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Thai Union Frozen Products (TUF)


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Title: Thai Union Frozen Products (TUF)

Thai Union Frozen Products (TUF)
Investor Presentation
December 2010
  • The information contained in our presentation is
    intended solely for your personal reference only.
    In addition, such information contains
    projections and forward-looking statements that
    reflect our current views with respect to future
    events and financial performance. These views are
    based on assumptions subject to various risks and
    certainties. No assurance is given that future
    events will occur, that projections will be
    achieved, or that the our assumptions are
    correct. Actual results may differ materially
    from those projected.

  • Prudent Investment Policy from our Chairman
  • We will expand internationally only on seafood
    business where we have experience and expertise
  • For investment decision, no matter what
    possibility of failure is, can we survive if the
    project fails
  • Clear strategies from our President
  • We look at the business on the global scale. Our
    goal is always to diversify our risk, expand our
    investment overseas, balance our revenue from
    around the globe and try to have additional
    production facilities outside Thailand. We have a
    global strategy, not just a Thailand strategy

TUF In A Snapshot
  • The largest Asian (ex-Japan) seafood processor in
    sales value. Sales (2009) approximately US 2
  • The worlds largest tuna packer in terms of
    production volume and sales, but will also be the
    most integrated global player after acquiring MW
  • A top five shrimp processor and exporter in
  • Global workforce 30,000 (c. 4,000 from MW
  • Select key customers Walmart, Costco, Sysco,
    Mitsubishi, Darden Restaurants, US Food Service,
    IMA, Nestle, Hagoromo, Safeway, Kroger, C S
    Wholesale, Dollar General, US Government and
  • Owner of
  • MW Brands Top shelf-stable seafood manufacturer
    in Europe with market leading brands in UK,
    France, Italy, Ireland and Netherlands, namely
    John West, Petit Navire, H. Parmentier and
  • Chicken of the Sea Brand the 3rd largest canned
    tuna brand in the US
  • Empress International a leading US seafood
    importer and distributor
  • Chicken of the Sea Frozen Foods a fast-growing
    seafood distributor under the Chicken of the Sea
  • Strategic shareholders
  • - Mitsubishi (Japans largest trading house)
  • - Hagoromo (Japans largest canned tuna
  • Market Cap. US 1.65 billion
  • 956.3 m shares
  • foreign limit 45.0

30 Years Of Seafood Processing Experience
  • Business growth through organic expansion and
    acquisitions (vertical integration)
  • Never has a single quarterly loss and never miss
    a single dividend payment
  • 2006
  • Invested with a few US seafood veterans to set up
    Chicken of the Sea Frozen Foods to market frozen
    seafood under the Chicken of the Sea brand
  • 2008
  • Acquired a 51 stake of Vietnam-based seafood
    processor Yueh Chyang Canned Food which produced
    canned shellfish and tuna and Invested in a 14.99
    stake of India-based shrimp feed and shrimp
    producer Avanti Feeds
  • 2010
  • Acquired 100 of Paris-based MW Brands, an
    integrated canned seafood manufacturer in Europe.
    The firm owns well-known brands John West,
    Petit Naivre, Mareblu and H. Parmentier with
    leading market positions in UK, France, Italy,
    Ireland and Netherlands.
  • 1977
  • Group founded under Thai Union Manufacturing by
    current Chairman Kraisorn Chansiri
  • 1992
  • Strategic partnership formed with key overseas
    customers, Mitsubishi Corp and Hagoromo Foods Corp
  • 2003
  • Acquired a 100 stake in Empress International
    Ltd. to improve seafood distribution capabilities
    in the U.S.
  • 1998
  • Acquired 90 of Songkla Cannings shares through
    share swap
  • 1997
  • Group purchased 50 of Chicken of the Sea
    International (COSI)
  • 2001
  • Purchased the remaining 50 stake of Chicken of
    the Sea International

  • 1994
  • Thai Union Frozen Products PCL. listed on the
    Stock Exchange of Thailand
  • 2006
  • Acquired a 76.5 stake of Indonesian tuna packer
    PT Jui Fa International Food
  • 2007
  • Acquired a tuna fishing fleet consisting of 4
    purse-seiners and 1 scout boat to catch fish in
    the Indian Ocean
  • 2009
  • Closed down American Samoa tuna processing plant
    and moved to a new facility in Lyons, Georgia
    state of USA
  • 2005
  • Invested in a 50 stake of Chinas Century
    (Shanghai) Trading Co., Ltd. which owns the
    Century brand, the No.1 canned tuna brand in
    China by sales value
  • 1988
  • Thai Union Frozen Products PCL established

