THAI UNION FROZEN PRODUCTS PCL TUF news March - April 2012 Growth VOL.16 English Version No. 1 Contents 3 Editor’s Note 4-9 Business Highlight TUF: Record Sales and Earnings in 2011 3 Consecutive Years of Trust in TUF among Stock Analysts and Investors -11 Inside Thai Union 10 A Path to the World’s Tuna King 12-15 Guide Tips (Special) Songkran Festival 16-17 Health Corner Lower Risk of Atrial Fibrillation 18-19 Cook Tips Spiced Tuna Paste Sandwich (Tuna Prung Rod Naam Prig Paad Formula) Fried Large Mild Chili with Tuna Stuffing & Red Curry Sauce 20-22 Activities March - April 2012 Production Directors & Consultants: Thiraphong Chansiri Produced by: Corporate Communications Department (Ext. 675-678) Thai Union Frozen Products Public Company Limited. Head Office: 979/12 M Floor, SM Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Tel: (662) 298-0024, 298-0537 - 41 Fax: (662) 298-0024 Ext. 679 E-mail: [email protected] 2 Editor’s Note This is our March-April 2012 E-Newsletter, the second issue for this year. The fire incident at our shrimp production lines at Samutsakhon plant in February could be a cause for concern among many readers. Actually, our well-established in-house safety systems and site emergency plans allowed us to react quickly and effectively to keep the situation under control and, most importantly, to safeguard our employees’ welfare. There was absolutely no fatality in the incident. In order to ensure uninterrupted production activities and timely delivery to our customers, we however have relocated our workforce from the damaged shrimp production lines to Thai Union Seafood, our shrimp- processing subsidiary, in Songkhla Province. Strong operational management and keen cooperation from our people across the business provide us with reasonable confidence in our capability to overcome challenges ahead. In this issue, we start with the recent achievement of another significant milestone in our corporate history. The record-breaking Q4/2011 and whole-year operational results creditably delivered profitability above expectations. Business Highlight imparts a piece of news on strong trust placed in TUF among stock analysts and investors, as reflected in the annual SAA’s Picked Award granted to us for the third consecutive year in 2011. Inside Thai Union prints life and work philosophies of the winner of the Right Livelihood Award 2012, Mr. Kraisorn Chansiri, TUF Chairman, in a concise writing piece titled “A Path to the World’s Tuna King”. Guide Tips provides you with Songkran Festival schedules in various tourist destinations countrywide. You can discover how much fish can contribute to your good health in Health Corner. As usual, two delicious yet convenient recipes from TUF kitchen are available in Cook Tips. We share with you the following two mouth-watering and wholesome menus; “Spiced Tuna Paste Sandwich (Tuna Prung Rod Naam Prig Paad Formula)” and “Fried Large Mild Chili with Tuna Stuffing & Red Curry Sauce”. Major events in Thai Union Group during the past two months are reported in Activities. We wish all readers every happiness during the forthcoming Songkran Festival and its integrated tradition of annual family reunion. Bon Voyage! Thank you Editorial team 3 Business Highlight TUF: Record Sales and Earnings in 2011 TUF announced its annual 2011 operating performance with significant year-on-year growth in both sales and net profit. Full year net earnings soared by up to 77% from a year ago to Bt5,075 million. Sales in U.S. dollar term surpassed the three-billion-dollar target to hit USD3,232 million. The target was met a year earlier than our original timeline. This achievement is considered a big leap in TUF’s long profitable track record and also a demonstration of effective deployment of the firm’s global strategy. 4 Business Highlight Thiraphong Chansiri, president of Thai Union Frozen Products PCL. (TUF), Thailand’s leading processor and exporter of frozen and canned seafood, announced that 2011 sales in dollar term were USD3,232 million, up 43% from USD2,268 million in 2010. Sales in Thai baht term were Bt98,670 million, up 38% from Bt71,507 million in 2010. Total annual net profit increased dramatically to Bt5,075 million year-on-year, up 77% against Bt2,874 million in 2010. The figures represented annual earnings per share (EPS) of Bt5.30, or up 66% from a year ago. Tuna Salmon Cephalopod Canned & Pouched Shrimp In respect to Q4/2011 operating results, quarterly net profit soared by up to 332% year-on-year to Bt1,523 million, compared to Bt352 million a year earlier, thanks to significant quarterly sales growth. Sales in US dollar term for the quarter amounted to USD837 million, up 22% from USD687 million in Q4/2010. In Thai baht term, sales were reported at Bt26,000 million, up 26% from Bt20,649 million in Q4/2010. 