Thai Union ramps up investment budget

The company also plans to outlay an annual average of Bt300 million on research and development from 2018-20. 
The spending plans are part of a drive to boost revenue to US$8 billion in 2020, the company’s chief executive officer Thiraphong Chansiri said at an exhibition yesterday to the celebrate the company’s 40th anniversary.
“Our investment budget will average Bt4 billion a year for capital expenditure on the maintenance of our production plants, and this is separate from the budget form mergers and acquisitions business,” Thiraphong said.
He said the company stood ready to add funds to its investment budget if opportunities presented themselves for mergers and acquisitions, with the amount depending on the size of the prospective business deal.
“We cannot say at this time what will happen regarding merger and acquisition deals in the future. However, we have enough funds available for investment if a deal opportunity arises,” he said, suggesting a deal of up to US$1 billion could be considered.
However, the company aims to restrict its debt-to-equity ratio to no higher than 1:1 when increasing its investment, including on mergers and acquisitions. The debt-to-equity ratio now stands at 1.3:1.
“We plan to reduce our debt-to-equity ratio to 1:1 in 2018,” Thiraphong said.
Meanwhile, the company will concentrate on how to achieve higher gross margins on its existing business, rather than a narrow focus on revenue.
This year the company faced a financial impact from rising production costs and currency fluctuations. The impact on gross margin this year will be lower than 14 per cent.
The company has flagged revenue growth of below 2 per cent this year, from last year, amid pressures in the global economy.
 “We hope to boost our gross margin to 17 per cent next year and 20 per cent in 2020,” Thiraphong said. “Accordingly, we have to revise our business strategy to focus on our on-hand business rather than take over other businesses, after we followed an investment plan with a number of deals between 2015 and 2017.”
For the first nine month of this year, Thai Union Group announced revenue of Bt104.34 billion and net profit of Bt4.61 billion.
In line with the business strategy to concentrate on its current business, Thai Union Group is focussing on its research and development unit, Global Innovation Incubator, which received Bt900 million in investment from 2015-17. The Bt300 million a year investment budget for research and development will be focused on the centre, which was set up in 2015.
Thiraphong said that the research and development would focus on six categories: tuna, shrimp, salmon, sardines and mackerel, premium pet food, |and ready to eat products. They would generate sustainable income for the company in long term, he said. 
The proposed innovative products include tuna oil, which will be launched in 2018, based on work at its production plant in Germany. The company will also produce tuna slices and tuna sausages. It will also study how to produce products from shrimp and also develop the premium pet food line as the next step, Thiraphong said.
In line with the business strategy, Thiraphong said that up to US$800 million of its projected total revenue of US$8 billion in 2020 will come from innovative products. 
Currently, up to 90 per cent of its total revenue from exports and overseas businesses, with the rest from the domestic market. 
Thai Union Group operates plants in France, the US, Thailand, Vietnam and India.
The company’s global brand portfolio includes Chicken of The Sea, John West, Petit Navire, Parmentier, Mareblu, King Oscar, and Rugen Fish, and Thai brands such as Sealect, Fisho, Bellotta, and Marvo.
The company took up a major stake in Red Lobster Seafood of the US last year.