Data loading...

Volatile Exchange Rates Hurt Thai Union’s Profits

Volatile Exchange Rates Hurt Thai Union’s Profits
Foreign exchange hedging ate into Thai Union Frozen Products’ quarterly net profit, which declined in baht term by 64 percent on year to only Bt359 million.
Sales in US dollar in the second quarter rose by 9.7 percent to USD 935 million, but sales in baht term rose only 5 percent to Bt28 billion.
TUF President Thiraphong Chansiri said “With the challenges of skyrocketing costs, net profit of the business was generally depressed in the second quarter. The company also experienced a loss from foreign exchange hedging, caused by the high fluctuation of Thai baht exchange rate.”
In the second quarter, the baht skyrocketed to above 28 per US dollar, before falling below 30 in June.
New financial tools as well new strategies will come into play to achieve the annualized sale growth target of 10 percent.
Thiraphong noted that in spite of numerous challenges, the company in the second quarter could achieve a higher gross margin of 12.4 percent than that in the first quarter. Compared to the first quarter, the second-quarter sales rose by 13 percent in dollar term and by 15 percent in baht term.
The overall picture of company exhibited improvement in operating profit due to product reprising and prominent import and distribution circumstances of shrimp business in the US.
In the first half, the company’s sales reached USD 1.76 billion, up by 5 percent on year, while sales in baht term at Bt52.56 billion were slightly below Bt52.06 billion in the same period last year. The 6-month net profit was Bt1 billion.
In the period, tuna business generated 50 percent of the revenue, shrimp and related business (22 percent), sardine and mackerel business (7 percent), salmon business (4 percent), pet food business (7 percent), value-added products and other business (10 percent). The US is now the biggest export market, generating 38 percent of the revenue; followed by Europe (31 percent), domestic market accounts (8 percent), Japan (8 percent), and other countries (16 percent). 
“Despite the strong challenges faced by our business during the first half, we believe that the trend would turn more positive in the second half of the year, resulted from adjustments in management strategies and plans to cope with the situations with focus on our strengths and efficiency optimization. The Company would emphasize efficient use of its resources and careful investments to achieve profitability. TUF has built strong competitiveness as a seafood producer, from upstream to downstream operations and is able to benefit from diversified sourcing raw materials. After all, we believe that our growth rate in this year would reach 10 percent, or close to USD 4 billion,” Thiraphong said.
TUF’s board approved the interim dividend payment of Bt0.60 a share, payable on September 9.