BANGKOK -- Thai Union Group has reported a 99% year-on-year plunge in group net profit for the three months through June after setting aside $44 million to cover potential costs related to U.S. litigation over alleged price fixing.
The world's largest producer of canned tuna logged net profit of just 9.63 million baht ($290,000) for the quarter after this expense, the company said this week.
From 2015 through 2016, American wholesalers and retailers including Walmart sued a Thai Union subsidiary that produces shelf-stable tuna under the Chicken of the Sea brand, along with its two largest competitors, for allegedly colluding to set prices. Thai Union said it reached a settlement with Walmart last quarter and that it is in "advanced negotiations" regarding other litigation. The $44 million provision "reflects potential risks," it said.
Sales slid 2% to 34.1 billion baht, owing partly to a lackluster showing in North America, which generates about 40% of Thai Union's sales. Global sales of chilled and frozen foods such as shrimp and salmon sank 3%, while sales in the mainstay canned-tuna business fell 2%.
"Thai Union will continue to work harder to weather the industry's volatility as we focus on continued business and product innovation, while growing our geographic diversity," CEO Thiraphong Chansiri said in a statement. The company has been making an effort to expand in China and other Asian markets.
Thai Union targets annual sales of $8 billion -- roughly double current levels -- by 2020.