By Product
9M10 Sales Breakdown By Product Market
By Market
S. America 1
Sales US 1,581 m
9M10 Sales Own Brands vs. OEM Sales from Thai
Sales from Thai Operations Alone (OEM Domestic
Own Brand vs. Contract Manufacturing
Contract Manufacturing for Export (OEM) 49
Overseas Subs. 39 (own brands)
Domestic Sales 12 (own brands)
Sales US 873 m
Sales US 1,581 m
Integrated Supply Chain - Tuna
  • Thailand is the worlds largest exporter of
    canned tuna
  • TUF is the worlds largest tuna processor by
    volume that allows competitive raw material
    sourcing and economies of scale (efficient cost
    control and value maximization by selling
    differentiated products to geographically and
    culturally diverse markets)

Tuna Catching
Marketing Distribution to Retailers and
Processing Canning
(Third-party suppliers own fishing fleet)
Can Label Production
(Thai Union Frozen, Thai Union Manufacturing,
Songkla Canning, Samoa Packing, PT Jui Fai
International Food, Yueh Chyang Canned Food)
(Asian Pacific Can Thai Union Graphic)
Integrated Supply Chain - Shrimp
  • Thailand is the worlds largest shrimp exporting
  • TUF is a top shrimp processor and exporter in
    Thailand, especially for the US market
  • End-to-end integration allows product
    traceability, food safety and total control of
    product quality

traceability trail
(Thai Union Hatchery)
Brood Stock Breeding Hatchery
Marketing Distribution to wholesalers,
food-service outlets, and end- consumers
Processing Exporting
Feed Production Distribution
(Thai Union Frozen Thai Union Seafood)
(partner farms in Thailand)
(Thai Union Feedmill)
Volatile Tuna Prices
TUF strategy
Skipjack tuna raw material prices (WPO)
What drive the tuna raw material price?
  • Catching situation / Weather (e.g. sea surface
    temperature, global warming)
  • Price of fuel
  • Number of fishing boats (purse-seiners)
  • Market speculation
  • Seasonality
  • Packers demand
  • Fishing technologies
  • Operating own fishing vessels to enhance
    bargaining power
  • Consistent and sizeable buying
  • Cost-plus pricing
  • Global sourcing intelligence
  • Lean buffer stock and non-speculative inventory

2008 Average US 1,585 / metric ton
2009 Average US 1,141 / metric ton
Persistently High Shrimp Prices
Domestic shrimp raw material prices
What drive the shrimp raw material prices?
TUF strategy
  • Integrate the supply chain to achieve
    traceability and reliable quality control
  • Source directly from select farms which practice
    good management and food safety standards
  • Cost-plus pricing and consistent buying
  • Shrimp size
  • Domestic overseas supply situation
  • Strength of Thai Baht
  • Disease outbreaks
  • Packers demand
  • Market speculation
  • Seasonality

White Shrimp (60 pcs / kg)
2008 Average Bt 109 / Kg
2009 Average Bt 107 / Kg
Thai Baht Strength A Manageable Challenge
-About 88 of the groups revenues and 62 of the
groups costs are in US in 9M10. COSI plant
relocation and rising shrimp sales increased our
Thai baht exposure within the current cost
structure, but partly offset by higher domestic
sales -Given the cost structure of our Thailand
operations, weaker Thai baht would normally
benefit us. But active FX hedging, cost
management and price adjustments helped keep our
operating margins relatively stable even when
Thai baht strengthened in the first 9 months of
Acquisition of MW Brands Completed
  • TUF has acquired 100 of MWB for a total
    consideration of Euro 680 mm in cash from
    Trilantic Capital Partners on October 29, 2010.
  • The transaction was financed by
  • Euro 340 mm (loans to the target by European
  • Euro 180 mm (loans to TUF by Thai banks)
  • Euro 60 mm (Euro Convertible Debenture to
    Standard Chartered Private Equity)
  • Euro 100 mm (a rights issue of 44.2 mm new shares
    at a ratio of 1 new share per 20 existing shares
    and a private placement of 29 mm new shares to
    institutional investors)
  • CIMB Securities (Thailand), the Independent
    Financial Advisor, employs various valuation
    methodologies i.e. comparables and DCF and opines
    that the optimal price of the acquisition is Euro
    702.3 mm Euro 875.5 mm

MW Brands Ocean to Plate
Sustainable sourcing and procurement
Vertically Integrated Business
  • Fleet management 5 fishing vessels in dominant
    fishing ground
  • Long-term supply contracts with ships from EU

Production facilities and processes
  • Processing facilities near major fishing grounds
    in Ghana and the Seychelles and at the heart of
    distribution center in France and Portugal

Distribution and logistic networks
  • Distribution throughout Europe, the worlds
    largest ambient seafood market

Marketing and sales organization
  • Products are marketed through leading iconic

Brand Portfolio
Source Nielsen and IRI MAT February 2010
MW Brands Secured Supply and Production
Secure fish supply through long-term supply
contracts and fleet ownership
Production facilities
Long-term supply contracts
Own fishing fleet
Est Paul Paulet, France
Pioneer Food Company, Ghana
  • Long-term supply contracts with French and
    Spanish fleets in Seychelles covering over 80 of
    IOT needs
  • Provides flexibility to handle tuna migratory
  • Ensures stability of fish supply
  • 5 renewed fishing vessels owned in Ghana covering
    over 60 of PFC needs
  • Ensures low cost supply
  • Allows licensed access to prime Gulf of Guinea
    fishing grounds

