Thai Union has announced the liquidation of its subsidiary in China due to insufficient profit margins, as revealed in a statement released on May 30 by the Samut Sakhon, Thailand-based seafood conglomerate.
Company Announcement
In a statement posted on the Stock Exchange of Thailand, Thai Union disclosed its plans for an early termination and liquidation of Thai Union China Company Limited (TUC), a wholly owned subsidiary. The decision, approved in the executive committee meeting on May 10, 2024, is part of the company’s strategy to divest from low-profit businesses and redirect resources toward more promising growth opportunities.
Thai Union President and CEO Thiraphong Chansiri stated, “The executive committee meeting approved the dissolution of TUC to scale down our low-profitability businesses and reinvest in other growth opportunities. The registration of dissolution is expected to be completed by June 2025.”
Financial Performance of TUC
Thai Union China Company Limited has a capital value of CNY 166.7 million (USD 23 million, EUR 21.2 million). In 2023, TUC reported sales of THB 400 million (USD 10.9 million, EUR 10 million), a growth from THB 300 million (USD 8.2 million, EUR 7.5 million) in 2022 but a decline from THB 800 million (USD 21.7 million, EUR 20 million) in 2021, according to Thai Union’s annual report.
History of Thai Union in China
Thai Union initially entered the Chinese market with its own-brand products in 2017, following the termination of a joint venture with the Philippines-based Century Pacific, which supplied the Chinese market with canned seafood. The company expanded its presence in China through a partnership with e-commerce platform Tmall to sell Chicken of the Sea products online. In 2019, Thai Union furthered its footprint by collaborating with Alibaba Group’s Shanghai Win-Chain in a seafood supply agreement.
At the time, Chansiri emphasized the strategic importance of the Asian market, particularly China, for the company’s growth. “Asia, especially China, is very important to our future growth, with the seafood market expanding steadily. Thai Union is very pleased to join hands with Win-Chain to provide our highest-quality seafood to Chinese consumers,” he said.
Recent Financial Performance
Despite the liquidation of TUC, Thai Union has experienced a robust first quarter in 2024, reporting higher profits and sales. However, the company faced financial setbacks due to its decision to sell its stake in the Red Lobster restaurant chain at a considerable loss.
Currently, Thai Union is engaged in a share-repurchase program initiated in January 2024, under which it aims to buy back 200 million shares by June 30, 2024. As of May 31, the company has repurchased 131.4 million shares for THB 1.9 billion (USD 51.6 million, EUR 47.6 million).
Strategic Focus Moving Forward
The dissolution of TUC represents Thai Union’s strategy to optimize its business portfolio by shedding underperforming assets and focusing on areas with higher growth potential. By reallocating resources from low-margin operations in China, the company aims to strengthen its market position and enhance profitability in more lucrative sectors.
Conclusion
Thai Union’s decision to dissolve its Chinese subsidiary highlights the company’s commitment to strategic realignment and growth. As the seafood market in Asia continues to expand, Thai Union’s focus on high-quality, high-margin products positions it well for future success. The liquidation of TUC, coupled with ongoing investments in growth opportunities, reflects a proactive approach to navigating the competitive landscape of the global seafood industry.
Read: Thai Union Counters Red Lobster’s Mismanagement Claims
