SET-listed Thai Union Plc (TU), the world's biggest exporter of canned and frozen tuna, reported a considerable dip in both third-quarter and nine-month net profits because of asset impairment charges and weak first-quarter results.
Consolidated net profit in the first nine months was registered at 2.19 billion baht, down from 4.6 billion logged in last year's corresponding period.
"This year's nine-month normalised net profit was 3.97 billion baht, down 13.3% year-on-year, mostly because of the challenging operating environment during the first quarter," said the company in its management, discussion and analysis for the third quarter.
"Nine-month net profit margin was 4.1%, compared with 4.6% in [last year's corresponding period]. Including the one-time accrual for US litigation and asset impairment charges, nine-month net profit would be 2.19 billion baht."
Despite recording the highest quarterly profit since 2015 at 1.73 billion baht in the third quarter, a one-off asset impairment related to the possible sale or closure of TU's Scottish salmon processing business, which was worth 420 million, caused net profit to reduce to 1.3 billion, a decline from 1.7 billion logged in last year's third quarter.
Gross profit, meanwhile, improved significantly to 5.4 billion baht from 4.96 billion logged in last year's third quarter, marking the best gross profit performance since 2016.
The improvement was mainly thanks to more stable raw material prices and product price recovery, according to TU.
Inventories of higher-priced raw materials, particularly in the shrimp business, along with the baht appreciation, contributed to ongoing market volatility in the seafood business, according to the company's statement.
Third-quarter sales declined by 1.9% year-on-year to 34.2 billion baht from 34.9 billion, attributed to the baht appreciation against the greenback and ebbing prices for tuna and shrimp.
TU's ambient seafood sales logged 16.8 billion baht in the third quarter, up 0.4% year-on-year.
Sales contribution from the frozen and chilled seafood business fell 8.1% to 13 billion, while Petcare and value-added product sales fell 5.4% year-on-year to 4.3 billion.
"Tougher market competition in North America, together with the US dollar depreciation, saw sales of frozen and chilled seafood decline in value, while volume also declined by 3.5%," said the statement.
TU shares closed yesterday on the Stock Exchange of Thailand at 17.50 baht, an increase of 70 satang, in trade worth 692 million baht.