Thai Union Group Public Company Limited (TU) Earnings Call Transcript & Summary

Good day, management, fund managers, analysts, bankers and everyone else online. I would like to welcome you to Thai Union Earnings Conference Call for the Fourth Quarter 2020 Results Release on Zoom Meeting and Facebook Live. Executives joining us today are Mr. Ludovic Garnier, Group CFO.

Hi. Good evening, everyone. Good morning for the others.

And Ms. Narisa Phahulrat, or Khun Amie, Group Accounting and Controlling.

Hello, everybody. Good evening, Thailand. Good afternoon, Europe; and good morning, U.S.A .

The session will be approximately 1 hour, comprised of a presentation, followed by a Q&A session, and it will be conducted in English. [Operator Instructions] Now please allow me to pass the stage to Ludovic Garnier to begin the presentation. Thank you.

Thanks a lot, Lina. I'm very pleased to be with you tonight. As you know, 2020 was a very unique year, not only for us, but I think for the whole world with the COVID-19 pandemic. Looking back at 2020, it started first in Asia and in China. And then it moved to the U.S. and also to Europe. And then it was a first wave and then a second wave. So it was a very unique year for all of us. So my first thought are really for the people who lost some friends or some family members, of the people who are sick -- still stick on this one. I want to add also specific thank you to our employees and our people. 2020 has been a really challenging and tough year for all of them because of the COVID-19. And I have a specific thanks to the people in the U.S. or in the U.K. who have been working from home since almost 1 year already. So you can imagine, it's very difficult to work in such a condition. On a more personal note, I would like to say also hello to Joerg Ayrle, the previous group CFO. You know that most of us -- most of you, you knew him for sure. And I'm sure he's watching the video. So hi, Joerg, and looking forward to see with you, okay? Now we will move directly to the presentation. We have some good news for you. You will see our numbers are very healthy for Q4 2020 and for the whole year. So just jumping directly. Here, we comment the Q4 2020 numbers. Overall, you will see we had a strong growth of our net profit by 38%. The 2 key drivers for such a growth are the Ambient and Pet Care and others business. On the sales, we achieved THB 33.5 billion, reported growth is 1.9%, mostly coming from the volume increase by 0.8%. And again, here, we will see the Ambient -- we deep dive after in the details, but the Ambient business is growing a lot, close to 9% in Q4 2020. We followed the same trend compared to what we could see before in Q3 and in Q2. The PetCare and other business is also growing by 8% in Q4 2020. This is one of the great achievements we have over the quarter. We have one downsize, which is on the frozen business, which is declining by 6% compared to '19, okay? So if you exclude the FX, in fact, our sales actually declining a bit by 0.9%, and we will elaborate on that. Gross profit, this is one of very strong success of this quarter. We are again at 18% in Q4 2020. This is the third quarter in a row that we are around 18% -- we are achieving 18%. If you remember, 3 years back, it was one of our key challenge. And now see, over the last 3 quarters, we over-delivered compared to 18%. And again, here, the key drivers are the Ambient, the PetCare, the mixed segment and the frozen business is also recovering in Q4 2020, okay? So in terms of top line, we still have some challenges for the frozen business, but in terms of gross profit margin, it is strongly recovering in Q4. As a result, OP is quite strong, THB 1.9 billion. This is pretty unusual for us. Normally, in Q4, we don't have such a high OP. But here, thanks to very healthy gross profit margin and the strong top line also, we had a good OP, okay? You will see that we have some increase in our SG&A, increasing from 11.4% to 12.2% and Amie will elaborate on that. But very strong OP, very strong net profit also, THB 1.457 billion, increasing by 38% compared to last year, okay? Again, coming from very strong OP. And below OP, we had also some good news on the other income, on reduction of the finance costs and also on the other lines. Moving to the full year numbers. Okay. Here, we are increasing everywhere, so it's quite nice to present. You can see the sales overall are increasing by 5%. We had THB 132 billion for the whole year. The gross profit is increasing by 16%, OP by 39%. 39% OP recovery compared to last year. This is really great performance. EBITDA, we are just below THB 13 billion. This is all-time high for Thai Union. Net profit reported numbers are increasing by 64% at THB 6.2 billion. I think this is the first time we have achieved THB 6 billion in terms of net profit. If now you exclude the impact of the antitrust last year, we are still recovering by 20%. So still really recovering compared to last year. We will elaborate also on our net debt situation, and you will see we have managed to improve and deleverage our debt in 2020, moving down from 1.07 net debt-to-equity ratio to 0.94. So you can see here why we are very happy and pleased with such a performance. I think this shows very well the trust of our consumers in our products and also the ability -- manage to deliver our performance in 2020. I really love this chart here. So this is a long-term story since Q1 2017. And if you get back to this time, '17 and '18, look at the gross profit margin. During that time, these years, we were around 14%, 15% gross profit margin. And we told you guys, we have a very specific plan to improve and to turn around the performance. And you can see in 2019, we are already