Group to record one-time estimated THB 18.5 billion non-cash impairment charge in connection with investment exit After impairment, balance sheet remains strong with a Net Debt/Equity Ratio of 0.84 Decision aligns with broader updated strategic plan to focus on core business
BANGKOK, January 16, 2024 -- Thai Union Group PCL (the “Group”) today announced its intention to pursue an exit of its minority investment in Red Lobster.
Since 2016, Thai Union has been a strategic partner and minority investor in Red Lobster. As previously disclosed in 2023, Thai Union and Red Lobster initiated a review of Red Lobster to identify areas for operational and financial improvement.
“The combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders,” said Thiraphong Chansiri, Thai Union Group’s CEO. “After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.”
The Group recorded a share of loss of THB 0.7 billion (USD 19 million) in the first nine months of 2023 from Red Lobster. While Thai Union continues to explore available options for its exit, the Group will record a one-time estimated THB 18.5 billion (USD 530 million) non-cash impairment charge for its whole investment in Red Lobster, which will be included in the Group’s fourth quarter 2023 earnings.
In brief
Thai Union Group PCL says it intends to exit its minority investment in Red Lobster, citing the restaurant company’s ongoing financial needs and their mismatch with Thai Union’s capital priorities. Thai Union expects to record a one-time, non-cash impairment of THB 18.5 billion (USD 530 million) for the investment in its fourth-quarter 2023 earnings. It reported a THB 0.7 billion (USD 19 million) share of Red Lobster losses for the first nine months of 2023. The company says its net debt-to-equity ratio will be 0.84 after the impairment. Its board also approved a share repurchase of up to THB 3.6 billion or 200 million shares. Thai Union says its developing Corporate Strategy 2030 will emphasize Ambient Seafood, Frozen and PetCare.
Key takeaways
- Thai Union plans to pursue an exit from its minority investment in Red Lobster.
- The company expects a THB 18.5 billion non-cash impairment in fourth-quarter 2023 earnings.
- The board approved a repurchase of up to THB 3.6 billion or 200 million shares.
- Thai Union’s planned Corporate Strategy 2030 will focus on Ambient Seafood, Frozen and PetCare.
After impairment, Thai Union’s business and financial position remain strong with a low net debt/equity ratio of 0.84 To prove Thai Union’s strong financial position, the Board has approved a share repurchase for financial management purposes not exceeding THB 3.6 billion or 200 million shares. The Group continues to deliver improvements in profitability and gross profit margin across all core business categories. Thai Union is in the process of finalizing its Corporate Strategy 2030, which will focus on its core business, centered around Ambient Seafood, Frozen, and PetCare. Through this, Thai Union’s management will advance ongoing strategies that strengthen its overall profitability and deliver long-term enhanced value for the Group’s shareholders.
For more information, you can find the analyst update on the Red Lobster investment in this link.
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About Thai Union
Thai Union Group PCL is the world's seafood leader, bringing high quality, healthy, tasty and innovative seafood products to customers across the world for 46 years.
Today, Thai Union is regarded as one of the world's leading seafood producers and is one of the largest producers of shelf-stable tuna products with annual sales exceeding THB 155.6 billion (US$ 4.4 billion) and a global workforce of more than 44,000 people who are dedicated to pioneering sustainable, innovative seafood products.
The Company’s global brand portfolio includes market-leading international brands such as Chicken of the Sea, John West, Petit Navire, Parmentier, Mareblu, King Oscar, Hawesta, and Rügen Fisch, Thai-leading brands SEALECT, Fisho, Qfresh, Monori, OMG Meat, Bellotta and Marvo, and ingredient and supplement brands UniQ®BONE, UniQ®DHA and ZEAvita.
With a commitment to “Healthy Living, Healthy Oceans,” Thai Union is proud to be a member of the United Nations Global Compact, a founding participating company of the International Seafood Sustainability Foundation (ISSF), and current Chair of Seafood Business for Ocean Stewardship (SeaBOS).
Thai Union's ongoing leadership in sustainability has been taken to the next level with the announcement of SeaChange® 2030, the Company’s expanded sustainability strategy with more ambitious goals for people and planet. Through SeaChange®, the Company was recognized and listed on the Dow Jones Sustainability Indices (DJSI) for the 10th consecutive year in 2023. The Company was ranked number one on the Seafood Stewardship Index (SSI) in 2023, listed in the S&P Global Sustainability Yearbook 2023 after being ranked in the top 1% of more than 7,800 companies assessed, and also named to the FTSE4Good Emerging Index for the seventh straight year in 2022. Find out more about the Group’s sustainability strategy at seachangesustainability.org.
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Questions around this news
Why is Thai Union pursuing an exit from its Red Lobster investment?
The company said Red Lobster’s continuing financial needs no longer fit its capital allocation priorities. It cited the effects of the pandemic, difficult industry conditions, higher interest rates, and rising material and labor costs, which it said had led to prolonged negative financial contributions. Thai Union said it was exploring available options for leaving its minority investment.
What impairment charge did Thai Union announce for its Red Lobster investment?
Thai Union said it would record a one-time estimated impairment charge of THB 18.5 billion, equivalent to USD 530 million, against its entire Red Lobster investment. The company said the charge is non-cash and would be included in its fourth-quarter 2023 earnings. It also reported a share of loss of THB 0.7 billion for the first nine months of 2023.
What does a non-cash impairment charge mean?
An impairment charge reduces the recorded value of an asset when its expected value or future benefits are judged to have declined. A non-cash charge affects reported earnings and the asset’s accounting value, but it does not itself involve a payment of cash at the time it is recorded. It can reflect changed expectations about an investment’s prospects.
How does a share repurchase work?
In a share repurchase, a company buys back some of its own shares, typically in the market or through a formal offer. Repurchased shares may be retired or held by the company, depending on applicable rules and its plans. A buyback uses company funds and is one way a company can manage its capital structure or return capital to shareholders.
Earlier from Thai Union
- Thai Union Group listed on Dow Jones Sustainability Indices for 10th consecutive year, marking a decade of transformation
- Thai Union Group Commits to Ocean Breakthroughs and Transforming Food Systems Initiatives
- Thai Union secures THB11.5 billion Sustainability-Linked Loan to underpin phase two of their Blue Finance program
- Thai Union Q3 net profit rises 17.2% on quarter to THB 1.2 Bn, with strong gross profit margin at 18.4%
- Thai Union Ranked No. 1 on Seafood Stewardship Index for 3rd time for leadership in driving positive change, delivering towards UN SDGs << Back
