TRIS Rating Co., Ltd. has affirmed the company rating of Thai Union Frozen Products PLC (TUF) at “A+”. At the same time, TRIS Rating has assigned the rating of “A+” to TUF’s proposed up to Bt4,000 million senior debentures. The rating outlook remains “stable”. The ratings reflect TUF’s strong market position as one of the world’s leading tuna processors, solid valuable “Chicken of the Sea” canned tuna brand, and the management team’s proven track record in the seafood export business. The ratings also take into consideration the company’s conservative business expansion policy, as well as its product and geographic diversity. These factors are partially offset by the maturity of the canned tuna industry in the US, high exposure to tuna price fluctuations, threats from manufacturers in low-cost countries, and the implementation of import trade barriers by major trading countries.
The “stable” outlook reflects TRIS Rating’s view that TUF will continue to maintain its competitive strength through economies of scale and production efficiency, expand business operations in a conservative manner, and improve its financial profile in the intermediate term.
TRIS Rating reported that TUF’s major product portfolio includes canned tuna, frozen shrimp, and other seafood products, as well as pet food and shrimp feed. Over the last 10 years, TUF has steadily built up
its market position in the global tuna industry. The company’s business profile has been enhanced after becoming the sole owner of the “Chicken of the Sea” brand in 2001. As a result, revenue in 2001 increased sharply to Bt35,324 million from Bt19,120 million in 2000. TUF’s current canned tuna production capacity
is 280,000 tonnes per annum, making it one of the top tuna processors in the world. This enables the
company to benefit from economies of scale in raw material procurement and production. In
addition, the company’s competitive position has been strengthened by its efforts to vertically integrate
through the acquisitions of packaging and distribution networks. The company also entered the
shrimp breeding and hatchery businesses, which will also enhance its ability to control and improve
shrimp quality. Although the company’s historical performance has been quite stable, various uncontrollable factors, including foreign exchange rates, climate change, and trade policies implemented by foreign government, stand as threats to its operating performance.
For the first quarter of 2007, TUF’s total sales were Bt12,802 million, down 6.7% from the same period last year, due to the appreciation of Thai baht. However, net profit rose by 27.2% to Bt528 million as a result of improved selling and administrative cost controls and lower interest expense. Cash flow protection, as measured by the ratio of funds from operations (FFO) as a percentage of total debt, was 34.9% in 2006, slightly down from 35.2% in 2005. The ratio is considered adequate, although it has been relatively volatile over the past few years as outstanding debt increased sharply after major acquisitions and declined afterward when the company utilized internal cash to repay the debt. The ratio of operating income before depreciation and amortization to sales had remained in the range of 6%-7% during the last three years. The company’s total debt to capitalization ratio as of March 2007 was 37.7%, improved from 39.3% as of year end 2006. TUF will use the proceeds from the proposed debentures for refinancing its existing borrowings and for working capital requirements, said TRIS Rating. -- End
Thai Union Frozen Products PLC (TUF)
Company Rating: Affirmed at A+
Issue Rating:
Up to Bt4,000 million senior debentures due 2011 A+
Rating Outlook: Stable
----------------------------------------------------------
Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook reflects TRIS Rating’s view that TUF will continue to maintain its competitive strength through economies of scale and production efficiency, expand business operations in a conservative manner, and improve its financial profile in the intermediate term.
TRIS Rating reported that TUF’s major product portfolio includes canned tuna, frozen shrimp, and other seafood products, as well as pet food and shrimp feed. Over the last 10 years, TUF has steadily built up
its market position in the global tuna industry. The company’s business profile has been enhanced after becoming the sole owner of the “Chicken of the Sea” brand in 2001. As a result, revenue in 2001 increased sharply to Bt35,324 million from Bt19,120 million in 2000. TUF’s current canned tuna production capacity
is 280,000 tonnes per annum, making it one of the top tuna processors in the world. This enables the
company to benefit from economies of scale in raw material procurement and production. In
addition, the company’s competitive position has been strengthened by its efforts to vertically integrate
through the acquisitions of packaging and distribution networks. The company also entered the
shrimp breeding and hatchery businesses, which will also enhance its ability to control and improve
shrimp quality. Although the company’s historical performance has been quite stable, various uncontrollable factors, including foreign exchange rates, climate change, and trade policies implemented by foreign government, stand as threats to its operating performance.
For the first quarter of 2007, TUF’s total sales were Bt12,802 million, down 6.7% from the same period last year, due to the appreciation of Thai baht. However, net profit rose by 27.2% to Bt528 million as a result of improved selling and administrative cost controls and lower interest expense. Cash flow protection, as measured by the ratio of funds from operations (FFO) as a percentage of total debt, was 34.9% in 2006, slightly down from 35.2% in 2005. The ratio is considered adequate, although it has been relatively volatile over the past few years as outstanding debt increased sharply after major acquisitions and declined afterward when the company utilized internal cash to repay the debt. The ratio of operating income before depreciation and amortization to sales had remained in the range of 6%-7% during the last three years. The company’s total debt to capitalization ratio as of March 2007 was 37.7%, improved from 39.3% as of year end 2006. TUF will use the proceeds from the proposed debentures for refinancing its existing borrowings and for working capital requirements, said TRIS Rating. -- End
Thai Union Frozen Products PLC (TUF)
Company Rating: Affirmed at A+
Issue Rating:
Up to Bt4,000 million senior debentures due 2011 A+
Rating Outlook: Stable
----------------------------------------------------------
Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.