improving, and we were around 16% gross profit margin. But you can see now in 2020, a clear step change on the gross profit margin. And the performance over the last 3 quarters, very stable, around 18%. And 18% in Q4 for us is really important, okay? Top line also was a challenge in 2019. We were decreasing. Again, there was some FX impact. But 2020, we have been growing every quarter if you remember, Q1 2020 increasing by 6%, and then Q2 by almost 3%, and Q3 by 9%, and then now Q4 by almost 2%. So these are really great achievements, and we are very happy about this one. We told you a few years ago, we'll get back to this kind of high level. We'll turn around the picture, and I think we really delivered. Of course, we can say that this year, we benefited from some unique circumstances, and this is absolutely correct. We are fully aware of this one. This is why at the end of the session, we'll do a quick focus on our expectation for '21, and we will also present you some overview on the strategy until 2025. Very quickly, because here, the picture is not very different compared to the one we had in Q2 and Q3. The Ambient is performing again very well this quarter. We are benefiting from a strong sales push, and Amie will elaborate on this one. But the market conditions are quite aligned with the one we faced in Q2 and in Q3. Strong push for the whole Ambient category. The people are still working from home. They are moving to more healthy eating. Plus we had one specific -- not one-off, but one specific operations happening in Q4 2020 with a push on the promotions in Europe and also in the U.S., and Amie will comment on this one. Frozen, as I mentioned, we are declining in terms of sales compared to last year. So it's a bit different compared to Q3. If you get back to Q3, the frozen business was recovering and now in Q4 is declining. Why? It's mostly coming from our operation in the U.S. Q4 2019 was very strong in our frozen operation in the U.S., and we were not able to replicate such a performance in 2020. Plus, our operations have been affected by the port congestion issue and also the container availability issue in Q4 2020. The last category, PetCare, value-added and others. We will elaborate on this one. This is really one of the key achievements of the quarter, both in terms of top line, but you will see also that the gross profit margin is record high. And here, we are really benefiting from the move to more innovative products. Just a quick update on our operation and COVID-19. And I think we can say really that Thai Union overall has been managing quite well. The issues created by COVID-19, all operations in Thai Union remain open. There was, before Christmas, a peak in Samut Sakhon of COVID-19 cases. Samut Sakhon is precisely the region where we have in Thailand most of our operations in this one. But we managed quite well the operation. We strengthened all our measures here. And thanks to this one, we didn't have to shut down any factories. Another location also where we are facing some issues were Seychelles. And here, the local government decided to put our factory as a first priority for the vaccination. We did already the first round of vaccination happening in Seychelles, and we are doing right now the second round of vaccination. The 2 key region that we wanted to highlight for you. We have some issues also in some other countries. But overall, I think we have been managing quite well in our operations. We have not stopped, okay? We have a very clear focus on the safety and the health of our employees. This is, for us, one of the key focus, and we have been delivering well in 2020. Last but not the least, I think we have been supporting really very strongly the local communities, and the next chart will show you this one. Overall, I think we have been donating more than 3 million servings of our products in 2020. Here, we just wanted to show you, because it's in all the operations in the U.S. It's very, very large also in Europe and also in Asia, and in Thailand, specifically, okay? Here, we are not talking about product donation. But at the beginning, there were some countries where they were missing some masks and some protection. So here, we contributed, and we provided them with also some sort of equipments in order to help the communities to face with this pandemic. And also very good news of the quarter, and we are very pleased with these developments, which is the conclusion of the U.S. antitrust litigation. And we did a press release in January where COSI, Chicken of the Sea, our U.S. Ambient operation, announced that they have reached some agreements to settle final cases with a final plaintiff and 2 class action. Of course, they will have to be approved by the court in 2021, but now we found at least an agreement on principle with these plaintiffs, and we are very happy. This is for us the end of a 4 years or even 5 years process. It brought a lot of distraction for the management in the U.S. But now we are getting out, and we are really confident about the future of our operation in the U.S. and really excited. When you look at the performance in 2020 and the real turnaround, really looking forward to see what will be the performance in 2021. Another one we were we did some communication, which is the Sustainability-Linked Loan, okay? We issued -- we just issued this one for an equivalent of THB 12 billion. I think we are the first one to issue some sustainability syndication loan in Thailand for roughly THB 6.5 billion and also combined with the subscription also in Japan and roughly for the 7 month, a bit less for THB 5.5 billion. And I must say that I was very surprised and very pleased also with the success that we have in our -- in