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Introduction & Market Context
Thai Union Group PCL (SET:TU) presented its Q1 2025 financial results on May 9, 2025, revealing a challenging quarter marked by declining sales but improved margins amid global economic headwinds and evolving trade policies. The company’s stock closed at 10.1 THB, up 2.97% on the day of the presentation.
Thiraphong Chansiri, President and CEO of Thai Union, acknowledged the difficult business environment: "Since early 2025, businesses around the world, including Thai Union, have faced economic headwinds and evolving trade policies." Despite these challenges, the company emphasized its commitment to accelerating transformation and driving sustainable growth through its 2030 strategy.
Quarterly Performance Highlights
Thai Union reported mixed financial results for Q1 2025, with sales declining but gross profit margin improving to a record high for a first quarter.
As shown in the following comprehensive financial overview:
Sales decreased 10.3% year-over-year to THB 29,789 million, primarily due to lower Ambient sales in the Middle East and Europe, as well as softer U.S. shrimp sales. Despite this decline, gross profit margin improved to 18.8%, and adjusted net profit increased 8.9% year-over-year to THB 1,317 million, supported by share of profit from Avanti Group and the reversal of deferred tax liabilities linked to Avanti shareholding restructuring.
The following chart illustrates the company’s sales, gross profit margin, and net profit margin trends over the past several quarters:
Ludovic Garnier, Group CFO, highlighted that "despite navigating a challenging environment in Q1 2025, with lower volumes due to rising raw material prices, our gross profit margin remained strong, reaching a record high for any first quarter, due to the effectiveness of our pricing strategy and disciplined cost management."
The bridge analysis below shows the factors contributing to the change in net profit from Q1 2024 to Q1 2025:
Detailed Financial Analysis
Thai Union’s sales decline of 10.3% year-over-year was primarily driven by organic sales decline and negative FX impact due to Thai Baht appreciation against major currencies. Sales volume, however, slightly increased by 0.6% year-over-year.
The following breakdown shows sales performance by category:
Raw material prices significantly impacted the company’s performance, with tuna and shrimp prices increasing substantially year-over-year:
By business segment, Thai Union’s portfolio is increasingly shifting toward higher-margin categories:
High-margin categories, specifically PetCare and value-added products, now represent 22% of the company’s portfolio, with an ambition to increase this to 25-30% by 2030.
The performance of each business segment varied:
1. Ambient: Sales dropped 14.0% year-over-year, but GPM improved 2.8% to 19.4%.
2. Frozen: Sales declined 12.2% year-over-year, while GPM improved to 12.4%.
3. PetCare: Sales increased 5.5% year-over-year, driven by a 13.2% increase in sales volume.
4. Value-added: Sales decreased 3.1% year-over-year, but sales volume improved significantly by 13.9%.
Strategic Initiatives
Thai Union is pursuing several strategic initiatives to navigate current challenges and position for future growth:
1. Transformation Programs: The company is implementing two major transformation initiatives - PROJECT SONAR and PROJECT TAILWIND - targeting combined annual savings and operational improvements of approximately USD 125 million.
2. Share Buyback Program: Thai Union expanded its current share buyback program (Program 4), increasing the maximum repurchase value from THB 3,000 million to THB 5,000 million.
3. Sustainability Initiatives: The company secured a landmark USD 150 million Blue Loan from the Asian Development Bank to advance sustainable shrimp procurement and climate goals.
4. Investment Restructuring: Thai Union restructured its investment in Avanti Feed Limited due to regulatory changes in India, resulting in a THB 381 million one-off positive non-cash impact.
Forward-Looking Statements
Thai Union updated its 2025 guidance to reflect the potential impact of U.S. tariffs and ongoing market volatility:
The revised guidance shows reduced expectations for sales growth (from 3-4% to 1-3% year-over-year) and gross profit margin (from 18.5-19.5% to 18.0-19.0%).
The company is particularly concerned about U.S. tariffs, as the U.S. market represents 38% of Thai Union’s total sales:
To mitigate the impact of potential U.S. tariffs, Thai Union has developed comprehensive strategies across its business segments:
1. For Ambient products, the company is leveraging its global manufacturing network and has built up 4-6 months of finished goods inventory across all major U.S. categories.
2. In the Frozen segment, Thai Union believes it holds a competitive advantage over higher-tariff peers and continues to gain customer support.
3. For PetCare, the company is well-positioned with the lowest tariffs among top pet food exporters and unique access to raw materials.
Despite the challenges ahead, Thai Union remains committed to its long-term growth strategy while maintaining operational resilience. The company’s focus on high-margin categories, transformation initiatives, and sustainability efforts positions it to navigate the current economic headwinds and evolving trade policies.
Full presentation:
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