Various Seafood Products (salads, seafood
Canned tune and frozen tuna loins
Indian Ocean Tuna, Seychelles
European Seafood Investment Portugal
Canned Sardines Mackerel
Canned Tuna
  • The Company owns and manages, through its
    subsidiary, five tuna fishing purse seines in
  • The combination of owned fishing vessels in Ghana
    and long-term supply agreements with ships from
    EU member countries entitles MWB to EU import
    duty exemption under the Cotonou Partnership

MW Brands Financial Highlights
MWB Sales Breakdown
By product
By country
  • In 2006 Trilantic acquired MWB through a carved
    out of various entities from the US food producer
    HJ Heinz at 8.9x EV/EBITDA
  • MWBs financial performance over the past four
    years reflects the implementation of a number of
    structural and strategic business changes that
    have focused on profitability rather than NSV
  • The negative sales volume growth is the result of
    a strategic decision to discontinue loss-making
    and low gross margin products in the private
    label and foodservice channels
  • The improved margin in 2010 was due to the strong
    brand equity especially in France.

For Fiscal Year Ended 31 March 2010
For Fiscal Year Ended 31 March 2010
Other fish 4
Export 6
Netherlands 3
Mackerel 5
Ireland 4
Sardines 8
Italy 7
Salmon 10
France 43
Tuna 63
UK 37
Value-added Tuna 10
Combined tuna products 73
Financial Summary
MW Brands Low Cost Producer
Unique strategic set-up delivers low cost
Strategic Location with High Barrier to Entry
  • MWBs production and processing facilities are
    located within easy access to two of the worlds
    best tuna fishing grounds, Seychelles (Western
    Indian Ocean) and Ghana (Atlantic Ocean). This
    enables MWB to access low cost tuna supply and
    flexibility to interchange production volumes
    between the two plants

Low Cost Producer Status with Duty Free Access to
EU Market
  • MWBs strategic locations not only provide
    optimal access to tuna but also enable MWB to
    benefit from low labor costs and zero import duty
    into EU market for ACP countries. TUF is
    currently paying 24 import duty to EU market

Sustainable Low Tax Structure
  • MWB benefits from a low corporate tax rate of 0
    in Seychelles and 4 in Ghana

Proximity to End Markets
  • Low logistic cost from production facilities to
    end markets in the UK and Continental Europe

MW Brands - Summary of IFA Valuation
  • CIMB Securities (Thailand), the Independent
    Financial Advisor, employs various valuation
    methodologies i.e. comparables and DCF and opines
    that the optimal price of the acquisition is Euro
    702.3 mm Euro 875.5 mm
  • Trilantic acquired MWB in 2006 at EV/EBITDA
    multiple of 8.9x
  • Precedent transactions of merger and acquisition
    in seafood company from 1999-2010 has an average
    EV/EBITDA multiple of 9.9x
  • DCF was calculated by using Weighted Average Cost
    of Capital (WACC) of 8.6, with sensitivity on
    terminal growth rate

Acquisition price Euro 680 mm
DCF (Post-Synergy)
DCF (Pre-Synergy)
Historical EV/EBITDA
Forward PER
Historical PER
Historical P/BV
Optimal RangeEuro 702 - 876 mm
Book Value of Total Assets
Enterprise Value (Euro mm)
Rationale For the Transaction
Accretive value to shareholders by unlocking
significant value from becoming globally
integrated seafood firm
Strengthen Market Positioning
  • Create a global seafood player of scale as well
    as a truly global tuna company
  • Access to Europe, the worlds largest ambient
    seafood market where MWB has leading positions in
    major countries, with continual cooperation from
    MWBs strong management team
  • Combined pro-forma sales of TUF and MWB of Euro
    2.1 bn (USD 2.7 bn)1 with strong presence in 3
    major continents namely USA, Europe, and Asia at
    well-balanced portion of one-third in each
    market. Currently, TUFs sales contribution in
    USA, Europe, and Asia is approximately 50, 13,
    and 14, respectively. Sales in Europe are mostly
    private label thus, no cannibalization in
    European market

Branded Products
  • Combined branded products sales of TUF and MWB
    will account for approximately 61 with owned
    portfolio of leading brands in UK, France, and
    Italy. Currently, TUFs branded products
    contributes approximately 50 of sales2
  • MWBs iconic brands i.e. Petit Navire, John West,
    Mareblu, Hyacinthe Parmentier have established
    goodwill in European market in many past decades

