Tuna shipper defies pandemic to boost sales as demand soars

Thai Union Group Pcl, one of the world’s biggest canned tuna makers, expects to return to sales growth as the coronavirus pandemic drives demand for its food products from the U.S. to Europe.

Revenue will continue to increase next year, said Thai Union’s Chief Executive Officer Thiraphong Chansiri, predicting a 5% growth even if lockdowns continue or vaccines become available.

Increased demand for canned food and frozen seafood with more people staying home during the pandemic is helping Thai Union offset a plunge in demand from hotels and restaurants, he said. Revenue grew 5.9% in the first nine months of this year, with net income surging almost 74%, he said.

“We tend to perform especially well during a crisis,” Thiraphong said in an interview on Tuesday. Cost cuts and shuttering non-performing businesses during the past two years are also contributing to Thai Union’s better performance, he said.

Thiraphong’s forecast of 5% sales growth next year would top a consensus estimate of a 2.1% increase, according to data compiled Bloomberg that predicts sales will increase 4.6% this year.

Stock rally

Thai Union shares have rebounded 29% from this year’s mid-June trough, outperforming a 6.6% gain in the SET Food and Beverage Index in the period, and setting them on course for the first annual gain in four years.

The stock may continue to rally as Thai Union stands to benefit from demand in the U.S. and Europe for shelf-stable products amid renewed lockdown restrictions to contain the virus, according to Pakorn Khaoeian, an analyst at RHB Securities (Thailand) Pcl, who rates the shares as buy.

Other highlights from Thiraphong’s interview include:

• Thai Union expects people to travel less and eat at home more even after the pandemic, which could benefit its canned and frozen seafood products
• Plans to focus on expanding new businesses, such as alternative protein
• Capital spending in 2021 seen at 4.3 billion baht ($142 million), up from about 3.7 billion baht this year
• New projects next year will include $25 million protein hydrolysate and $33 million packaged meal production facilities in Thailand, and a $10 million cold storage unit in Ghana