the oversubscription. We did have a lot of oversubscription, both in Thailand and also in Japan, and we are very pleased with this one. So what does it mean exactly? So it means that we have a term loan, where we have some specific KPI, okay? And the KPI are covering the greenhouse gas emissions, the monitoring -- electronic monitoring of the tuna fishing vessels or also the DJSI, okay? It means that here, we have a specific KPI. If we meet with this KPI, then we will benefit from some discount on the interest rates, and we are extremely pleased about this one. Of course, this will be monitored by a third party, by the DJSI and also some third-party consulting for the other one. So we will not monitor only by ourselves. There will be some third-party adviser saying, yes, you met with the KPI or, no, you miss with the KPI. This is one of the great success. We have been investing a lot over the past years in sustainability. And now we are -- it's a clear proof that we can gain also some money and save some money thanks to these ones. So that's why we say this is, for us, a very significant step in the Blue Finance for Thai Union, but not only for Thai Union. I will say for the whole industry. We were the first one to do this one in 2020. We want to continue further, and we encourage the whole industry to move in this direction. A quick update also on our expansion on some new category of innovative products. And we told you already since quite a while that we want to shift a bit our portfolio. So we signed 2 joint ventures in 2020 and beginning of '21 also. The first one is called Interpharma-ZEAvita. We'll be together with the company called InterPharma, and they will be focusing on health and well-being supplement product in Thailand. The second one, together with ThaiBev, we issued a joint venture called Food and Beverage United just in October 2020. And there, the joint venture will be focusing on the nutritious food and beverage products, okay? These 2 have been managed by TUI, Thai Union Ingredients, which is really one of the business where we want to invest over the next years. The last one, still on TUI, and we discussed a bit last time -- last quarter about this one. We launched the new tuna bone calcium powder manufactured in our facility in Songkhla in the south of Thailand. With all of this, I think we can see a very clear direction on where we want to invest in the next years. We have some strong expectation behind each of these points. Very quick focus here on some NPD, new product development. On the left, you can see the [ oh my god, meat ], which is a plant-based seafood and meat product. It's quite new for us. We are very happy about this one. This is also one of the other areas where we want to invest in the future. So right now, the impact -- it will be launched soon in March '21. At the beginning, it will be small, but we feel a very clear a proof of our intention to grow in this direction. On the right, you can see the other NPD-specific launch in Thailand for the After Yum for our SEALECT products. It's really good. You just need to try this one, and you -- I'm sure you will enjoy. A quick update on our CVC, Corporate Ventures. If you remember 2 years ago, in 2019, we said we want to invest $30 million, 3-0, in the CVC. We did some few investments. The last one I want to mention to you is BlueNalu. We just did a communication on this one. I'm sure you know BlueNalu. This is a U.S. company based operation, and this is a leading cell-based seafood company on this one. Now we have something like 6 or 7 different investments. And you can see here the different category. The first one is alternative protein. The second one is functional nutrition. The third one is value chain technology. And the last one is a bit specific. This is a fund investment, investing also in the protein activities. So you can see that here -- you can see clearly the direction where we want to grow, okay. And here, we want really to build an ecosystem, okay? So not only about Thai Union. We want to build a whole ecosystem, and we want to have -- we cannot invest everywhere. So we want to do some very dedicated and specific investments in some areas where we believe there is some potential for growth and is also good for the world, okay. Some awards and recognitions, okay. Again, we've been benefiting from some awards in 2020. You can go through the list. I would just mention maybe the first one. We were ranking #2, in the 2020 DJSI. Again, we are very pleased about this one. We are decreasing a bit versus previous years where we were #1, so it's a very high competition to be #1 and #2. However, we are still very pleased with this performance. I think the difference between #1 is very small, and we try to catch up next year. And you can go through the others, but again, we are pleased with these awards. Just as a quick overview and, of course, we have some record here in terms of net profit this year. So we are about to announce the final dividend of THB 0.40 per share. The full year dividend for 2020 will be THB 0.72 per share. The payout ratio is between 56% to 57%, in line with our guidance, which is above 50%. And here, we really wanted to show our trust in the future of Thai Union. And we want also to compensate the shareholders. We know the 2018 and '19 in terms of dividend were not great, very unique reason for this one with the antitrust. And now in 2020, the antitrust is done, is behind us, and we are ready to have this kind of high dividend. I'm very pleased for this one. So having said that, I will pass the floor to Khun Amie. Very pleased to have Khun Amie with us. It's her first time with us. I'm sure she will do well. Thanks. With that, Khun Amie. Back to you.