Seafood Integration
  • Unlock significant revenue and cost synergies
  • Optimize fleet vessel fishing grounds and
    procurement MWBs production facilities are
    located in Ghana and Seychelles, one of the major
    fish grounds. Once TUF transfers 4 vessels to
    Ghana, the fleets, totaling 9 vessels, will
    increase the capacity and efficiency of the
    overall fish catching. Average raw material cost
    will decrease due to the contribution of low fish
    cost sourcing by its own fleets in Ghana and
    long-term contract with French and Spanish fleets
    in Seychelles
  • Capitalize on the high complementarity of TUF and
    MWB production facilities
  • Share production know-how and commercial best
  • Full integration of different production
    facilities and leveraging the know-how for the
    development of value-added products i.e. fish
    meal, fish oil, and fish extract. TUF plans to
    grow NSV of MWB with sustainable EBITDA margin by
    new products development i.e. frozen seafood, pet
    food, and leverage brand value to more European
  • No import duty for Europe operations since the
    production facilities of MWB locate in ACP

Notes (1) Pro-forma combined sales for 12 months
ended 31 Dec 2009 exchange rates of THB/EUR of
41.9055 and THB/USD of 32.3950 (2) Based on the
TUFs last twelve month (LTM) figure and the
MWBs FY ended 31 Mar 2010
Global Sourcing, Global Production and Global
Truly Global and Vertically Integrated
  • After the acquisition, TUF will become a truly
    global seafood player that have processing
    facilities and market distributions in major
    continents all over the world
  • Reduced reliance on the US market sales through
    market diversification
  • Combining fleet of 9 vessels and production
    facility in 8 strategic locations
  • Production facilities are located closely to
    fishing grounds hence, achieving lower cost of

Georgia, USA
TUF Markets
TUF Production Bases
TUF Fishing Grounds
MWB Production Bases
MWB Markets
MWB Fishing Grounds
Combined TUF - MW Brands Position
  • Source Euromonitor 2009
  • Source Nielsen and IRI MAT February 2010
  • Notes
  • Based on the TUFs last twelve month (LTM) figure
    and the MWBs FY ended 31 Mar 2010
  • Source Fishstat Plus (F.A.O.) 2007
  • Converted to THB at the rate of THB 41.9055 per
    Euro 1

Acquisition Structure
Acquisition Debt Financing
Acquisition Debt Financing
  • Long-term loan from Thai Banks of THB 15,0000 mm
  • Tranche A 6-year amortizing, THB 6,000 mm
  • Tranche B 8-year amortizing, THB 9,000 mm
  • Long-term loan from European Banks of Euro 340 mm
  • Tranche 1 6-year amortizing, Euro 140 mm
  • Tranche 2 7-year bullet, Euro 200 mm

Up to THB 15,000 mm
Thai Banks
European Banks
Euro 340 mm (equal to THB 14,248 mm)
Up to THB 15,000 mm
Bid Co.
Plan to take out by CD and Equity Financing
(newly issued shares from RO/PP)
THB 29,248 mm (equal to Euro 680 mm)
TUF acquires MWB with cash, fully financed by
debt locally and internationally
Euro 680 mm4
Debt financing of Euro 680 mm
  • Well-planned LBO by mitigate TUFs risk with
    ring-fence, THB 14,248 mm (50) of acquisition
    debt at MWB level
  • Debt financing cost is approximately 6-7 to
    acquire high cashflow company with EBITDA margin
    of 18

Repayment of existing financials debts of Euro
296 mm3
Equity issue of117 million new shares
  • TUF proposes to increase its capital to 1,000
    million shares from 883 million shares by issuing
    new common shares of 117 million shares as
  • Reserved RO shares of not exceeding 44.2 million
    shares to reward the existing shareholders
  • Reserved PP shares of approximately 29.8 million
    shares to expand shareholders base i.e.
    institutional investors and/or high-net worth
  • Reserved 42.8 million shares for the conversion
    of convertible debentures1 and the adjustment of
    right of such convertible debentures to private
    placement investors2
  • The proceeds from RO and PP shares sold will
    lower debt level of TUF

The remaining to pay to Trilantic Capital
Partners (Seller) of Euro 384 mm3
Notes (1) CD of EUR 60 mm, 4 years maturity from
issue date, 5 p.a. cash coupon annually (with an
overall yield of 8 p.a. unless converted into
common shares) and exercise price of THB 46 per
share (2) TUF plans to issue convertible
debentures after filing necessary documentations
to the SEC. The proceeds of convertible
debentures will be lower debt level of TUF
Note (3) Financial debts and equity as of 31
March 2010 (Latest fiscal year) (4) Assuming the
EBITDA (net of CAPEX) to be generated by the
target at not lower than Euro 80 mm per year
(after synergies), the payback period for this
transaction should be close to 8-9 years
Pro-former Financial Highlights
LTM as of 31 March 2010
FY ended 31 March 2010
(Unit THB)
86.4 bn
18.8 bn
67.7 bn
9.8 bn
3.5 bn
6.3 bn
60.7 bn
23.4 bn
37.2 bn
41.1 bn
11.8 bn
15.1 bn
14.2 bn
Interest Expense
2.3 2.7 bn
567 mm
906 mm 1.1 bn4
852 994 mm4
Interest Coverage Ratio
3.6x 4.3x
5.7x 7.0x
3.5x 4.1x
  • Notes
  • Pro-forma analysis as of 31 March 2010 for
    illustrative purpose only exchange rate THB/EUR
    of 41.9055 based on Bank of Thailands average
    selling rate as of 23 July 2010
  • MWB acquired on debt-free, cash-free basis
  • Acquisition debt of Euro 360 mm and Euro 340 mm
    at TUF and MWB, respectively TUF portion
    includes Euro 20 mm of estimated transaction fees
    and expenses
  • Estimated, based on 6-7 interest rate for new

