TRIS Rating Affirms Company and Issue Ratings of “TUF” at “A+” with “Stable” Outlook

TRIS Rating Co., Ltd. has affirmed the company and issue ratings of Thai Union Frozen Products PLC (TUF) at “A+” with “stable” outlook. The ratings reflect a strong market position as one of the world’s leading tuna processors, product and geographic diversity, and solid valuable “Chicken of the Sea” canned tuna brand. The ratings also take into consideration TUF’s proven track record in the seafood business and conservative business expansion policy. These factors are partially offset by maturity of the canned tuna industry in the US, high exposure to tuna price fluctuations, and threats from manufacturers in low-cost countries, as well as the implementation of import trade barriers by major trading countries, and Thai baht fluctuations.

The “stable” outlook reflects TRIS Rating’s view that TUF will continue to maintain its competitive strength through economies of scale and production efficiency. The company is expected to take a conservative approach in expanding its business operations.

TRIS Rating reported that TUF is Thailand’s leading processor and exporter of canned and frozen seafood products with revenue in 2008 at Bt69,048 million. As of November 2009, TUF’s canned tuna production capacity was 400,000 tonnes per annum, making it one of the top tuna processors in the world. Its supply chain has been strengthened through the integration of packaging and distribution networks. The company product portfolio is highly diverse. For the first nine months of 2009, canned tuna generated the largest revenue, about 44% of total sales in US dollar terms, followed by frozen shrimp at 19%, canned seafood at 9%, and canned pet food at 9%. The company primarily exports to the US (50%), Europe (13%), and Japan (11%). Management has an experience of over two decades in the seafood processing industry. The company has a solid canned tuna brand, “Chicken of the Sea”, as the third-largest brand of canned tuna in the US. The full acquisition of the brand in 2001 almost doubled the company’s revenue base, as well as facilitated production and distribution efficiency. The brand strength also enables the company to capitalize on and introduce value-added products.

TRIS Rating said that TUF’s financial profile for the first nine months of 2009 improved from the past two years. Falling and more stabilized tuna prices have alleviated pressures on operating margins and cash flow generations. For the first nine months of 2009, operating margin was 7.6%, up from 5.6% in 2008. Debt to capitalization ratio as of September 2009 was 44.7%, improved from 52.0% in 2008. Liquidity measures remain strong. Earnings before interest, tax, depreciation, and amortization (EBITDA) interest coverage for the first nine months of 2009 was 9.3 times. TUF’s financial performance should continue to face challenges in tuna prices and baht fluctuations for some times. However, cash flow is not expected to be severely impacted given a broad diversification and inexpensive product offerings, said TRIS Rating. -- End

Company Rating: Affirmed at A+ Issue Ratings: TUF10NA: Bt1,500 million senior debentures due 2010 Affirmed at A+ TUF116A: Bt3,200 million senior debentures due 2011 Affirmed at A+ TUF13NA: Bt500 million senior debentures due 2013 Affirmed at A+ Rating Outlook: Stable Copyright 2009, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.

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