Thai Union Group: Remains cautiuos
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4Q25 core earnings declined 19% y/y and 24% q/q, coming in below our expectations and consensus estimates
Weaker performance was driven by US reciprocal tariffs, elevated expense levels, and lower other income
More positive view on the 2026 outlook, but remain cautious regarding the ongoing impact of US reciprocal tariffs
Maintain HOLD with higher TP of THB13.50, reflecting the recent treasury share cancellation
Earnings review
4Q25 core earnings were below expectations. TU reported 4Q25 core earnings of THB 911mn (-19.2% y/y, -23.9% q/q). The results were below our estimates and consensus by 16% and 12%, respectively. The key deviation from our forecast was due to lower-than-expected GPM. Overall, the softer earnings were largely attributable to a lower gross profit margin and a decline in other income. During the quarter, TU recorded a forex gain of THB 102mn, resulting in 4Q25 net profit of THB 1.13bn (-16.5% y/y, -22.3% q/q).
Slight contraction in sales. TU posted total revenue of THB 35bn (-0.2% y/y), mainly dragged down by exchange rate impacts and soft value-added sales. Ambient seafood sales inched down 2% y/y, weighed down by FX impact and weak demand in the US, which partially offset growth in other markets. Frozen seafood sales, on the other hand, recorded decent growth of 3% y/y, supported by healthy demand and a strong feed business. Petcare sales inched up 1% y/y, driven by higher volumes in the US and European markets, which outpaced lower average selling prices. Value-added sales remained soft amid a weakening economic environment.
Gross margin narrowed y/y. 4Q25 gross margin came in at 18.3% (-40bps y/y, -70bps q/q), primarily due to lower margins in the ambient seafood and petcare businesses. Ambient seafood gross margin declined 50bps y/y, reflecting the impact of increased US tariffs and higher tuna raw material prices (+3% y/y). The company’s inability to fully pass on tariff-related cost increases also weighed on margins. Petcare gross margin declined 50bps y/y, mainly due to FX impact and tariff support provided to certain US customers. Conversely, frozen seafood margins improved y/y, driven by lower raw material costs and strong feed business performance.
SG&A expenses inched down. The SG&A-to-sales ratio was 13.9% (-10bps y/y, +10bps q/q). Despite lower transformation costs (reduced from THB 299mn in 4Q24 to THB 156mn in 4Q25), SG&A-to-sales remained elevated due to continued proactive marketing expenses.
Lower other income offset by higher associate income. Other income declined significantly y/y, largely due to lower interest income from subsidiaries. Associate income increased 14% y/y, driven by stronger performance from Avanti. Nonetheless, interest expenses edged up both y/y and q/q following the refinancing of a short-term loan into a Blue Loan. The effective tax rate declined y/y due to lower-than-expected profits from the Thailand operations. Overall, 4Q25 core profit margin came in at 2.6%, down 60bps y/y and 90bps q/q.
Outlook
More positive 2026 outlook, but with close monitoring required. During the analyst meeting, management guided the following key financial targets:
(i) sales growth of 3%-4% (assuming USD/THB at 32.5),
(ii) gross margin of 19%-20% (vs 18.9% in 2025),
(iii) SG&A-to-sales of 13.5%-14.5% (vs 14.3% in 2025),
(iv) effective tax rate increase of 1%-2%, and
(v) capex of THB 5.5–6.0bn.
Overall, management believes sales growth will be driven by higher volumes and the gradual pass-through of US tariffs to customers. Gross margin improvement should be supported by better performance in the ambient and frozen seafood businesses. SG&A-to-sales is expected to remain elevated due to intensive marketing campaigns and the impact of US reciprocal tariffs on the frozen seafood business, despite lower transformation costs.
On the balance sheet side, the company aims to reduce gearing to around 1.1x after it increased to 1.18x at end-2025. The rise in leverage was driven by higher working capital requirements to mitigate the impact of US reciprocal tariffs and funding needs to support the share repurchase program, which led to higher debt levels in 2025.
Nevertheless, in our current forecast, we adopt more conservative assumptions. We project sales growth of 1.8% (assuming USD/THB at 32.0), with gross margin at the lower end of management guidance at 19.1%. Although uncertainties surrounding US reciprocal tariffs have been resolved and the current 19% tariff rate enables TU to remain competitive against key rivals, we expect rising product prices in the US market in 2026 to potentially decelerate domestic consumption. Notably, approximately 40% of TU’s revenue is generated from the US market (including North America). Thus, we conservatively forecast a gradual earnings recovery of 8% in FY26F, supported by modest sales growth and improved operating margins.
2026 guidance
| TU | DBSV |
| Sales growth | 3%-4% | 1.8% |
| GPM | 19%-20% | 19.1% |
| SG&A to sales | 13.5%-14.5% | 14.1% |
| Capex (THB bn) | 5.5-6.0 | 5.5 |
Source of all data: Company, DBS
Capital reduction of 200mn shares. Thai Union has reduced its registered and paid-up capital through the cancellation of 200mn treasury shares, representing 4.49% of total paid-up capital. Following the capital reduction, the company has 4,255mn paid-up shares outstanding, effective 8 January 2026. Currently, Thai Union still holds 400mn treasury shares, representing 9.4% of total paid-up shares, which could provide further upside to EPS should the company proceed with additional capital reduction.
Recommendation
Maintain HOLD with a higher TP of THB 13.50. We have maintained our earnings forecast for FY26F, which remains more conservative than the latest management guidance. Nonetheless, we have reflected the recent cancellation of 200mn treasury shares, representing 4.49% of the total paid-up capital. As a result, our TP has increased from THB 12.90 to THB 13.50, pegged to a 13.5x FY26F P/E, in line with its five-year historical average. However, given the limited upside to our TP and persistent uncertainties in the US market, we maintain our HOLD recommendation.
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