants, and marine ingredients which produces food ingredients products such as tuna oil, Mr Thiraphong said.

"We expect to see an impressive performance in China by next year," he said, adding that the company recently tested online sales in China and became Alibaba.com's exclusive seafood brand.

Revenue generated from emerging markets is expected to be around US$200 million in 2020, with revenue of marine ingredients and food service estimated at $200 million and $400 million, respectively.

TU's net profit in the third quarter was 1.74 billion baht, up 8.9% year-on-year. Net profit in the first nine months was 4.62 billion baht, up 6.1% year-on-year.

Sales in the third quarter grew by 0.4% year-on-year to 35.19 billion baht, a record high for quarterly sales.

Sales in the first nine months came to 101 billion baht, up 0.8% year-on-year.

TU shares closed yesterday at 18.40 baht, down 10 satang, in trade worth 377 million baht.

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