Thai Union Group Public Company (TU) Q4 2023 earnings summary

Executive summary

• 4Q23 sales rose 4.8% QoQ to THB 35.5bn, the highest quarter of 2023, as Frozen and PetCare recovered; FY23 sales fell 12.5% to THB 136.2bn.

• FY23 results included a THB 18.4bn one-time, non-cash Red Lobster impairment; the investment exit is underway and contributions are expected to cease from 1Q24.

• Strategy 2030 prioritizes stronger profitability through business rationalization, cost efficiency, product innovation and investment in growth businesses.

Financial highlights

• FY23 sales THB 136,153mn, down 12.5% YoY; gross profit THB 23,225mn, down 14.6%, with 17.1% gross margin.

• FY23 operating profit was THB 6,853mn, down 13.0%; EBITDA was THB 11,106mn, down 13.8%.

• FY23 net income was THB 4,499mn excluding the impairment and IFRS 5 reclassification, down 37.0% YoY; reported net loss was THB 13,933mn.

• 4Q23 sales were THB 35,529mn, up 4.8% QoQ and down 10.3% YoY; gross profit was THB 6,327mn, with 17.8% gross margin.

• 4Q23 operating profit was THB 2,122mn, down 8.1% YoY; normalized net profit was THB 1,243mn, up 0.4% YoY and 3.1% QoQ.

Outlook and guidance

• FY24 sales target: 3–4% YoY growth; gross margin ~17.0–18.0% and SG&A to sales ~11.0–12.0%.

• FY24 guidance includes an effective interest rate increase of 0–0.5%, CAPEX of ~THB 4.0–4.5bn and a dividend payout ratio of at least 50%.

• Softer YoY profitability is expected in 1Q24; PetCare management anticipated a return to YoY sales growth in 1Q24.

• Guidance assumes THB 33.50/USD; a THB 1/USD FX move has an estimated 0.7–0.8% topline translation sensitivity.