With its core businesses seeing relatively slow growth, SET-listed Thai Union Group (TU), a global seafood conglomerate, plans to develop more new businesses such as ingredients, tuna oil and hydrolysed proteins, and calcium over the next five years.
The company is keen on beefing up its investment in startups, with areas of interest including alternative protein made from new technology, health and nutrition, said Thiraphong Chansiri, president and chief executive of TU.
"Over the next five years, we will no longer invest in core businesses," said Mr Thiraphong. "We are large enough to be gauged by production capacity and scale."
TU is one of the world's largest seafood players. It owns a brand portfolio in key markets and global sourcing, production and distribution networks.
TU's key products are canned tuna and frozen shrimp. It also makes products for external customers through its private label business.
The company engages mainly in three key businesses: ambient business; frozen business; and pet care, value-added products and other businesses.
The ambient business contributes 49% of the group's total sales, with the frozen segment making up 36% and pet care, value-added and other businesses making up 15%.
Despite the pandemic pinching the global economy and exports, TU reported total sales for the first nine months this year of 98.9 billion baht, up 5.9% year-on-year, with net profit rising 73.6% to 4.78 billion baht.
Sales from the US contributed to 43% of the group's total as of Sept 30 this year, with Europe comprising 29%, Thailand 10% and other markets making up the remaining 18%.
Though the virus crisis caused many firms to struggle with liquidity, TU reported a cash flow of 9.19 billion baht in the first nine months this year, higher than the entirety of 2019 at 7 billion baht.
With strong cash flow, the company bought back 116 million shares or 2% of total shares, with spending of 1.6 billion baht during the second quarter when the company's shares fell to 11-12 baht. A sturdy cash flow enabled the group to pay back 2.5 billion baht in debts, bringing its net debt-to-equity ratio to 0.97 times at the end of the third quarter from 1.43 times in the third quarter of last year.
The company was also able to pay out dividends 29% higher in the first half of the year than the same period last year.
"It's been a good year for us and this should be partially credited to luck. Panic shopping caused by the outbreak and better management allowed us to boost our production capacity to serve higher demand nationwide and honour deliveries. Thailand is our key manufacturing base, and reports of infection made us increase production capacity by 20%," said Mr Thiraphong.
He said TU's business has fared quite well in every crisis, be it during the 1997 financial crisis, the 2008 subprime crisis or the European crisis, as food is a go-to product during a crisis.
But the best year was in 1997, when the baht depreciated to 40-50 baht against the US dollar, said Mr Thiraphong.
"As the crisis is so serious, we're lucky to survive unscathed and continue to take care of our 44,000 employees worldwide, 35,000 of whom are in Thailand," he said.
According to Mr Thiraphong, TU's mindset has completely changed from this year upon realising growth opportunities from core businesses are very thin.
"For the next five years, our focus will be on the bottom line. We will no longer focus on creating large sales growth as in the past," he said.
"Our mindset has changed from over 30 years of doing business, when we largely focused on volume and scale. The world has changed, and volume and scale no longer matter, but a greater diversity of demand and smaller size do."
The company set a capital expenditure over the next five years of 4-4.5 billion baht a year, excluding new investment worth around 500 million to 1 billion baht a year. Of the total, some 400 million baht a year will be allocated to invest in startups.
"Investment in startups does not require much money, worth about 400 million baht a year. We've already invested through our Global Innovation Center, set up six years ago. Investment is about knowledge and new markets," he said.
"We believe in open innovation and collaboration, which draws the individual strength of each partner. We're going to see more joint ventures over the next five years in the areas of health, food-related businesses and alternative proteins such as feed, as we've done Indonesia."
Mr Thiraphong said the company is still holding onto some old ways of thinking: cautious investment spending, staying lean with low costs and sturdy cash flow.
"In the five-year plan, the company has not set a lofty sales target growth as in the past, with sales estimated just at single-digit growth per year. But we aim to raise our profit growth by 50% a year over the period," he said.
Mr Thiraphong said over the next five years, in addition to being one of the world's leading food operators, the group may become the largest seafood restaurant chain operator in the world if it succeeds in turning around Red Lobster, which had sales over US$2.4 billion before the pandemic.
TU shares closed on Monday on the SET at 15.90 baht, unchanged, in trade worth 582 million baht.