At its analyst meeting, Thai Union Frozen Products (TUF) management confirmed that the worst is over for the shrimp business that has been affected by Early Mortality Syndrome (EMS).
This was already seen in the third quarter 2013 earnings, with shrimp sales volume increasing to 16,695 tons, a growth of six per cent year on year and 0.4 per cent quarter on quarter.
The setup of a new subsidiary, TMAC Co, to handle the shrimp business will help improve sales and margins of this business in the fourth quarter of 2013 and into 2014, reports The Nation.
Widening margin will be higher production, reduction in costs and improvements in operational efficiency, coupled with the ability to pass higher costs onto customers in new contracts.
Better EMS Management
Rather than finding a cure to EMS, the company is instead focusing on improving prevention methods and finding tactics to reduce mortality rates. This is working, with TMK2 farm seeing a reduction in mortality rates to 30-40 per cent from 50-60 per cent earlier this year.
The company targets TMK2 farm production of 170 tons in 2013 (100 tons YTD) and 490 tons in 2014. The jump in 2014 is because TMK2 Farm is not yet operating at full capacity in 2013.
TUF expects 2013 to be the shrimp sector's worst year as it battled the EMS epidemic. However, moving ahead, three factors are expected to lead to improvement in this business:
1. Thailand's shrimp species are at their historical best ever
2. Shrimp farmers are now better educated on EMS and how to prevent the disease
3. More sharing of knowledge between countries will help provide more data on the disease and eventually lead to a cure.
Backed by these factors, TUF estimates Thai shrimp production at 250,000 tons in 2013 from 550,000 in 2012, with gradual improvement to 300,000 tons in 2014, 400,000 tons in 2015, and 500,000 tons in 2016.