Illustrative Pro-forma Leverage
As of 31 March 2010 (Unit THB)
Existing Debt
11.8 bn
- 2
11.8 bn
New Debt3
29.3 bn
14.2 bn
15.1 bn
Total Debt
41.1 bn
14.2 bn
26.9 bn
(A) (B)
9.8 bn
3.5 bn
6.3 bn
(A) (B) / (C)
  • Notes
  • Pro-forma analysis as of 31 March 2010 for
    illustrative purpose only exchange rate THB/EUR
    of 41.9055 based on Bank of Thailands average
    selling rate as of 23 July 2010
  • MWB acquired on debt-free, cash-free basis
  • Acquisition debt of Euro 360 mm and Euro 340 mm
    at TUF and MWB, respectively TUF portion
    includes Euro 20 mm of estimated transaction fees
    and expenses

Risk Management
  • Foreign Exchange Risk Management
  • Cash Flow Risk (Transaction Risk) ? Balance
    Sheet Risk (Translation Risk)

Risk Management
  • Foreign Exchange Risk Management
  • Cash Flow Risk (Transaction Risk) ? Balance
    Sheet Risk (Translation Risk)
  • Interest Rate Risk Management
  • We have only exposure on increasing interest rate
    risk on money borrowed
  • Hedging products can be Cross Currency Swap,
    Interest Rate Swap, Interest Rate Options i.e.
    Cap, Collar.

Risk Management
  • Other Risks
  • Business Risks i.e. trade barriers, competition
  • CSR, sustainable development, compliance, ISO
  • MA horizontally to diversify risk and benefits
    from presences in many countries.
  • Production Risks
  • Cost plus strategy
  • Synergy and Security from high volume purchasing
  • Administrative and Management Risks
  • Clear guidance and policy
  • Annual business planning and tracking by boards.
    Internal Audit. Committee
  • Strengthening our people thru HR development
    program. Happy work life.

Investment Risk Management
  • Prudent Investment Policy from our Chairman
  • We will expand internationally only on seafood
    business where we have experience and expertise
  • For investment decision, no matter what
    possibility of failure is, can we survive if the
    project fails
  • Clear strategies from our President
  • We look at the business on the global scale. Our
    goal is always to diversify our risk, expand our
    investment overseas, balance our revenue from
    around the globe and try to have additional
    production facilities outside Thailand. We have a
    global strategy, not just a Thailand strategy

Outlook for 2011
  • Expect dollar sales to grow 30 thanks to
    consolidation of MW Brands in spite of the
    continual negative impact from strong Thai baht.
    Therefore, sales of all items should grow,
    particularly tuna
  • Average group operating profitability should
    improve given MW Brands typically higher margins
    while overall financial gearing will increase due
    to the acquisition financing of MW Brands
  • Expect positive EPS growth despite a small
    dilution effect from the right issue and private
    placement of new shares in October, 2010
  • Increase in pet food sales in the US through the
    new investment US Pet Solutions
  • Semi-annual dividend payment will continue but
    will be capped at Bt 1.2 billion per year to meet
    the debt covenant until the debt-to-EBITDA ratio
    returns to the pre-acquisition level (3-4 years
    from now)

Strategy For 2011
  • Integrate MW Brands into Thai Union Group in
    terms of corporate and financial reporting,
    procurement and production.
  • Optimize MW Brands operations through
    coordination and technical assistance from TUF
  • Transfer Thai Union fishing vessels to Ghana to
    enhance MW Brands fishing operations
  • Launch more value-added products (higher margin)
    by the Thailand-based Culinary RD Center in
    order to serve custom requirements and expand to
    new market segments
  • Actively manage financial (FX and interest rate)
    risks and scrutinize cash flows and debt covenants

4-Year (2009-2012) Sales Targetof US 3 billion
Will Almost Be Met By 2011 Thanks To MWB
AcquisitionSo, A New Target.
  • US 4,000 billion in 2015

  • 9M10 performance was considered respectable given
    the presence of negative factors, namely stronger
    Thai baht, highly volatile tuna raw material
    prices and persistently high shrimp raw material
    prices. These negative factors disrupted sales
    and exerted pressure on margins
  • Expect annual sales growth rate of 10 for 2010
    (thanks to consolidation of MW Brands since
    November) while the financial position remains
    strong in terms of net profit, EBITDA and
    operating cash flows. Despite a challenging year
    so far, we remain positive that 2010 will be a
    comparable one to the record year of 2009
  • US operations contributed positively to the
    bottom line of the group so far after the COSIs
    plant relocation and Empress COSFF
  • MW Brands (the deal was completed on October 29,
    2010) is an once-in-lifetime opportunity that is
    highly complementary to TUFs existing business
    despite the added debt burden

