Thai Union Forced To Cut Its 2013 Investment Budgetff
3 July 2013
Thailand
Thai Union Frozen Products Plc owners of the ‘Chicken of the Sea’ tuna brand has reported a 54 percent drop in first-quarter net profits this year, after an outbreak of shrimp disease has pushed up costs.
The negative developments in the shrimps sector has forced the worlds major canned tuna producer to cut back investments this year by 17 percent and maintain its current capacity, without aiming for new expansion on the short term.
With huge customers such as Wal-Mart Stores Inc and Costco Wholesale Corp, the company had intended to invest substantial funds into the building of new factories for shrimp and salmon, but Thai Union President Thiraphong Chansiri said the shrimp shortage had obstructed that plan.
He added that unpredictable tuna prices and insecurity in global markets has also led to the decrease in the price injection, stating: “ Our investment should not be higher than five billion baht this year. The industry is facing a shortage of raw materials. We don’t need to invest to expand capacity and the budget next year may be cut further.â€
Depleted earnings have resulted in Thai Union shares falling 19 percent this year so far, underperforming a 4.3 percent rise in the extensive Thai market.
