MD & A

Analysis of Operating Result and Financial Position

  • (1) Business Overview of the Company and Its Subsidiaries.
    1. In 2021, the snack food business had a decrease in growth value of 0.2 percent and when considering only the fish snack market, its growth value dropped by 11.7 percent, which is still a consequence of the COVID-19 epidemic. The government has issued measures to prevent the spread and ordered department stores and various retail stores as well as entertainment venues to close at an earlier than normal hour and imposed strict measures to control festival activities such as Children's Day, the Songkran festival, etc. which, if considering only the market value in the sales channels of department stores and convenience stores in 2021, the market growth decreased by 1.8 percent. The company then focused on expanding its distribution network to cover both domestic and international markets so as to increase the distribution channel of the company, opening online sales channels to facilitate the purchase of consumer products and also continuing to focus on developing and introducing new products to the market regularly.

      Pet food product manufacturing business, in 2021, was still affected by the COVID-19 pandemic regarding to international shipping due to container shortages, labor shortage and also including rising costs of raw materials and packing materials. Due to effective management in difficult situations, sales from the pet food business increased regarding the growth of the pet food markets, especially in the European and American markets. This was a positive impact due to the epidemic situation of COVID-19 which social distancing had people stay home and the rate of raising pets increased. The Company continued to focus on the production and distribution of pet food by collaborating with partners to develop products and design in a variety of new packaging formats, and focused on producing quality products that meet global international standards. In 2021, the Company increased production capacity in order to support business expansion and meet the market needs sufficiently and keep up with the demand.
  • (2) Analysis of the Operating Results
    1. The Company and its subsidiaries had profit for the period of 344.6 million Baht, decreasing from the same period of the previous year by 54.2 million Baht. The Company and its Subsidiaries had profit from operating activities of 438.6 million Baht, which decreased by 47.6 million Baht.

      Net revenue from sales and services for the period was 4,364.3 million Baht, increasing from the same period of the previous year by 203.8 million Baht, which consisted of:

      • Domestic sales amounted to 3,103.9 million Baht, decreasing from the same period of last year by 50.8 million Baht. As a result of COVID-19 pandemic impact, there was a decrease of 81.9 million Baht from the consumer product distribution business while there was an increase of 31.8 million Baht from accelerating the distribution of coffee products.
      • Foreign sales amounted to 1,260.4 million Baht, increasing by 254.6 million Baht from the same period of the previous year as a result of increases of 248.9 million Baht from the food production business of pet food which continuously increased from the previous year, especially in European and U.S. markets, and 5.7 million Baht from the Taro product distribution in Republic of China.

      Gross profit margin was 30.9 percent, decreasing from the same period of the previous year by 1.5 percent, mainly due to the coffee product business of 1.0 percent and a food production business of 0.5 percent. This resulted from an increase in prices of main raw materials and packaging products as well as an increase in expense of COVID-19 protective measures at the factory.

      Distribution costs for the period was 463.4 million Baht, increasing from the same period of the previous year by 32.1 million Baht, from an increase in advertising and promotional expenses for new products including organizing the Traceability project of Taro products and the opening of a coffee business flagship store.

      Administrative expenses for the period was 477.3 million Baht, increasing from the same period of the previous year by 35.1million Baht, mainly due to the increase in personnel expenses of 23.3 million Baht mainly from food manufacturing business. In the period, there was recognized as a loss on exchange rate from revaluation of foreign currency assets and liabilities amounting to 6.5 million Baht due to higher exchange rate of the current year relative to the previous year. Depreciation expenses increased by 3.3 million Baht from investment in machinery and equipment, including the installation of solar panels in the Subsidiary's factory (Solar Rooftop) and opening a coffee Flagship Store. Marketing research and product development amounted to 2.0 million Baht.

