Thai Union Group Plc, one of the world's biggest makers of canned tuna, will take a one-time charge of US$530 million (18.5 billion baht) as it plans to exit the unprofitable US restaurant chain Red Lobster.
Thai Union (TU) will book the one-time impairment charge in its fourth-quarter earnings, chief executive officer Thiraphong Chansiri said. Red Lobster’s ongoing financial requirements no longer align with Thai Union's capital allocation priorities, he added.
Challenges that hit Red Lobster in recent years included the Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labour costs, Mr Thiraphong said in a filing to the Stock Exchange of Thailand late Tuesday.
That resulted in a "prolonged negative financial contribution" to Thai Union, he said.
Thiraphong Chansiri, chief executive officer of Thai Union Group. (Photo: Apichart Jinakul)
The SET-listed producer of seafood-based food products paid $575 million in 2016 for a 25% stake in Red Lobster — plus preferred stock that can convert into a further 24% shareholding — and bought another 13.7% of common equity interest in 2020. The company also owns the Chicken of the Sea and John West brands.
In the July-September period, TU's share of losses from Red Lobster operations was 395 million baht ($11 million), up from 94 million baht the previous quarter, according to a company presentation on its website. In 2022, the share was 1.21 billion baht, compared with 178 million baht the year earlier.
In the first nine months of 2023, TU reported a net profit of 2.53 billion baht, a decrease of 22% from 3.25 billion in the same period a year earlier. It will report its fourth-quarter earnings later this month or early in February.