Thai Union’s earnings are expected to increase by 16% in 2013 to reach USD 222.6 million, despite encountering supply problems last year, according to analysts.
Chicken of the Sea, the company’s brand in the US, is expected to help drive the growth, after it faced tough price competition in 2012 and saw its market share improve from 16% to 18%.
Thai Union is also expected to slightly increase its canned tuna prices in the US – though they will remain lower than market leader StarKist’s – and this strategy is expected to help the company’s revenues, according to analysts.
The company’s turnover from January to September in 2012 was lower than forecasted and the securities company, Maybank Kim Eng, has cut Thai Union’s financial year 2012-2013 earnings projection by 4%. However, its profit is still expected to rise by 15% to USD 191.5 million.
According to the securities firm, many factors were a challenge for the canned tuna giant last year, including: the fierce price competition in the US canned tuna market, the higher minimum wage, the increasing strength of the baht, the sharp rise in shrimp prices and a fire in one of its major shrimp processing factories.
Despite plans to expand through mergers and acquisitions, Thai Union did not make any major moves in 2012. With possibilities for growth in its main markets, the US and Europe, the company also has opportunities closer to home, in ASEAN member countries, with its domestic canned seafood Select brand. But, the company still intends to reach USD 5 billion in sales by 2015 without any new acquisition.
Despite EU concerns about the food safety of Thai tuna products, Thai Union’s canned tuna exports remained stable to Europe, representing 4% of total revenues and 9% of total tuna sales.
One analyst, however, expects a weak fourth quarter and a slow start to 2013 for the company. The analyst said customers are waiting for skipjack tuna prices – which peaked near USD 2,300 per ton in September last year and started to fall in October – to drop even further before placing their orders.