Thank you very much, Ludo. Hello again, everybody. And let's start from key takeaways. Ludo has already mentioned to some of material on this slide. So I'll go over very quick. We delivered top line at THB 33.4 billion, and the gross profit margin were at high 18% versus 16.1% last year, driven by shifting to mix towards higher-margin products. Operating profit increased 26%, and net profit also increased 38% year-over-year. SG&A, up 9%, and Red Lobster contributed share of loss about THB 320 million. Tuna prices increased 40% year-over-year. However, there was sequential decline quarter-over-quarter and has continued to drop to USD 1,200 per ton in January 2021, and we expect some inflation in the future months. And tuna prices within USD 1,300 to USD 1,700 per ton, in this range within our expectations. Next one is the sales growth. We are very pleased, very happy with the top line results. If you look at the quarterly information, THB 33.4 billion increased almost 2% year-over-year, driven by the strong performance in Ambient and Pet Care, but offset by the soft performance in frozen, like Ludo mentioned, mostly from the U.S. operations and some delay shipments in the fourth quarter. If we exclude the FX top line declined 0.9%, below 1 percent year-over-year. And I would like to show this slide to everybody. So this shows Thai Union diversified portfolio that proved to weather the storm of the pandemic. On the left-hand side, the Ambient business performed well, driven by people continue eating at home. Right next to it, frozen dropped because most of our products are related to restaurants. Very next to it, PetCare grew very huge at 18% driven by people staying at home, spending money during this pandemic with their furry friends. And lastly, Thai baht depreciated in value, gave us a favorable impact to our net sales. Revenue structure by geographic and by business. There's no significantly change between '19 and '20. So I'll move to the next slide. Gross profit margin were high at 18% and above in the last 3 consecutive quarters, driven by shifting to mix towards on the higher-margin products. And that also pushed to our full year number to be 17.7% gross profit margin, very high compared to the prior years despite the COVID-19 situation. The second wave in Thailand, since the fourth quarter of 2020, we managed the situation well. There's no closure or there's no shutdown in any of our operating plants. For the operating profit, for the quarter, we were at THB 1.9 billion, improved about 26% year-over-year. This is driven by the good performance in gross profit margin. SG&A increased quite a bit at 9%, driven by the negative impact of FX marketing and advertising expenses. We pushed the promotion phasing mostly in Europe from the second -- sorry, from the second quarter to the fourth quarter as we decided to invest in our brands. And lastly, we had higher logistic costs driven by the port congestions and the container shortages. But Ludo just mentioned, full year picture, operating profit, we ended at THB 7.8 billion, improved 103% versus 2019 reported basis. EBITDA for the quarter, we were at THB 3 billion, improved 12% year-over-year from the strong operating profit and higher other income, mostly from the higher interest income. For the full year, we were at THB 13 billion, improved 27% versus 2019 on a reported basis. For the net income, quarterly, we were at THB 1.4 billion, improved 38% year-over-year. And for the full year, we were at THB 6.2 billion, all-time record high. In Q4 2020, we had one-off of a fair value adjustment in Russia for the amount of THB 146 million. If we exclude this amount, our net profit landed at THB 1.6 billion or 30% improved year-over-year. Earnings per share for the quarter was at THB 0.29 per share, improved 31% versus the same period of last year. And for the full year, we were at THB 1.26 per share, improved about 58% versus the last year reported basis. With that, I'm going to hand it back to Ludo.