      In the period, the Company and its Subsidiaries recognized unrealized gains (losses) from fair value measurement of financial assets as gains of 8.5 million Baht. In the same period of the previous year, there was recognized as a loss of 12.1 million Baht.
  • (3) Analysis of the Financial Position
    1. Assets
      Total assets of the Company and its subsidiaries as at 31 December 2021 amounted to 2,585.1 million Baht, decreasing from the end of the year 2020 by 127.8 million Baht or by 5.2 percent from significant changes as follows:

      Total assets of the Company and its subsidiaries as at 31 December 2021 amounted to 2,585.1 million Baht, decreasing from the end of the year 2020 by 127.8 million Baht or by 5.2 percent from significant changes as follows: • Cash and cash equivalents increased by 33.1 million Baht
      • Trade and other receivables decreased by 115.2 million Baht, mainly due to the Company's sales decline with an average debt collection period of 58.9 days
      • Inventories increased by 81.8 million Baht, mainly from food manufacturing segment with an average sales period of 8.6 days
      • Other current financial assets increased by 44.0 million Baht, mainly from prepaid expenses for producing advertising material for Taro products in Republic of China
      • Property, plant and equipment increased by 69.5 million Baht from additional investment in machinery, tools and equipment to expand the production capacity and increase the efficiency of the Subsidiary's production

      Liabilities
      Total liabilities of the Company and its subsidiaries as at 31 December 2021 amounted to 1,154.8 million Baht, increasing from the end of the year 2020 by 61.4 million Baht or by 5.6 percent from significant changes as follows:
      • Bank overdrafts and short-term loan from financial institution increased by 131.2 million Baht, from being used as working capital of the Company and its Subsidiaries.
      • Trade and other payables decreased by 27.3 million Baht, mainly from trade payables decreasing by 10.8 million Baht and other payables decreased by 16.5 million baht, with an average repayment period of 42.1 days.

      Shareholders’ Equity
      Total shareholders’ equity as at 31 December 2021 amounted to 1,430.3 million Baht, increasing from the end of 2020 by 66.4 million Baht. Profit for the year was 344.6 million Baht. Actuarial gain net of income tax was 14.1 million Baht. Land appraisal gain net of income tax was 14.7 million Baht. Dividend payment during the period was 307.0 million Baht.
  • (4) Analysis of the Cash Flow Statement
    1. The Company had cash flow and cash equivalents as at 31 December 2021 of 57.0 million Baht, increasing from the same period of the previous year by 33.1 million Baht from significant changes as follows:
      • Net cash flows from operating activities amounted to 411.2 million Baht from profit before income tax of 427.1 million Baht, adjusted by reconciliation of profit before tax to cash received (paid) of 118.2 million Baht mainly from depreciation and amortization. Operating assets and liabilities decreased by a net of 62.0 million Baht, and during the year, income tax was paid in the amount of 72.7 million Baht.
      • Net cash flows from investing activities amounted to 130.1 million Baht from the purchase of a net open-end fund of 2.3 million Baht and additional investment in building improvements and equipment net of 127.9 million Baht.
      • Net cash flows used in financing activities amounted to 248.0 million Baht from dividend paid of 306.9 million Baht, repayment of operating lease liabilities of 19.5 million Baht and cash received from financial institutions and overdrafts net of interest expenses of 78.4 million Baht.
      2. Factors or Events That May Affect the Financial Position or Operations Significantly in the Future (Forward Looking)

      From the situation of COVID-19 pandemic that is still spreading around the world including the situation of rising oil prices which will affect the production cost, raw material cost, packaging cost, shipping cost and other main costs, the overall cost has continued to rise. In addition, the minimum wage will increase in this coming April, the Company expects that it will rise more than usual regarding to a significant increase of the cost of living.

      However, the management of the Company and the Group of Companies have given importance to planning so as to cope with such situations and remained closely monitor. Also, they have focused on raw material management, factors in production and other costs to be effective and maintained the quality of products and services to create customer satisfaction. In addition, if the above situation has adjusted in a better way, the Company and the Group of Companies have prepared themselves to support the recovery from the aforementioned situation, both in terms of capacity expansion, product development and distribution channel development so as to provide consumers with convenient and comprehensive access to the products of the Group, including expanding the production capacity to support the needs of consumers continuously.

      Amid the uncertain situation both domestically and internationally, the management of the Company and the Group continues to focus on monitoring the impact of the COVID-19 pandemic, which is the main factor affecting the health of the world's population and causes the global economic downturn continuously, political factors both domestically and internationally, social conditions, age factors of the population in countries where the proportion of elderly people has increased significantly, employment rate in the country includes the various government policies in each country, changing technology trends, laws and environmental factors. Most of these are factors that the Company cannot control but these may affect the Company both in the short term and in the long term, and both directly and indirectly.

      Therefore, the management team of the Company and the Group of Companies foresee this importance that needs to closely monitor the above-mentioned internal and external control environmental factors in order to manage risks appropriately and be able to resolve problems that may occur to the Company and the Group in a timely manner so as to minimize negative impacts to the Company.