Seafood heavyweight Thai Union saw gross profit for the first quarter of 2023 slashed as soft demand and high costs took a toll on the company's profits.

The Bangkok-based firm reported THB 32.6 billion (€867 million/$957 million) in sales and an operating profit of THB 796 million (€21 million/$24 million) during the first quarter, a decrease of 10 percent and 51.5 percent year-on-year, respectively.

The group reported an earnings before interest and taxes (EBIT) of THB of 1.4 billion (€37 million/$41 million), a decline of 28 percent year-on-year.

The company’s pet care division's sales, which spun off its i-Tail Corporation on the Thailand stock exchange last year and which had been strong previously, dropped by 22 percent year-on-year, mainly from soft demand from inventory destocking for customers in the US and Europe, negative product mix and lower freight prices.

Clawing it back

The group has reportedly been considering making an exit from the struggling US restaurant chain Red Lobster, following significant losses the company has suffered since buying into the franchise, according to media reports.

The chain unexpectedly recorded a profit of THB 20 million (€530,000/$580,000) once a THB 101 million loss for lease accounting adjustment had been included, compared to losses of THB 335 million (€8.9 million/$9.8 million) for the same period last year.

However, in response to the speculation about Red Lobster's future within the group, Thai Union issued a statement on March 11, "reconfirming" that the restaurant chain is "still considered as a valuable opportunity for Thai Union."

The group credited this turn around to the success of its annual Lobsterfest campaign.

Thai Union acquired a 25 percent stake in the Red Lobster, the world's largest seafood restaurant chain with over 700 locations, in 2016 for $575 million (€589 million). In 2020, the company joined with a group of investors to acquire the remaining stake from private equity group Golden Gate Capital.

Red Lobster has been struggling for some time. Already in questionable financial health, its business was deeply impacted by the shutdown of the US foodservice sector and the forced closure of roughly a third of its restaurants at the height of the coronavirus pandemic.

Last year, Thai Union Group CEO Thiraphong Chansiri toured Red Lobster restaurants ahead of a new plan to turn around the struggling chain.

In February the restaurant chain launched its first-ever retail line of branded frozen seafood products. Thai Union said the launch of new, innovative products appealed to consumers in its full-year 2022 financial results.

In its 2022 annual report Thai Union said its net profit of THB 7.1 billion ($204 million/€192 million) was down around 11 percent from last year, citing a higher share of loss from Red Lobster’s operations, which totaled THB 1.2 billion ($34.5 million/€32.4 million) for 2022.

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