Thanks a lot. Thanks a lot, Amie. So this is our specific focus on -- our usual focus on Red Lobster. In Q4 2020, you can see here all the impact in our P&L. Red Lobster delivered in Q4 2020 a loss, a share of loss by THB 321 million. So it's a deterioration if you compare to Q4 '19, where we're at THB 243 million. Few explanation about this one. You know that traditionally, the Q4 is always a loss-making for Red Lobster and this is historically the lowest quarter for them in terms of seasonality. So we are facing with the same in 2020. And of course, we are facing with still the issues of the pandemic. If you remember, in Q3, we told you that all the [ F&B ] businesses were open, and we are operating something like 94%, if I remember well, of the dining hall. In Q4, there was an increase, a second wave of the COVID-19 in the U.S. And now they are only operating 78% of the dining halls. So basically, they had to close some of them. The restrictions are still here. And in average, we operate around 50% of the capacity, okay. So these are the key drivers and explanation also for the share of loss of Red Lobster in Q4. Apart from this one, on the other line, we are kind of stable. The income, interest, expense and income tax, there is no significant change compared to what we had before. One very good news to be announced is the refinancing of Red Lobster, and there were some question on this one after Q3. And you knew that we had to refinance Red Lobster because we are very close from the maturity of the loan. So now we can announce that they successfully refinanced that existing loan in January '21. There is no impact for us. We did not provide any guarantee. We did not provide any new loans, so there is no increase in Thai Union exposure. Cash flow, cash flow performance. So here, we achieved THB 1.1 billion in Q4. Honestly, we are very positively surprised on this one. If you look at Q2 and Q3 performance, which were exceptionally high, I was expecting personally a decrease in Q4. We know -- you know that usually, we have an inventory buildup in Q4. We managed to generate, again, some positive cash flow in Q4. For the full year, we have THB 10.4 billion of cash flow. The cash conversion rate is super high, 1.16, a record high over the last 5 years. So very strong performance in terms of top line, profitability and also cash flow. Thanks to this very strong performance, we managed to deleverage our net debt by almost THB 3 billion from THB 55 billion to THB 52 billion. And if you look at the key components of this one, the first one is, as I mentioned, the record high EBITDA. The second one is the CapEx. The CapEx, the net CapEx, we spent THB 3.7 billion in 2020. This is lower compared to what we spend usually. And if you remember, back in Q1 2020 when we are facing with the first impact from the COVID-19, there were a lot of uncertainties at that time. And we decided to freeze or to delay a lot of the CapEx project just to make sure that our cash was preserved in 2020. So this is a key explanation for the low CapEx in 2020. Apart from that, we have our usual operation, the net interest paid. The dividend also, which was a bit lower compared to what we have usually. Usually, it's above the THB 3 billion, now it's below the THB 3 billion in 2020. And we have 1 unique impact also coming from the program of treasury share repurchase, and the impact is THB 1.5 billion. Despite all of this, we managed to deleverage from 1.07 to 0.94 our net debt-to-equity ratio. And we can be very pleased about this one. Next slide, Slide 35. I will go quickly. There is no significant change apart from the fact that we did refinance in beginning of '21 a significant portion, THB 12 billion, of our loans. The ratio here are all improving, thanks to the profitability. In terms of inventory days, 125 days, we're quite happy with this one; with net working capital, 104 days. We have an increase of the inventories in Q4, that was expected and it happens. But overall, the situation is really strong and very healthy. If you look at the ratio, net debt to EBITDA, we are now below the 4 to 4.5 target. We are just at 4.02. And in terms of net debt to equity, we always communicate that we want to be between 1 to 1.1 range. We are now below, since 3 quarters, at 0.94. ROE and ROCE, I don't comment. They just increased, thanks to the increase in profitability. Just a quick overview on the raw material price, and Amie already commented the tuna price. Salmon price for your reference is record low in Q4 2020, and you can see here the numbers, and we are very pleased with this one. There are some specific conditions. The consumption in China has been decreasing, so there is less pressure on the salmon overall. So it's record low right now. It's increasing a bit in '21. The shrimp price, overall, we have been quite -- there were some ups and downs all along the year. But overall, we are quite lucky, and it's quite okay. For the tuna, it was low, as we mentioned, in its -- it decreased further to $1,200 in January '21. We expect some kind of inflation to happen, but we don't expect in '21 some significant changes overall on average over the whole year compared to 2020. The FX, this is something unique to have in mind. And you know we have been suffering from negative impact from the FX over the last years. In 2020, there is a shift, and now we are benefiting from positive impacts, mostly coming from the euro and also the GBP, a bit also coming from the USD, but not that much. So the key drivers, and especially for us in Q4, are really the euro and GBP increase and appreciation versus Thai baht. Quick focus on our 3 categories. So first of all, the Ambient, and I want you really to appreciate this performance. Our Ambient sales are growing by almost 9% in Q4 2020, mostly driven by the [ communities ] and the volume growth by 7%. Over the full year, we are increasing by 14%, 14% between 2019 and 2020. So this is an excellent news for us. Gross profit margin, we are also very prudent and very happy about such a performance. And you can see a very regular, a very strong performance every quarter, and we managed to increase over the whole year from 19.4% to 21.1%. So these are really some great achievements. Frozen, the picture is a bit different. We mentioned that already. We are still facing some challenges clearly on the top line. We are declining by 6.5% in terms of sales, by 7% in terms of volume. Over the whole year, we are declining by 5%, okay. So in terms of top line, this is one of the explanation for the frozen business in 2020. But look at the gross profit margin picture, okay? Q1 and Q2, very difficult situation. We really went down to 8%, 7% gross profit margin. But now since Q3, we are back above 11%. So we are above compared to what we had before. So the gross profit margin is back on track, okay. However, we still need to fix this top line. It's a lot depending on the foodservice activities. You know that foodservice is one of the key customers for this category. And as soon as we will see some recovery in the foodservice business, I'm sure we'll see some recovery in the frozen business. The last category, PetCare, value-added and others. I mentioned to you, sales increased 8% in Q4, really strong over the whole year. It's also an increased by 7.7%. Very happy with this performance. And I think here, we are really getting the benefits from our investment in the past years in the PetCare, in the value-added products. Look at the gross profit margin we achieved in Q4, record high 29% -- 29.4%. And if you look year-on-year, we are increasing by 21.6% to 26.7%, okay. So we mentioned with this one, we explain the different factors, but very happy about such a performance. Sales, I go quickly on this one. Of course, the U.S. are still our first market, increasing in Q4, we had 43%. Europe was a bit down, but around 30%. And then we had a decline in our domestic market in Thailand to 10%. I think it -- we were at 12% a year before. Just a quick focus by region. U.S. operations, we are growing by 8% in Q4 2020 and by 