Record first quarter sales were not enough for Thai Union to overcome pandemic and supply chain strains, and the company reported a drop in net profit in its first quarter results.
Thai Union reported its net profit for the January-March period was 1.7 billion baht ($49.1 million, €46.7 million), down 3.2% from at the same time last year. The company attributed the decline to the “continued impacts of the pandemic and supply chain challenges, [financial exchange] loss and severely strained Red Lobster’s operations.
Its operating profit was the same value as its net profit – 1.7 billion THB ($49.1 million, €46.7 million) – a 10.9% year-on-year decline. the other. The company cited increased logistics costs and marketing expenses as key pain points.
Thai Union said it encountered “unprecedented levels of inflation in the first quarter of 2022, both due to key costs and ongoing logistical issues.” A hike in freight rates cost the company 710 million baht ($20.5 million, 19.5 million euros) in the first quarter, from 200 million baht ($5.8 million, 5 .5 million euros) in the same period last year.
The company’s decline in profits contrasts with its first quarter of 2021, when it made a record profit of THB36.3 billion ($1.05 billion, €997.4 million) due to the growth of most of its core segments.
One of Thai Union’s benefits in the first quarter of 2022 was its ambient seafood sales, which increased 14.3% from a year ago, supported by an increase in its tuna sales on the most major markets and higher selling prices. Thai Union’s ambient seafood category includes shelf-stable products including tuna, sardines, salmon, mackerel and herring, which are largely sold through retail channels.
Sales of its frozen and chilled seafood also increased, rising 14.2% year-on-year on strong global foodservice demand as restaurant closures and other pandemic-related restrictions were lifted, as well as because of better selling prices. Its sales of pet care products and value-added products also increased by 27.2%, thanks to a significant increase in sales of existing and new products.
The company’s losses at its subsidiary Red Lobster in the first three months increased to THB335 million ($9.7 million, €9.2 million), from losses of THB226 million (6.5 million, 6.2 million euros) in the same period last year. Last month, Red Lobster CEO Kelli Valade stepped down after just eight months in the role, a move a financial analyst covering the company described as “very, very, very bad.”
The company’s share of profit from its joint venture with Indian Avanti Frozen Foods declined year-over-year due to “weakening of its pet food and frozen food businesses due to higher commodity prices, overall inflation and remaining supply chain challenges,” Thai Union added.
In response to the many challenges it faces in the global market, Thai Union said it has revised its financial targets for this year, with sales growth raised to 7-8% from 4-5% previously. The company maintained its planned capital expenditure at THB6 billion ($173 million, €164 million) for 2022.
Photo courtesy of Thai Union Feedmill