MD & A
Explanation and Analysis of the Management
(1) Overview of the Company and its subsidiaries.
The snack market in 2019 grew at the rate of 5.4%, which is lower than in 2018 that grew at 5.9%. The Company is still focused on development and launch of new products on the market, especially creating its own brands, and on selecting trade partners that can create higher returns for the Company and sustainability together. It increased its distribution channels to cover both domestic and overseas markets and to facilitate the purchase of products by consumers. There is also advertising and public relations and regular organization of sales promotion activities.
For tuna and seafood products, the Company places importance on product development and the introduction of technologies to increase production capacity, as well as have a positive effect on the nutritional value. Distribution is made both locally and overseas, which emphasizes mainly on the Asian, European, American, Australian and Middle Eastern markets.
For the coffee business, emphasis was on the production and distribution channels of organic coffee products. In the current year, distribution was made through the modern trade, traditional trade and online channels to facilitate purchases by consumers, as well as development of more diverse products.
(2) Results of the Operation
The Company and its subsidiaries have profit for the period of 270.1 million Baht, decreasing from the same period of last year by 94.6 million Baht or by 25.9% because during the period the Company and its subsidiaries realized the effect of the change in labour laws of an increase in the retirement benefit of employees to 400 days’ compensation, which resulted in the Company and its subsidiaries’ recognition of expenses for such item of 27.6 million Baht, and there was a gain on sales of investments in available-for-sale securities of 13.7 million Baht last year. Therefore, profit before such extraordinary items was 297.7 million Baht. Significant changes were as follows:
- Net revenue from sales and services for the period was 4,086.3 million Baht, decreasing from the same period of the year before by 385.7 million Baht or by 8.6% in line with the business strategy of the Company and its subsidiaries to focus on selecting trade partners that can create higher returns for the Company and create sustainability together, which consisted of:
• Domestic sales amounted to 3,324.7 million Baht, decreasing from the same period of the previous year by 261.1 million Baht due to a decrease of 263.4 million Baht from the consumer products distribution business, an increase of 2.2 million Baht from the food production business and an increase of 0.1 million Baht from the cold storage warehouse and services business.
• Export sales amounted to 761.6 million Baht, decreasing by 124.6 million Baht from the same period of the previous year due to a decrease of 120.8 million Baht from the food production business and a decrease of 3.8 million Baht from the consumer products distribution business.
Selling expenses for the period was 453.4 million Baht, increasing from the same period of the previous year by 56.5 million Baht due to the increase in advertising and sales promotion expenses of the consumer products distribution business of 81.5 million Baht and increase in expenses of the sales representative and distribution center (concessionaire) project of 6.0 million Baht while transportation expenses decreased by 23.1 million Baht mainly from transportation expenses for trade partners whose distribution agreements have been terminated in line with the business strategy mentioned above, sales personnel expenses decreased by 7.4 million Baht, vehicle and travel expenses decreased by 1.9 million Baht and other expenses increased by 0.8 million Baht. The ratio of selling expenses to sales and service revenues was 11.1%, increasing from the same period of the year prior by 2.2%.
Administrative expenses for the period was 415.2 million Baht, up from the same period of the previous year by 1.8 million Baht due to the increase in operation system expenses of 5.1 million Baht, increase in rental and office expenses of 3.3 million Baht, increase in doubtful accounts of 2.7 million Baht and increase in vehicle and travel expenses of 2.4 million Baht while personnel expenses decreased by 5.6 million Baht, donations decreased by 4.9 million Baht and other expenses decreased by 1.2 million Baht.