11%, okay. And we have very different activities in the U.S. in 2020. Our Ambient operation with COSI were really strong and performed really well. Our frozen operation, they were facing really some shortfall in terms of sales in Q1 and Q2. And I must say that I was very impressed by their recovery in Q3. In Q4, they are declining a bit, however, it's improving. So this is something I want to insist on, the Europe. And you can see here, very strong growth from the sales by 21% in Q4. This is very impressive. Let's make it very clear. We have a strong FX impact coming from this one. I mentioned to you, euro has been increasing by 9% and GBP by 4%. But even if you exclude these 2 FX impacts, we are still delivering very strong growth in Q4 2020. Over the whole year, we are increasing by 9% compared to 2019. We are benefiting from the very high demand in our products, a very good product mix also. We did also some promotion push, specifically in Q4. But I think with these numbers, you can really see the trust of our consumers and customers in our brands and in our products. Thailand, the picture is less nice. We are declining by 20%. I think we are strongly impacted by the lower tourism activities. Many restaurants, again, they cannot operate properly on this one, so we are declining. And then our foodservice business is not recovering yet. So we are still facing with some challenge in our domestic market. Emerging markets and the rest of the world, we are declining by [ 8%, 11% ]. We very often have some ups and down in this region. And we have seen some decline in Asia and in Australia, in Africa. However, we have some good news in Japan, which is one of the key market for us where we can see some kind of recovery. So here, we just wanted to provide you -- and I'm sure that in the question, you will say, okay, what is the impact of the COVID-19 and what is your guidance for 2021. And I think with this guidance, you will see kind of estimation of what could have been the impact for us of the COVID-19 in 2020. So in 2021, just to make it very clear, we are very confident on Thai Union activities. So in terms of numbers, the sales, we expect a 3% to 5% top line growth. We do forecast a gross profit margin around 17%. SG&A to sales should be roughly aligned with this year, between 11% to 12%. Interest rate, we don't forecast any significant change. CapEx, we do expect some significant change here. We plan to invest quite substantially in 2021 between THB 6 billion to THB 6.5 billion, and I will elaborate on this one maybe a bit. I mentioned in 2020, we did not -- we really decreased our spending in terms of CapEx for different reasons, for cash preservation and also because of technical issues. Sometimes the technical could not access to our factory, so we plan to catch up in '21. And we have also some very specific projects to happen in our new activities like the new protein factory, like a new culinary factory also where we want to invest massively in '21. Dividend policy will not change. We'll continue with the 50% dividend payout ratio. So just to give you some flavor, if you compare to 2020 performance, in terms of sales, we did achieve close to 5% in 2020, okay. So we do expect some kind of normalization to happen in '21. So we don't expect to deliver the same performance, to make it very clear. However, we are still targeting to deliver a 3% to 5% top line growth. On the gross profit margin, we know perfectly that in 2020, we're benefiting from the very strong positive mix segment, meaning the Ambient and the Pet Care and others segments have been growing to the detriment of the frozen business, which is our less profitable business historically. We do expect some kind of normalization to happen in '21. The frozen business will recover. And there will be kind of a mechanical effect, and we do expect our gross profit margin to drop a bit compared to our 17.7% performance in 2020. We just wanted also to give you a quick overview in our 2025 corporate strategy. I will be quick on this one, and maybe tomorrow we have more time to deep dive on this one. But you know that now we really insist on the healthy living and healthy oceans on this one. So you know that we are one of the seafood -- we are the seafood leader since quite a while and really want to focus on what is healthy for our consumers. We want also to focus on what is responsible sourcing nutrition for everyone, and we want to create long-term value for our stakeholders. I will deep dive a bit further, but we have set our 2025 targets around an EBITDA around $450 million to $550 million in 2025, okay. And we have 4 key pillars. The first one is our core business. The second one is we have some new value-added businesses. The third one is the sustainability. And the last one is strategic investments. Quick focus on the core business. And here, we are mostly talking about the Ambient and the frozen business. And you know these are mature categories, and we do expect them to generate some growth, 3%. Some people may find this number a bit disappointing. We want to be a bit careful. Keep in mind, we start from a 2020 level, which is quite high, of course, on this one. Something which is important also, we want to invest massively, around $200 million to $300 million over the next 5 years in productivity. We want to achieve 3% annual conversion cost improvement year after year. So okay, so this is very ambitious target. And clearly, we want to put some financial resources behind this one. On the target regarding the revenue from innovation with high margin, we maintain our objectives of 10% of revenue with high-margin above 20%. And the last one, we have been really focusing on this one, is focusing on the loss-making businesses. We have some few of them. We want to turn that around or to divest them. So I think we have a much more active management of our portfolio over the last year and over the next years also. Next one, the new value-enhancing businesses. And you can see already in our CapEx some first touch of this strategy. We want to invest $500 million in these new businesses over the next 5 years. Some of the key ones will be PetCare and feed businesses. So we want them to do -- over deliver 3x the GDP growth over the next years. Ingredients and culinary will be also 2 areas where we really want to grow, and we really want them to scale up. We are looking for different M&A options here. We want to focus on some very dedicated, high-value, accretive and strategic areas for us. By '25, we forecast that all these new businesses will continue more than 1/3 of the EBITDA. So they will be very significant and very quickly. Sustainability. I can go quickly on this one because you know everything on this one, but we will continue to expand our SeaChange program. We want to fight the climate change. We want to move to more and more sustainable packaging in 2025. We will continue to manage very carefully our operations. We want to move our operation, but also the whole industry operation to something which is more and more sustainable. We mentioned the last one, the Sustainability-Linked Financing. We want to continue in this direction. And I'm sure we can do much more. I was very pleased again with the outcome of this activity in 2021. The last one, here we have some -- we have different partnerships. Two of them are really key for us. Avanti is doing well. We want to continue with this direction. The second one is Red Lobster. Red Lobster is still in a challenging situation, just to make it very clear. Like the whole restaurant industry in the U.S., they are still in surviving mode. However, we did really see some changes over the last months. And we really believe we are on the good track to turn around the picture and to improve the operation and to grow the business there. The last one is one of the focus we want to do, and we started already with the 2 new joint ventures that we announced. We want to invest more and more in this direction and having some new partnership in some very specific areas. Having said that, back to you, Lina.

