Bangkok--20 Aug--TUF Thai Union Manufacturing Co., Ltd. (TUM), Thailand’s leading processor and exporter of canned tuna and pet food and also a subsidiary of Thai Union Frozen Products PCL. (TUF), has invested Bt440 million in 5 newly set up wholly owned companies in order to expand into tuna fishing business. The objective of this investment is to take advantage of the lower import tariffs as a result of recent preferential trade pacts between Thailand and other countries and strengthen the group’s supply chain through increased control over the fish resources. The firm will set up wholly-owned subsidiaries to manage the vessels. Mr. Thiraphong Chansiri, president of TUF, said, “This investment by our subsidiary TUM would enhance our group’s competitiveness. Through these new subsidiaries, we plan to buy these deep-sea vessels to catch tuna in the Indian Ocean. The investment will include 4 purse-seiners and 1 fish searching vessel. The onboard cold storage capacity ranges from 700 to 1,100 tons per purse-seiner. These vessels will be able to supply us around 25,000 tons of tuna raw materials per year. This should be as much as 8% of the total annual tuna raw material requirement of our group. These vessels will be ready for operations by the end of this month”. Mr. Chansiri explained, “Tuna in forms of frozen loins or can packages are our key products which produced steady growth to us over the years. We would like to secure fish supplies to meet continual growth in the market. Having our own tuna vessels will certainly help achieve this objective. The current requirement for tuna raw materials in our group amounts to 300,000 tons per year and our daily production capacity stands at 1,200 tons per day. Aside from the benefits of increased control over our raw materials, this move will help expand export sales from our Thailand-based operations thanks to beingable to complying with the rule of origin requirements in various preferential trade agreements, namely the recently signed Japan-Thailand Economic Partnership Agreement (JTEPA) and the European Union (EU)’s Generalized Preference of System (GSP) privilege on Thai canned tuna imports. He elaborated, “For instance, JTEPA requires fish used in canned tuna exported from Thailand to be sourced either from ASEAN-registered boats or any member of the Indian Ocean Tuna Commission (IOTC). Please bear in mind that the fish supply from Thai-registered tuna boats is very limited due to the small fleet available at the moment, making the country (including TUF) more difficult to enjoy the true potential of these preferential trade benefits. At the moment, tuna fishing in the Western Pacific Ocean and the Indian Ocean is dominated by the Taiwanese, the Japanese and the Spanish.” Despite the huge market potential of canned tuna in the EU, TUF has not been able to carve a meaningful share so far due to the high import duty (24%). With the GSP granted to Thailand since 2006, Thai tuna packers have been be allowed to lower this disadvantage to 20.5% as long as the fish used are sourced from Thai-registered fishing vessels. Mr. Chansiri also commented on the current situation of tuna prices, “The tuna prices have hit a new record high lately. Dramatic climate change could be a culprit as the sea surface temperature increased in recent months. Higher water temperature drove tuna (which often swim in schools) to stay deeper in the ocean and became more dispersed than usual. All these have made catching more difficult at least for the moment. Packers in general are affected. In order to stay competitive, we continue to push through all cost-saving efficiency improvement measures within our plants. This allows us to continue to pursue our performance targets.” “Another factor which is also affecting us is the strong Thai baht. Continual appreciation of Thai baht against U.S. dollar has become a serious concern among exporters. For TUF, we have been closely monitoring the situation and adopt measures whenever necessary to cope with the situation. We continue to use hedging tools, such as foreign currency forward contracts and options, to manage our foreign exchange exposure. A series of cost-saving and efficiency improvement measures have also been installed to keep ourselves cost-competitive and allow us to grow continuously. In addition, the board of TUF has passed a resolution to pay an interim dividend for the first half operating period of 2007. The dividend per share will be Bt0.55 (Bt0.35 will be subject to the normal 10% withholding tax while the remaining Bt0.20 will be tax-exempt thanks to the BOI privileges), equivalent to 50.46% of the total net profit earned during the first 6 months this year, which is in line with the firm’s policy of paying out at least 50% of net profits as dividends with payments twice a year. The payment is scheduled to be made on September 18, 2007 and the closing date of share registration book for the rights to receive the dividend will be on September 7, 2007. During the first 6 months this year, the firm has made a net profit of Bt957.9 million, representing 27% growth from Bt756.1 million of the same period last year. For more information please contact Corporate Communications Department Tel: (662) 298-0024 ext. 675 - 678 Fax: (662) 298-0024 ext. 679 Email: [email protected] Click for photo release at www.thaipr.net