Thai Union Frozen Plc (TUF) is doubling its annual capital expenditure to 6 billion baht per year over the next three years to expand its production capacity and penetrate more ASEAN markets.
A cold storage facility with a capacity of 30,000 tons will be built, with 20,000 tons operational this year and another 10,000 tons in 2014, according to President Thiraphong Chansiri. He added mergers and acquisitions will also play a part.
Thiraphong said the investment of 18 billion baht is vital for the world's largest tuna firm to achieve total revenue of $5 billion by 2015. The SET-listed company, which recently reported a 60% drop in net profit for the last quarter due to a sharp fall in tuna prices and higher costs in its shrimp business, targets revenue growth of 15-16% to $4 billion this year.
Normally TUF spends 3 billion baht annually, mainly for maintaining production efficiency. Right now, it is building a new frozen shrimp factory in Samut Sakhon to replace the one damaged by fire in February last year, with capacity doubling to 200 tons a day. The new factory is scheduled to start production in the second quarter of next year.
The company has 240 rai (3/.84 hectares) of land available near the existing site in Mahachai town for expansion. The new salmon and squid plant will be built where the shrimp factory was formerly located, with a daily capacity of 70 tons. "Our business plan emphasises investments for growth," said Thiraphong, adding mergers and acquisitions will also play a part.
TUF is expanding to Vietnam, Myanmar and Laos this year. The US is the largest market for TUF, at 36% of exports, followed by 30% to the EU, while the domestic and Japanese markets sit at 10% and 9%, respectively. Tuna generates 49% of sales, followed by shrimp (23%), value-added products (11%), pet food (7%), sardines and mackerel (6%) and salmon (4%).
Last year TUF reported revenue of $3.44 billion, up 6% in dollar terms from 2011. In baht, turnover grew 8%, surpassing 100 billion baht for the first time at 106.69 billion, while net profit dropped 8% to 4.69 billion. In the fourth quarter, net profit decreased by 60% year-on-year to 612 million baht while quarterly sales rose 1.1% to 26.3 billion baht.