Thank you, Ludo. Now we would like to open the floor for a Q&A session. [Operator Instructions] Okay. So we have the first incoming question. Will full year 2020 results be the peak performance for Thai Union? Can we expect to see continuous growth in 2021?

So maybe I take this one. Of course, we know that in 2020, we benefited from some unique circumstances. We are fully aware that there was a strong push that could have been in Q1 some pantry loading, some panic buying also. But now we can see in Q2, Q3 and Q4, the same very strong performance. So we believe such a very strong performance will continue in 2021. As I mentioned already, and you can see that in our guidance for '21, we do expect some kind of normalization. The revenue we are planning for '21 will be between 3% to 5% and the gross profit margin will be around 17%. So we do expect some kind of normalization. But the ambition is still here. The ambition is very clear, we want to continue to grow, okay. We don't want to stay here. We don't say -- we don't want to say it was a one-off. No. We have a very clear strategy to move to more value-added businesses, and we still want to grow and to continue to improve year-on-year.

Okay. Thank you. For the second question, how do you see Red Lobster performance in 2021?

So Red Lobster. Again, we mentioned this one. So we have been generating a loss by THB 320-something, I guess, million loss in -- maybe I get back just to give you the right number. Just...

THB 321 million.

Here, this one is THB 321 million loss here. Here, we had the numbers. So yes, we have a loss again. We are in a challenging situation, not only for us, but again, for the whole restaurant industry. Very clearly, I mentioned this one, surviving mode, not only for Red Lobster but for the whole restaurant industry. We have some positive news, I really do see here. The refinancing is now effective, and you can imagine how difficult it was to refinance a restaurant business in the U.S. during this COVID-19 situation. We did it successfully. So it really shows some trust from the -- from some partners here. We believe in this business. We want to turn around. There were some very strong changes happening at Red Lobster in 2020. We discussed the revisit completely, the menu in 2020. The off-premise business was representing something like 8% of the business before COVID. Now we are around 30%. So we do expect some significant change happening in '21. Of course, it will depend a lot on the COVID-19 situation in the U.S., and we could see that in Q4 there was a deterioration of the situation. However, now we see the vaccination is really increasing. I think we have something like 60 million of doses, which were provided to the U.S. people. So it goes very fast. We do expect that with this vaccination campaign, the situation will turn around very quickly in the U.S., and Red Lobster will be really benefiting from this one. What I'm quite sure is, compared to Q1 2020 when it was the first time we faced with the COVID-19 situation in the U.S., we can definitely say that Red Lobster is a much -- is in a much better situation and much stronger and much more well prepared compared to where they were 1 year ago.

Okay. The next question, according to the Thai Union Feedmill share offering announcement to the SET, will the reduced shareholding portion from the new share allocation cause a lower profit consolidated to Thai Union's financial statements? Or is there -- or are there any expected sales and profit growth of Thai Union Feedmill business expansion plan, which can offset those reduced contribution?

So maybe 2 answers on this one. The plan regarding TFM is to keep the control of TFM, okay? So we will move back to where we were a few years ago. If you remember, a few years ago, we are owning 51% of this business. We have been increasing a bit since then. And yes, the plan for us is to go for IPO for this company. But however, we'll keep the control. So here, we are talking about a small portion of our shareholders. We will not sell a very significant portion of this one. You could see -- you could have seen already over the past 2 years the impact of the move from 51% to 60-plus percent shareholding. So yes, we will see a bit of dilution. It will not be that much, I think, in terms of impact. And very clearly, why do we do this IPO? Because we want to give TFM the means to grow by itself. And yes, absolutely correct, we do expect to have a top line growth and also bottom line growth, which will offset this dilution of our interest there. So very clearly, yes, we don't want to lose any money there. We just want to give them with some more means to grow for the future.

Okay. On the next question, regarding the 2021 guidance, the CapEx of THB 6 billion to THB 6.5 billion is quite high compared to THB 4 billion to THB 5 billion years ago. Can you share the plan for them non-increased?

Sure. Sure. Sure. And think we mentioned this one during the explanation. Few explanation for this one, and you're absolutely correct. This is a record-high CapEx, I think, for Thai Union. Few explanation. We're saying that we want to invest massively in some new areas. And here, part of this CapEx here, we have some significant new investment in a new protein factory in Thailand and also a new culinary factory in Thailand. So this is one of the key drivers. You can see here the shift, and we want really to put some money behind these new activities. So this is one of the first reason. The second reason, I mentioned this one. 2020, CapEx was low because of the COVID-19, because of the cash protection plan and because it was technically difficult to bring some technicians in some of our factories. So here, you have kind of a catch-up happening in 2021. Of course, we will manage very carefully the situation. If there is any tension on the cash, we can still reduce and revise this plan, but we want to really invest massively. We want to move quick on this one. And I think this is for us and for you, also one of the clear proof that the management is very confident of the future of Thai Union.

Okay. On the next question, can you please elaborate on the onetime negative impact from the Russia TUMD item?

Sure. So if you remember, so we did invest in Russia. I think it was 2 years ago or 3 years ago in 2018. And we first invested and took 45% of the business. 2020 -- and since then, the business was -- the achievement was not fully aligned with our expectation. We were underdelivering compared to my expectation. We were facing with some local difficulties here. So that's why we took the decisions in 2020 to took over and to increase our shareholders into 90%, okay. Clearly, the situation in our business in Russia is a difficult and a tough one. So we did some restructuring. In 2020, we closed one part of the business, which is the frozen business. We changed the management here, and we had a very clear turnaround plan. Due to all these uncertainties, we decided to recover EUR 4 million fair value adjustment in Q4 2020. So this is the one-off that Khun Amie mentioned a bit earlier, and this is, I think, the unique one that we have in 2020. We'll continue to follow carefully the situation of operation there. We want to see quickly some improvement there. But yes, the situation is difficult in -- for us in this country.

