MD & A
Explanation and Analysis of the Management
(1) Overview of the Company and its subsidiaries.
The snack market in 2017 grew at the rate of 5.4%, which is similar to the year before. The Company has implemented strategies on product marketing that focus on providing benefits to consumers in terms of quality, taste and nutritional value in line with the ever changing needs of the consumers, on distribution channels that facilitate consumer purchases, on efficient inventory management, on continuous advertising and organization of sales promotion activities, and on expanding new customer base.
- For the tuna and seafood products for export, the Company continues to place importance on new product development, as well as use of technologies in the production of goods, and on quality management system in all production processes that are traceable for which it has received international standards certification that are recognized by customers overseas. It also emphasizes on producing products that are environmentally friendly, which allowed the products of its subsidiaries to gain continuous trust from consumers, with emphasis on exports to the Asian, European, Australian and Middle Eastern markets.
(2) Results of the Operation
Net profit for the 12-month period ended 31 December 2017 amounted 501.6 million Baht, increasing from the same period last year by 156.5 million. Profit from operating activities for the period was 442.5 million Baht, down from the same period last year by 78.4 million Baht. Gain on sales of asset classified as held for sale in 2016 (ordinary shares of Premier Enterprise Public Co., Ltd) was 107.0 million Baht. Gain on sales of investments in available-for-sale securities was 12.6 million Baht and income tax that decreased from tax losses from sales of such securities was 62.6 million Baht. Significant changes in the operating performance for the period are as follows:
Net revenue from sales and services for the period was 4,186.2 million Baht, increasing from the same period of the year before by 133.5 million Baht due to the rise in domestic sales of 85.4 million Baht (consumer goods distribution business increased by 75.3 million Baht and food production business increased by 10.1 million Baht) and export sales increased by 48.0 million Baht, which comprise sales revenue of Premier Canning Industry Co., Ltd. that increased by 32.1 million Baht from the increase in price per container while volume of exports decreased by about 32 containers (Human -25 FCL / Pet +57 FCL) and increase in the consumer goods distribution business by 15.9 million Baht. In 2017, the undertaker of the export sales was changed from P.M. Food Co., Ltd. to Premier Marketing Public Co., Ltd.
Gross profit margin was 27.0%, down from the same period of the previous year by 0.6% due to the consumer goods manufacturing and distribution business while for the manufacturing for export business and cold storage warehouse and services business there were no material changes.
Other income was 46.7 million Baht, up from the same period of the year before by 17.4 million Baht from gain on sales of investments in available-for-sale securities of 12.6 million Baht, increase in gain on exchange rate of 8.5 million Baht, decrease in gain on sales of other investments of 2.0 million Baht, decrease in interest income of 0.2 million Baht and decrease in other income apart from such items of 1.5 million Baht.
Selling expenses for the period was 351.2 million Baht increasing from the same period of the year before by 21.8 million Baht due to the increase in advertising and sales promotion expenses for the consumer goods manufacturing and distribution businesses of 6.5 million Baht, increase in sales personnel expenses of 11.5 million Baht from the adjustment in salaries and annual bonuses, increase in transportation expenses of 4.8 million Baht while other expenses decreased by 1.0 million Baht. The ratio of selling expenses to sales revenues was 8.4%, increasing from the same period of last year by 0.3%.
Administrative expenses for the period was 371.0 million Baht, up from the same period of the previous year by 71.8 million Baht due to the increase in personnel expenses of 27.6 million Baht from the adjustment in salaries and annual bonuses together with the increase in number of employees from the expansion of marketing and the organic coffee business, increase in administrative and consulting expenses of 18.0 million Baht, losses from trial marketing in Nigeria of 7.1 million Baht, increase in donations of 3.1 million Baht, increase in office building and warehouse rental expenses of 3.1 million Baht, increase in technological expenses of 2.8 million Baht, increase in office building expenses of 1.6 million Baht, increase in bad debt expenses of 1.4 million Baht, increase in travelling expenses of 1.3 million Baht and increase in other expenses of 1.6 million Baht.
Research and development expenses for the period was 10.1 million Baht comprising marketing research and development expenses of the Company of 5.3 million Baht and product research and development expenses of the subsidiaries of 4.8 million Baht, increasing from the same period of the year before by 4.2 million Baht
Income tax expenses for the period was 42.4 million Baht, down from the same period in the previous year by 68.8 million Baht from the exercise of tax privileges from tax losses from the sales of the ordinary shares of Premier Enterprise Public Co., Ltd. totaling 62.6 million Baht.