Thai Union Frozen Products PCL (H.TUF), the world's second-largest tuna-canning company, said it will report strong earnings in the fourth quarter and expects growth to continue this new year.
Thai Union Frozen President Thiraphong Chansiri told Dow Jones Newswires he is confident the strong fourth-quarter results will enable the company to report a performance for the full year of 2002 in line with or above earlier expectations.
Thiraphong also expects the company's strong performance to continue in 2003, with growing exports to the U.S. and Japan to be unaffected by any conflict in Iraq. †We expect both our revenue and earnings to grow by at least 10% in 2003," Thiraphong said.
The company's confidence was boosted by the recent signing of a two-year contract between discount retail giant Costco Wholesale Corp. (COST), and Thai Union Frozen's U.S.-based unit, Chicken of the Sea, to supply all of Costco's canned tuna requirements for 2003 and 2004.
"This is an important contract because Costco is a major U.S. retailer," Thiraphong said. He refused to disclose the amount of the contract or the percentage of orders that will be filled by Thai production units.
The U.S. market represents about 30% of Thai Union Frozen's sales. Chicken of the Sea had an 18.6% share of the U.S. market in 2001.
Early in the fourth quarter, Thiraphong said he expected the company's net profit for 2002 to exceed the profit posted in 2001. Thai Union Frozen recorded a net profit of 1.51 billion baht ($1=THB42.872) in 2001 and THB1.04 billion in the nine months to September 2002.
A consensus forecast published by Multex projects the company's 2002 net profit at THB1.58 billion. Last year's results are due to be announced by the end of February this year.
UBS Warburg analyst Youssef Abboud estimated the Costco deal will contribute some $30 million to Chicken of the Sea's sales revenue, bringing total sales to a management target of about $345 million in 2003.
On the cost side, Thiraphong said he expected tuna prices to remain stable around $700 a ton.
Source : Dow Jones