5 Business Highlight Khun Thiraphong added that 2011 was another exceptional and fruitful year for TUF. TUF successfully managed to drive its 2011 Sales Breakdown by profitability. In addition, TUF could also achieve its 3-billion-dollar Product annual sales target within barely 3 years against its original 4-year target (within 2012). This initially ambitious goal was successfully reached one year before schedule, thus being considered a big leap for TUF. The management and employees across the group were truly excited about this result. Looking back to the first few months of 2011, TUF was facing a host of challenges that started during the fourth quarter of 2010 and continued into the first quarter of 2011. However, thanks to some relentless efforts, TUF managed to overcome this situation and produced a series of consecutively and strong performances subsequently in the remaining three quarters of the year, sending all business plans and initiatives well back on track. Khun Thiraphong further added that TUF’s domestic and overseas Tuna Products 48% subsidiaries delivered strong annual performances. MWB, in particular, managed to achieve on-target results in every single Frozen Shrimp 19% quarter through the entire year. Meanwhile, the business integration between TUF and MWBrands (following the acquisition in 2010) Canned Petfood 7% has been effective without interruption, therefore providing Domestic Products 6% anticipated synergies to both companies. Besides, annual sales growth was observed across all product categories during 2011. Shrimp Feed 5% Canned sardine/mackerel registered the most robust annual sales growth rate of 81%. Other product categories registering strong Frozen Salmon 5% sales growth included, among others, tuna (70%), shrimp (22%) and pet food (10%), respectively. The annual gross margin for 2011 Canned Seafood 5% also climbed to 16.6% from 13.3% in 2010. Canned Sardine and Mackerel 4% With regards to 2011 annual sales by product, tuna products retained Frozen Cephalopod 1% the largest share of 48% in TUF’s sales portfolio. Frozen shrimp came in the second at 19%, followed respectively by canned pet food (7%), products for domestic market (6%), canned seafood (5%), frozen salmon (5%), shrimp feed (5%), canned sardine/mackerel (4%) and 6 Business Highlight frozen cephalopod (1%). As for the annual sales breakdown by core markets, the US remained the No. 1 spot with a 36% share, followed respectively by the European Union (32%), Japan (10%), domestic 2011 Sales Breakdown by Thai market (10%), Africa (3%), Oceania (3%), the Middle East (2%), Export Market the rest of Asia (2%), Canada (1%) and South America (1%). TUF sets its annual sales and earnings growth targets at 20% in 2012 respectively. Core products will continue to serve as the main driver for the business. Meanwhile, penetration into new market frontiers in Europe, such as Russia, Germany and Scandinavia, is being implemented by MWB. On the other hand, TUF is gaining a foothold and expanding its product presence among its existing and potential customer bases in Africa and South America. Debt reduction will continue to be the firm’s primary focus in 2012 through prudent financial controls and management. The strong 2011 operating results have helped bring down the firm’s D/E ratio to 1.47 times at 2011 year-end from 1.61 times at 2010 year-end. TUF plans to restore its USA 36% D/E ratio to its comfort zone of 1:1 by 2013. European Union 32% Japan 10% The corporate policies and business strategies executed through the years have led to strong operational and cash management in TUF. Domestic Sales 10% The firm has managed to thrive solidly despite constant expansion of its scope of business and corporate organization. This operating Africa 3% efficiency assures continuation of strong performance and profitable growth in the years to come. At present, TUF is well position to thrive Oceania 3% further in international seafood markets with its status of a truly Middle East 2% global industry player. TUF is able to source, produce and market its products globally. In particular, the global brand advantage of its Asia 4% tuna products extends across all geographic regions. TUF now sets to grow its sales to USD4,000 million by the end of 2013. Canada 1% South America 1% 7 Business Highlight With regards to the fire incident at one of TUF’s Samut Sakhon plants on February 11, 2012, the actual cause of the fire and damage cost, as revealed by Thiraphong, are now still under investigation. The damage caused by the fire was limited to the shrimp production plant only. Other production plants in the same area are all unaffected. The Samut Sakhon shrimp plant is the Group’s one of the two main Thailand-based shrimp processing facilities for export markets. The plant can process up to 120 metric tons of whole shrimp daily.