By Achara Pongvutitham
Half way to realising its 2012 “business vision”, Thai Union Frozen Products (TUF) will soon achieve its target of having foreign-exchange earnings account for 50 per cent of the company’s total revenue.
The company’s plan is to achieve total sales of US$3 billion (Bt99 billion) by 2012, with export income accounting for more than 50 per cent of revenue. The company’s export income accounted for 45 per cent of its total sales worth US$1.49 billion during the first nine months this year.
Started in 2008, the five-year plan foresees big opportunities in the domestic market, with the company’s investments abroad playing an important role in generating revenue.
TUF president Thiraphong Chansiri said the company has set a clear business strategy for its overseas investments. Its investment in the US will serve as a business model for expansion in the West. The business in the US now involves not only tuna manufacturing under the brand Chicken of the Sea – the third largest tuna brand in the US – but also frozen seafood-products distribution.
The investments in the US include Tri-Union Seafoods, Empress International and Tri-Union Frozen Food, now TUF’s biggest business overseas. Total revenues from these companies has reached a combined $800 million, accounting for 40 per cent of TUF’s sales.
“The investment in the US is our most important business,” said Thiraphong.
It is expected that total revenues from the US will achieve $1 billion in the next few years.
This year, TUF launched a big push in the US, particularly its establishment of a new tuna-manufacturing plant in Georgia. The plant is operated by Tri-Union Seafoods, a wholly owned TUF subsidiary and the manufacturer of Chicken of the Sea. The new plant has a daily processing capacity of 100 tons of raw materials or approximately 4 million cases of canned tuna per year.
This new Georgia plant allowed the company to relocate its production from American Samoa. The existing plant in American Samoa will be utilised as a cold-storage facility for raw materials. That is expected to help save costs and enhance the group’s competitiveness.
TUF has merged the management of Tri-Union Frozen Food and Empress International as part of its plan to achieve cost savings and facilitate operations.
TUF’s investments in Asia include facilities in India, Indonesia, Vietnam and China, which is its second-biggest business site after the US.
Thiraphong pointed out that the businesses in Asia serve not only the domestic markets in each country but also export bases.
For instance, TUF is a major shareholder in PT Juifa International Food, which is a leading canned tuna manufacturer and exporter in Indonesia. In addition, the investment in Yueh Chyang Canned Food in Vietnam is focused on exporting canned seafood products.
In India, TUF invested Bt40 million to hold a 14.99-per-cent stake in Avanti Feeds Ltd, which is the second biggest shrimp feed meal maker in the country. The firm’s business expansion in Shanghai has focused on distribution channels by setting up Century Trading (Shanghai) Co. The investment there was made through subsidiary Thai Union Manufacturing Co Ltd.
Recent investment has focused on the Philippines, with joint ventures formed with two local partners, Century Canning Corporation and Frabelle Fishing Corporation. The joint venture Moresby International Holdings will be the parent’s business arm for entering Papua New Guinea.
Moresby International Holdings has set up Majestic Seafood Corporation in the country to catch tuna in local waters and nearby areas. In addition, it also set up a canned tuna manufacturing plant with registered capital of $1.5 million, with the partners taking equal shareholdings.
However, Thailand is TUF’s biggest production base, particularly for tuna products, reaching a total of 440,000 tonnes.
The company has also set up TN Fine Chemicals, a joint venture between Thai Union Manufacturing, a subsidiary of TUF, and its Japanese partner Nippon Suisan Kaisha Ltd. The joint venture is to produce and export seafood by-products, such as oil extracts from tuna fish, and cytosine from shrimp shells. The production plant has been established in Samut Sakhon.
“TUF emphasises 360-degree growth through new products, new markets and new businesses, but everything depends on marketing circumstances, which are out of our control,” Thiraphong said.
He added that seafood products are affected by oil prices, for which the outlook is good next year, unlike the outlook affecting other farm crops. As a result, it will be a good year for the frozen seafood products business in 2010, he said.
However, the exchange rate is a problem, particularly for the Vietnamese dong. Its devaluation by 5 per cent has strengthened that country’s competitiveness.
Thiraphong said Thai exporters should revise their plans to maintain competitiveness through their strengths in terms of manufacturing scale and quality.
Source: The Nation Business
