TUF to hold off on major acquisitions for two years after latest deal, CEO says

 

TUF, the world’s largest canned-tuna company, is waiting for approval from US antitrust authorities to proceed with the purchase of its US competitor, which would add $1 billion (Bt33 billion) to its annual revenue and allow it to control nearly 40 per cent of the United States’ shelf-stable tuna market. 

Thiraphong said that after its capital increase planned for completion in August, TUF was expected to have a net debt-to-equity ratio close to 0.5:1, while the debt-leverage ratio would go up to nearly 1:1 after the acquisition of Bumble Bee, expected to be finalised by September or October.

“Our financial position is at the strongest level ever. Nevertheless, we will wait to ‘digest’ [the new acquisition] before making a new move. 

“We have maintained our prudent financial management. As you see, the last time we made a major acquisition was in 2010 when we bought MW Brands,” he said.

TUF’s key focuses this year will be organic growth, integrating and synergising its global operations, and completing the acquisition of Bumble Bee, its largest deal ever.

“I’m still confident that we’re on track to achieve our target of doubling our revenues to $8 billion by 2020,” he said.

As for this year, TUF expects its second-quarter results to be in line with its targets. Last week, the company reported that in the first three months, net profits increased by 58.7 per cent to Bt1.5 billion. 

Thiraphong said TUF’s total sales grew by just 2.4 per cent in the first quarter, mainly because of all-time-low prices for raw tuna, which would eventually move up, and not because of a slowdown in its business activities.

Thiraphong expected tuna-fish prices to stay low for the rest of this year, while the weakening of the euro and yen might affect the purchasing power of consumers in the countries using those currencies, which are among TUF’s major markets.

The ending of the Generalised System of Preferences for Thailand has caused a loss of market share for Thai frozen seafood in Europe. The “yellow card” warning issued recently by the European Union and the country’s low ranking in the United States “Trafficking in Persons” report, meanwhile, have tarnished the image of Thai seafood products overall, he said.

People, innovations, and sustainability are the three key strategic priorities of TUF. Thiraphong said TUF, which recently set up a global innovation centre in Bangkok, would like to see innovative products contribute more than 10 per cent of total group sales by 2020. He maintained TUF’s gross margin target at 15-16 per cent for this year, although it managed only a 13.8-per-cent gross margin in the first quarter.