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Thai Union Stalls Shrimp Expansion – Continues With Takeover

Thai Union Frozen Products’ (TUF) key shrimp business faces challenges for the second half of 2013, prompting the company to slash this year’s capital expenditure and revenue forecast.

The world’s largest canned tuna producer has now downgraded its revenue projection from USD 4 billion to USD 3.8 billion. Financial performance for TUF has been disappointing throughout the first half of 2013, with net profit decreasing 58.1 percent year-on-year.

The Bangkok-listed firm is putting increased focus into obtaining the remaining 25 percent of seafood processor Pakfood, making an offer of USD 10.3 million. TUF already owns 74.64 of the ‘ready-to-eat’ processing company.

TUF, with tuna dominating half of its business, has made the decision to allocate part of its shrimp production to the Samut Sakhon factory of Packfood Plc, which is currently underused.

Deputy General Manager of TUF, Wai Yat Paco Lee said: “We have suspended the shrimp capacity expansion for now and will look at the plan again early next year. If early mortality syndrome (EMS) has eased by then, we might decide to proceed with the expansion.”

For 2013, the shrimp supply is expected to fall sharply from around 480,000 tons to 250,000 tons. The EMS epidemic is said to have caused this, resulting into a rocketing of the price of shrimp materials.

Mr. Lee added: “Since the third quarter of 2012, the shrimp business has been tough due to an inadequate supply of raw materials. This year, the situation has remained challenging because the disease is yet to be tackled and we expect EMS will remain with us until next year.”

TUF has now offered USD 1.60 per share of the remaining 25.36 percent of Pakfoods. The tender period for the decision runs until October, 31.