Fish processor Thai Union Frozen Products has reported a fall in profit in the second quarter of 2005, for which it blamed higher tuna costs, despite a jump in sales.
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The firm achieved sales worth 13,222bn baht (US$328m) during the quarter, compared with 11.024bn baht in the same period last year. Net profit of 498.5m baht, compared with 527.5m last year, although the company said profit was up on the 472.1 baht achieved in the first quarter this year.
Sales revenues for the first half of the year were to 25.088bn baht, compared with 21.252bn last year, while net profit for the half was 970.5m baht, compared with 842.8m last year.
“Strong sales growth in the second quarter was made possible by improved performance at our US subsidiaries which together reported an average sales growth rate of 8%,” said Thiraphong Chansiri, president of TUF. “Sales of tuna products surged 27% while those of shrimp feed jumped 60% from the same period last year. As a consequence, the consolidated sales of the group grew 17% from last year.”
“The reason for the lower net profit this quarter was the higher tuna raw material cost, when compared with competitors in the other region, which exerted pricing pressure on the gross margin,” he said. “Anyway, thanks to continual and net profit growth, performance of the first half of the year was considered satisfactory and should stay on track to achieve our preset targets.”
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By GlobalDataThiraphong pointed out that tuna products generated as much as 60% of the group’s revenues. Demand for tuna products grows steadily as canned tuna are food staples and sold at affordable prices. Because of the global economic slowdown, people will tend to consume tuna more often, the company said. During the second quarter, sales of tuna products accounted for 57% of the overall sales as frozen shrimp for 17%, canned seafood for 7%, pet food for 6%, shrimp feed for 6%, products for the domestic market for 4%, and cephalopod for 3%.
Excluding contribution from overseas subsidiaries Chicken of the Sea and Empress, the firm’s Thai operations shipped 22% of its products to the Japanese market, 17% to the EU, 15% to the US, 9% to Asia ex-Japan, 4% to Africa, 5% to Australia, 4% to the Middle East, 3% to Canada, 1% to South America, 20% for the domestic market.