Okay. The next question from the floor. How does management expect Ambient sales to perform in 2021 versus 2020? Do you expect short-term gross profit margin pressure from low tuna prices?

Sorry, I mentioned this one. In '21, we do expect some kind of normalization overall the group impact. And this is also -- this also applies to the Ambient. We don't expect the Ambient to grow by 9% or 8% to 9% like the way we did in 2020. So yes, we do expect some normalization in the sales. We will not have the same growth. But overall, the picture will not be in that difference. Although at group level, we are targeting from 3% to 5%. Gross profit margin pressure from low tuna prices, let's see. This is only January, we -- indeed, the fish price was quite low, around $1,200. We do expect some inflation to happen in the next months to come. There was some explanation for this one. I think we did manage quite well our gross profit margin in 2020, and we expect to do the same in 2020, '21 to make it very clear.

Okay. On the next question, how do you expect to increase sales year-on-year from a high base in 2020?

So you're correct. I think it's a challenge for us because, of course, the higher you start from, the most difficult it is to deliver growth. We are confident. We are confident, I can tell you this. Of course, a lot will depend on the COVID-19 development, and it's very difficult to predict anything. And I understand the question, but as I mentioned, our guidance for 2021 is really to grow -- to continue to grow 3% to 5%, so a bit lower compared to our performance in 2021. If you look at what we have been doing over the last years, I think the trend is really good. The long term, even excluding the COVID-19, the trend is really good. We are -- we have some new product development. You can see some of them already in the first slides we went through. We are investing also in the value-added category. You can see also with the CapEx, that we have some significant investment here, okay. And if you remember, 2 years ago, also, we did some other investments in the ingredients, and now that we will start to see the impact in '21. We'll see, for instance, the first impact from our factory in Germany, the one which burned. We mentioned this one 2 years ago. Now it is fully rebuilt, and I think we'll be operational in Q4. So the impact in '21 will still be low. And however, there will be some contribution coming from these parts.

There's another question on Red Lobster. Has there been any significant change in strategy for Red Lobster post shareholding shifts?

I think clearly, we could see some change in the strategy. It was not related to the shareholding shift. Indeed, if you remember, we did change the shareholding with Golden Gate exit in the previous quarters. But the key drivers between the changes in strategy were really the COVID-19. These guys in Red Lobster, they had to face with a very unique and challenging situation. If you remember, back in Q1 and the beginning of Q2 2020, we closed the vast majority of the restaurants, not only Red Lobster, but I mean the whole restaurant industry in the U.S. So yes, they had to change to begin that strategy. They need to push as much as possible on the off-premise business. They had to cut massively in their SG&A, in their marketing costs and also in their headquarter. They had to rethink completely also the menu. If you live in the U.S., I think the change was very impressive. We had a menu which was something around 20 to 30 pages at the beginning. And then we moved to 1 or 2 pages during the peak of the COVID-19. Now we are elaborating a new menu here. We are also been investing a lot and massively on everything which is digital. I think now you have a -- you can have a full touchless experience when you want to order some Red Lobster. And this is something the guests in the U.S. are really appreciating, okay. So yes, we can see a really change in the strategy for Red Lobster, not coming from the shareholding shift, but really coming from adaptation to the COVID-19 issues. And again, we believe now Red Lobster is in a much better situation to fight with the COVID-19. Again, Red Lobster is in a challenging situation. We know that. We know perfectly. Not only them, but the whole restaurant industry in the U.S. But we believe that they will turn around the picture in '21, and the share of loss of profit coming from them will be much better in '21 compared to 2020.

Can we have a quick update on the other components of the share of profit, such as Avanti, et cetera?

So quick a bit on Avanti. Avanti is a listed company, so you can have access to their financials. Usually, they will go public a bit later than us, so you don't have a view yet on their quarter. And they don't have the same year-end, so sometimes it's a bit difficult to compare. However, Avanti is doing well. They are doing well in 2020. And I must say that we are very pleased with such a performance. So you know, this is -- if you compare to our own frozen business, I think there is one key difference between them, their business and also our frozen business in Thailand, which is the currency topic. Right now, we can see that we are fighting against a strong Thai baht. Even if in Q1, you can see a decline of the Thai baht versus USD overall, around THB 30, THB 31 for USD 1. The Thai baht remains very strong, okay? In India, they don't face with the same situation. So for them, I would say it's easier. But overall, we are very pleased with this one. We have some few ups and down for -- with our other partners, but the really 2 key ones, which are the key impact in our numbers are really Avanti and Red Lobster.

On the next question. Does the polar vortex in the U.S. impact Thai Union business now?

So here, I would say, I'm a bit unclear on the question. What do we mean exactly? Do you understand exactly what is the polar vortex that we are talking about?