9M10 Sustainable Performance
Margins Sustained Despite Rising Thai Baht
Stable ROA and ROE
Note ROA EBIT / Avg. Total Assets
Gearing ratio Total Liab./ Total Equity
D/E ratio Interest-bearing debts / Total
Solid Financial Position in 9M10
  • Higher EBITDA In Spite of Slightly Lower Net
    Profit - Financial Position Stayed Strong Net
    profit (Bt2,521 m) was slightly lower than the
    same period a year ago but EBITDA (Bt4,723 m) was
    higher, thanks to higher other incomes and FX
    gains during the first 9 months this year.
    Financial position remained solid. Average
    margins were at about the same level from a year
    ago. In addition, operating and free cash flows
    were positive while D/E ratio stabilized between
    0.6x - 0.7x since the end of 2009 and
    Debt-to-EBITDA inched up slightly from 2.07 to
    2.20x (before the completion of the MW Brands
  • Debt Amount Unchanged Short Term Proportion
    Increased As of September 30, 2010 (pre-closing),
    interest-bearing debts rose temporarily to Bt
    13,859 m from Bt 12,169 m at the end of Q210,
    partly due to the interim dividend payment and a
    lower level of accounts payable. The value of
    inventories and accounts receivables were fairly
    stable from Q210. Currently, 89 of our
    interest-bearing debts (local and abroad),
    amounting to Bt10,800 m, were short term, up from
    58 at the end of Q110, essentially owing to a
    large portion of Thai baht bond issue worth
    Bt1,500 m and Bt3,200 m coming due in November
    2010 and May, 2011. By the end of Q310, around
    78 of our total debts were in Thai baht. The
    average effective interest rate for the group was
    3.66 for Q310.

Thank You Mr. Wai Yat
Paco Lee Financial Controller / Investor
Relations Officer
  • Appendices
  • Historical share price movement dividend
  • Historical profitability financial position
  • Costs Benefits of the Samoa Plant Relocation
  • US top 10 most popular seafood
  • Global seafood export breakdown
  • Major tuna fishing grounds and key tuna species
  • TUFs ACC 3-Star Certification
  • Tuna fish sustainability
  • Import tariff rates for Thai tuna and shrimp in
    major markets
  • Tuna Fast Facts
  • Potential Sources of Growth
  • Where Thailand Stands In World Seafood Industry

Appendix 1a TUF Share Price Movement (till
Appendix 2a Historical Profitability
Appendix 2b Historical Financial Position
-Lower interest-bearing debts thanks to a lower
Inventory balance (down by Bt 966 m and Bt 2,826
m from 3Q09 and a year ago respectively) -EBITDA
hit a new high at Bt 5,926 m thanks to expanded
margins. A lower inventory level further sent
operating cash flows (Bt 8,578 m) and free cash
flows (Bt 6,672 m) to record levels despite
capital expenditure worth Bt1,988 m
Gearing ratio Total Liabilities / Total Equity
Note ROA EBIT / Avg. Total Assets
D/E ratio Interest-bearing debts / Total
Appendix 3a Samoan Plant Ceased Operations
  • Background
  • American Samoa has been home to COSIs processing
    plant (Samoa Packing) since 1954
  • There were 2,041 workers employed by Samoa
    Packing to carry out the full conversion process
    (from fish to cans)
  • Mandated increasing minimum wages imposed by the
    federal government (in order to be in par with
    that of the mainland) added costs in a time of
    economic uncertainty that was indeed in an urgent
    need for cost savings
  • Increasing costs and occasional inefficiencies
    led to managements reassessment of the true
    strategic value of the Samoan plant

Appendix 3b Strategic Reasons For Relocation
  • Escalating costs in American Samoa due to
  • Increasing minimum wage
  • Occasional inefficiencies and difficulties in
    efficient inventory control
  • Need to enhance customer service by locating the
    plant onshore (near the market)
  • Further integration with Thai plants to take
    advantage of the opportunities for cost-savings
    and better inventory management given a more
    coordinated supply chain
  • Tuna loins for all oil and white meat products in
    the new facility will be supplied by TUFs Thai
    plants while other existing tuna products, such
    as chunk light in spring water, will be
    completely packed by Thai plants.

