Thai Union's profit drops in Q2 2023 despite Red Lobster turnaround

Following record highs in net profit and sales in the third quarter of 2022, Thai Union has posted drops in its net profit for three straight quarters, including in the second quarter of 2023, despite improved performance from Red Lobster, its global restaurant chain.

The Bangkok-based seafood producer earned a net profit of THB 1 billion (USD 28.6 million, EUR 26.1 million) between April and June – down 36.7 percent year over year – a drop due mainly to “unfavorable nonoperating items such as a negative impact from foreign exchange losses, lower tax credit, and dilution … on i-Tail [Thai Union’s pet care brand] net profits,” the company stated.

In Q2 2023, Thai Union reported sales of THB 34.1 billion (USD 973.8 million, EUR 889.6 million), down 12.6 percent year over year, with declines occurring across the majority of sectors, such as pet care, frozen and chilled seafood, and value-added products.

The improved performance of Red Lobster and other income sources, however, partially offset the decline in second-quarter net profit compared to the two previous drops, Thai Union stated.

The turnaround for Red Lobster, which Thai Union acquired in 2020, began early this year as the restaurant chain contributed a profit of THB 20 million (USD 571,200, EUR 522,000) to Thai Union’s bottom line in Q1 2023 “thanks to [the] seasonality and success of [the] Lobsterfest campaign.”

Red Lobster’s share of loss during Q2 2023 was THB 189 million (USD 5.4 million, EUR 4.9 million), marking an improvement compared to its loss contribution of THB 383 million (USD 10.9 million, EUR 10 million) in the same period last year. This less extreme loss was due, in large part, to “price increases, lower cost of goods sold, and lower labor costs from our turnaround strategy.”

These much-needed improvements, though slight, could not have came at an opportune time for Thai Union. As 2022 losses from Red Lobster, which operates over 650 restaurants in the U.S., piled up, including a THB 456 million (USD 13.1 million, EUR 12.2 million) loss in Q4 2022, Thai Union reportedly considered exit plans from the beleaguered restaurant chain.

But Red Lobster began to right itself in February 2023, when it launched a new frozen line – a core piece of the restaurant chain’s multipronged turnaround plan. The launch included packaged retail products now available in 5,200 stores and online in the U.S. Thai Union said the profit earned by Red Lobster proves its turnaround business plan for the seafood restaurant chain has “shown positive progress,” leaving behind, for now, the possibility of selling off Red Lobster.

The improved performance has also enabled Thai Union to ... 

Photo courtesy of Thai Union