Thai Union sees third-quarter profit rise by 50%

Thai Union sees third-quarter profit rise by 50%

SET-listed Thai Union Group Plc (TU) saw its third-quarter net profit rising by 50% year-on-year, a quarterly record, due to strong sales growth and reduced losses in Red Lobster Seafood Co, the company's restaurant arm.

Net profit was registered at 2.1 billion baht during the July to August period, with nine-month net profit increasing by 74% year-on-year to 4.8 billion baht.

Excluding US legal fees of 1.4 billion baht incurred during the second quarter, normalised net profit growth will be at 15% year-on-year.

"[Third-quarter net profit growth] is mainly due to strong core operations and reduced losses in Red Lobster," said TU in its management, discussion and analysis of third-quarter results.

Sales were reported at 34.8 billion baht in the third quarter, up 9.3% year-on-year, mainly driven by the ambient seafood business that continued to demonstrate a sales growth of 12.4% year-on-year, as consumers consumed more seafood products at home against the backdrop of the Covid-19 crisis.

Strong sales performance in the ambient seafood business was seen in all key markets in the third quarter, with increased consumption of canned seafood detected from last year, according to TU.

For Red Lobster, the company reported less losses on a quarter-on-quarter basis as it implemented stringent cost-saving initiatives, focused on off-premise sales and opened much of its restaurants for dine-in.

The nine-month share of loss came at 339 million baht, largely due to Red Lobster, from the temporary closures of its restaurants in the second quarter during the city lockdown in the US, according to TU.

Thai Union announced that it has acquired the remaining stake of Red Lobster by a consortium of investors, Seafood Alliance and Red Lobster management, as Golden Gate Capital exited the business.

Through a series of terms of conditions, Thai Union's ultimate shareholding remains unchanged at 49% diluted equity ownership on a fully diluted basis.

With food service operations resuming normal operations during the third quarter, frozen and chilled seafood sales rose by 4.7% year-on-year.

Pet care and value-added sales increased by 12% year-on-year on the back of increasing volume, attributed to a keen focus on higher margin products.

For TU's business overview, the US and European sales increased 27% and 7%, respectively, during the first nine months mainly from growing demand of both ambient and frozen seafood.

TU shares closed yesterday at 15.40 baht, up 50 satang, in trade worth 798.3 million baht.

Thai Union has been an anchor investor in Red Lobster since 2016.

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