Appendix 3c Details of the New Plant
Location Lyons, Georgia Area 220,000 sq.
feet Expected number of employees 220
employees, up to 330 in the future Planned
capacity 100 loin tons per day Expected annual
output 4 million cases Products tuna-in-oil
and white meat products
Appendix 4 Top 10 US Seafood Consumption by
Species in 2009
Seafood consumption in the US was 15.80 pounds
per capita in 2009 where fresh frozen (11.8
pounds) canned (3.7 pounds) cured (0.3
pounds) Most of the seafood consumed in the U.S.
was not caught in U.S. waters. About 84 percent
of the seafood consumed in the U.S. is imported,
a dramatic increase from the 66 percent just a
decade ago. Farmed seafood, or aquaculture,
comprises almost half of the imported
seafood. The US is the third largest consumer of
seafood behind China and Japan in terms of volume
Source H.M. Johnson Associate for US National
Fisheries Institute
Appendix 5 Global Seafood Export Value in 2008
(US94.5 billion)
Source FISHDAB - Globefish
Appendix 6 Major Fishing Grounds and Key Tuna
2008 World Tuna Catches 4,228,000 metric tons
Note Species mainly for canned tuna Skipjack,
Yellowfin and Albacore Species mainly for sashimi
tuna Bluefin and Bigeye
Source FISHDAB - Globefish
Appendix 7 ACC 3-Star Certification
  • TUF is Thailands first shrimp producer to
    achieve Aquaculture Certification Council (ACC)s
    three-star certification which ensures that its
    shrimp business units operations meet a
    stringent set of social, environmental, and food
    safety standards, from hatchery, to farms, to
    processing plants three types of facility which
    are represented by the three stars
  • ACC is an independent and non-governmental US
    body to certify and promote best aquaculture
  • For a facility to be certified, it needs to
    comply with Best Aquaculture Practices (BAP)
    standards on community rights, compliance with
    all relevant regulations, worker safety and
    employee relations, effluent management,
    responsible use of chemicals and fuels, and
    responsible management of waste. Shrimp farms
    also cannot be located in mangrove or other
    ecologically sensitive areas

Appendix 8a Tuna Fish Sustainability
Currently, four Regional Fisheries Management
Organizations (RFMOs) manage global tuna
resources 1. IATTC Inter-American Tropical Tuna
Commission (1949) 2. ICCAT International
Commission for the Conservation of Atlantic Tuna
(1969) 3. IOTC Indian Ocean Tuna Commission
(1996) 4. WCPFC Western and Central Pacific
Fisheries Commission (2004) Current challenges
related to RFMOs - Building consensus amongst
members - Effectively limiting capacity or
limiting fishing - Ensuring effective compliance
with fishery regulations - Taking effective
action for violating fisheries regulations -
Improving the science and information / new
Appendix 8a Tuna Fish Sustainability
Appendix 8b TUF co-founding ISSF
  • Development of ISSF - International Seafood
    Sustainability Foundation (
  • 65 of the world tuna business have agreed to
    implement the NEW ORGANIZATION to manage this
    critical issue.
  • TOP 3 U.S.A Tuna Companies
  • TOP 3 European Tuna Companies
  • TOP 2 Asian Tuna Producers
  • Most Important Worldwide Tuna Brokers / Boat
  • Environmental Organizations
  • Recognized Tuna Scientist
  • ISSF board is composed of
  • Members representing the foundation (NGO)
  • Tuna Scientists
  • Environmental non-governmental organizations
  • Opinion Leaders

Appendix 8c ISSFs Survey of Tuna Stock
  • Green - Overfishing is not occurring and the
    fishery is not overfished.
  • Yellow - There are one or more issues with the
    fishery but effective management practices are in
    place to ensure the sustainable management of the
  • Red - Overfishing is occurring and the fishery is
    overfished. However, a management regime is in
    place that is addressing the issues.
  • Black - Overfishing is occurring and the fishery
    is overfished
  • Management actions to bring the fishery back into
    a sustainable state are not being taken and
    members will cease to purchase until appropriate
    actions are taken

Appendix 9 Import tariffs for Thai Tuna and
Shrimp Products In Developed Markets
Appendix 10 Tuna Fast Facts
  • Tuna never stop moving, they are always in motion
    and a typical tuna may eat 5 percent of its own
    weight in food in one day
  • Unlike most fish, which are cold-blooded, tuna
    are able to maintain their temperature several
    degrees warmer than the water in which they find
    themselves. Albacore is the only species that can
    be labeled as "white meat tuna" in the U.S
  • In recent years, the worlds tuna catch breaks
    down into approximately skipjack at 60
    yellowfin at 25 bigeye at 9 albacore at 4
    and bluefin at 1. Yellowfin, skipjack, and
    bigeye tunas spawn widely throughout tropical
  • The majority of US canned tuna is skipjack.
    Skipjack accounts for the largest share of tuna
    caught and eaten by people around the world
  • Main fishing methods 61 purse seine 13.9
    longline 10.9 pole and line 1.2 troll and
    12.4 others
  • Stock status by species (based on ISSF survey
    http// )
  • Skipjack stocks are overall a very healthy
    species of tuna with a majority of stocks being
    sustainably fished (mainly canning)
  • Yellow fin stocks are overall at or nearing the
    maximum level of fishing and need to be monitored
    (canning sashimi)
  • Albacore stocks are overall healthy with some
    likely being fished at or near maximum level
  • Bigeye stocks are overall at or nearing the
    maximum level of fishing and need to be monitored
    with the exception being EPO bigeye which needs
    immediate conservation measures put in place by
    IATTC (mainly for sashimi)
  • Blue fin stocks are overly exploited and require
    immediate conservation measures (mainly for

