TUF plans worldwide growth push

TUF plans worldwide growth push

Eyeing opportunities in South America

SET-listed Thai Union Frozen Products Plc (TUF), the world's largest canned tuna company, is studying the South American market as part of a strategy to have global reach.

Mr Thiraphong says TUF is pursuing strategies to become a truly global company.

President and chief executive Thiraphong Chansiri said the company has considered expanding in South America, where purchasing power is higher than in Asean.

"As of now, consumption is growing there, spurred by economic growth in the region," he told reporters yesterday. "We are looking for further opportunity to widen our business there, probably by teaming up with business partners in the near future."

South America accounts for just 1% of TUF's overall revenue, with 42% coming from the US, 30% from Europe, 7% each from Japan and Thailand and 4% from other markets.

Mr Thiraphong said the price of tuna has dropped to US$1,200-$1,300 (38,874-42,113 baht) a tonne from $1,950 in 2013.

But the situation will most likely improve in the second half on developments in the US, Europe and Japan.

The US and European economies have shown improvement, and TUF expects healthier sales and margins in those markets.

Tuna contributed 47% of TUF's sales last year, followed by shrimp and related business (25%), pet food (7%), sardines and mackerel (6%), salmon (4%) and other products (11%).

In 2013, TUF endured challenges in seafood exports, mainly fluctuations in tuna prices and an epidemic of the shrimp disease called early mortality syndrome (EMS).

In the past, Thailand produced 500,000-600,000 tonnes a year of shrimp; but the EMS scourge cut shrimp production to 250,000 tonnes last year.

This year, total shrimp supply is forecast at nearly 300,000 tonnes.

"The EMS spread is likely to ease in the second half of 2014," Mr Thiraphong said.

This year, TUF expects group revenue of $4 billion, up 9% from 2013, with a gross margin of 14%.

In 2013, sales surged by 6% both in baht and dollar terms to 112.8 billion baht and $3.67 billion.

By focusing on cost control, TUF hopes to maintain sales and administrative expenses at 9% of revenue.

Turnover is projected to hit $5 billion in 2015 and reach $8 billion by 2020.

To drive growth, Mr Thiraphong said TUF is always on the lookout for potential mergers and acquisitions. Nothing is concrete at this stage.

In addition, organic business growth is driven by product innovation and market expansion.

The company has outlined a strategic direction for 2014 that will transform TUF into a truly worldwide company with a global structure.

The five strategies are global talent management, innovation, sustainability, strategic sourcing and operational excellence.

Each year, TUF will invest 150 million baht in research and development. A three-year plan has been laid out to make tuna a global product.

The world's biggest maker of shelf-stable tuna products employs a global workforce of more than 32,000.

TUF's portfolio includes leading Thai brands such as Sealect, Fisho and Bellotta, as well as the highly recognised international brands Chicken of the Sea, John West, Petit Navire, Parmentier, Mareblu and Century.

Shares of TUF closed yesterday on the Stock Exchange of Thailand at 68.75 baht, up 25 satang, in trade worth 66.37 million baht.

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