Appendix 11 Potential Sources of Growth
  • Near term
  • Economic recession forcing consumers to trade
    down to low price / highly affordable staple
    items, such as canned tuna and shrimp
  • New products through new packaging designs/
    technologies which provide consumers with
    convenience and ease of use, e.g. tuna / salmon
    pouches, ready-to-eat tuna / salmon steak
    pouches, peel-to-open tuna / salmon cups,
    ready-to-eat frozen meals, etc.
  • MA opportunities upon consolidation of the world
    tuna and shrimp industries
  • Outsourcing/ contract manufacturing for private
    labels and existing retail brands
  • Healthy eating trend of seafood upon more
    scientific proof of its importance in daily diet
  • Removal of trade barriers through GSP privileges,
    Free Trade Agreements or WTO
  • Long term
  • New markets China and Indian markets, as well as
    the Middle East, Africa and Eastern Europe, where
    consumption of tuna is still low at the moment,
    but should grow in the future
  • Higher demand for inexpensive nutritious food
    (protein) to feed the growing world population as
    a result of the increasing individual life span

Appendix 12a Where TUF stands - Nearly 40 of
Thailands Canned Tuna Exports
Source FISHDAB - Globefish
World Production of Canned Tuna 2006 (Vol
1,667,300 tons)
World Exports of Canned Tuna 2006 (Vol 1,078,000
World Imports of Canned Tuna 2006 (Vol 1,144,000
Est. World Consumption of Canned Tuna 2006 (Vol
1,733,600 tons)
World consumption is estimated by Production
Imports Exports
Appendix 12b Where TUF Stands - A Top 5 Shrimp
Exporter in Thailand
Source FISHDAB - Globefish
World Shrimp Production 2006 (Vol 6,624,400 tons)
World Shrimp Exports 2006 (Vol 2,394,200 tons)
Est. World Shrimp Cultivation 2006 (Vol
2,718,400 tons)
World Shrimp Imports 2006 (Vol 2,275,000 tons)
William B. Darden Supplier Award 2 years (2009
2010) in a row
  • In the past 15 years, TUF has won 10 awards in
    different categories, but it is definitely an
    achievement of winning this top honor back to
  • Again, only 11 out of over 1,500 global suppliers
    won the award this year and among this handful of
    winners, only two are seafood suppliers.
  • The Bill Darden Distinguished Supplier of the
    Year Award is the highest level of honor awarded
    to the suppliers of the restaurant company. It is
    also one of the most prestigious awards for
    suppliers in the US food service industry.
  • Based in Orlando, USA, Darden Restaurants is the
    worlds largest full-service restaurant company
    that owns and operates more 1,700 restaurants,
    including Red Lobster, Olive Garden, LongHorn
    Steakhouse, The Capital Grille, Bahama Breeze,
    and Seasons 52. It employs 180,000 people and
    generates US 7 billion in annual sales.

Awards and Recognitions By The Financial Community
  • Best Managed Company Awards
  • Securities Analysts Association of Thailand Poll
  • 2009 Most Favorite Company, Most Favorite
    CEO, Most Favorite CFO and Most Favorite IR in
    the Food and Agro sector
  • Boston Consulting Groups Biannual BCG100 Global
    Challengers Survey
  • 2006 2008 One of the only 2 Thai companies
    selected in the survey
  • Asiamoney Magazines Annual Best Managed
    Companies Poll
  • 2005-2006 Consecutively voted as Overall Best
    Managed Thai Mid-Cap Company
  • 1998-2006 Consecutively voted as one of Overall
    Best Managed Thai Companies
  • FinanceAsia Magazines Annual Best Managed
    Companies Poll
  • 2010 Best Managed Thai Mid-Cap, One of the
    Overall Best Managed Thai Companies, One of the
    Best Corporate Governance, One of the Best
    Investor Relations, One of the Most Committed to
    a Strong Dividend Policy
  • 2009 One of Thailands Overall Best Managed
    Companies One of the Best Mid-Cap One of the
    Best Corporate Governance One of the Most
    Committed To A Strong Dividend Policy
  • 2006 One of Thailands Best Managed
    Companies in the category of Best
  • Corporate Governance and Most
    Committed to Strong Dividend Policy
  • 2002-2004 One of Thailands Overall Best Managed

Awards and Recognitions By The Financial Community
  • Best Managed Company Awards
  • Euromoney Magazines Annual Best Asian Companies
  • 2010 One of the top 3 Best Asian
    Companies in the Food, Drink and Tobacco
  • Corporate Governance Awards
  • Securities Exchange Commission of Thailand
  • 2002-2003 Disclosure Award
  • 2003 Popular Award
  • Stock Exchange of Thailand
  • 2004 Best Performance Award Agribusiness

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