2020 was an unprecedented year of challenge and uncertainty for all of us, as Covid-19 and the global pandemic upturned the way we live, work and play. Amidst these challenges and turmoil, Thai Wah Public Company Limited delivered a steady and profitable operating performance positioned for sustainable growth. By far, the most important thing we did in 2020 was keeping our associates, supply chain and partners safe and healthy amidst this global pandemic, especially for our 3,000 associates working across the region at the frontline.
As we know it, the first half of 2020 was chaotic and disruptive, with Covid-19 ravaging across many parts of Asia including our key markets in Thailand, Vietnam, China, Indonesia, USA and Europe. Our biggest priority in the first half of the year was to keep our teams and associates safe with full safety and hygiene protocols while keeping operations running smoothly. We saw temporarily loss in demand and severe supply chain disruptions for 3 months, but overall fundamental demand and customer pick up returned in the second half of 2020. As food and consumer food products is a daily necessity and consumer staple, we remain optimistic on the long-term prospects and continue to proudly serve our customers from Farm to Shelf.
In spite of Covid-19, volume from our China tapioca business managed to grow by 17% as we witnessed a strong recovery in second half of 2020. The demand for tapioca starch especially premium food grade where Thai Wah operates in, remains steady as a key staple. The impact of Covid 19 resulted in supply chain disruption for a few months, as well as higher idle cost and operating expenses during this period. We faced lower starch content during several periods of the year also resulting in higher raw material costs and lower gross margins overall. Despite these headwinds, we continue to grow our business steadily focusing on better distribution, sales and marketing across our regional Message from the Chief Executive Officer offices in China and Southeast-Asia. At the same time we increased the variety of our starch solutions such as cassava flour, rice flour, organic tapioca starch and pre-mixes and have launched this to over 10 global markets.
We continue to aspire to be the leading tapioca brand in the world. Our Rose brand is the preferred brand for food-grade tapioca starch in China, Taiwan and ASEAN markets. Through several online-exhibitions and key market channels this year such Food Ingredients China (FIC) in China, ThaiFex - World of Food Asia and Food ingredients Asia (FIA), we continue to build our evolution to become a starch-solutions provider and have made strong momentum in gaining market share and better distribution in markets such as Vietnam, Japan and Indonesia. Virtual collaboration is now becoming critical for all customer interaction and we have partnered with regional and global trade channels to access our markets online and through digital exhibitions, trade fairs and e-conferences.
Thai Wah is a sponsor and partner for Future Food Asia and continues to play a role in regional events.
Our Food business delivered exceptional operating performance and its higher profit ever. The efforts of the company over the last 3 years to strengthen our export and international channels for our Food Business have paid off - during Covid - 19 pandemic in 2020 our export food business grew more than 95% and our Vietnam business more than doubled. This is strong validation of the company’s strategy to be a leading global player in all types of starch-based noodles and noodle solutions to serve a global market.
Agriculture and Food is one of Southeast Asia’s most important exports and we are committed to serving our consumers and customers better by putting innovation and sustainability at the core of our long-term vision. These efforts were enabled by a new R&D hub based at Chulalongkorn University in Thailand. We launched more than 10 new products for both starch and food business and will continue to invest in its growth and innovate for the future, developing a more open innovation ecosystem for partnership and breakthrough technologies in areas of food modification, and bioplastics. Looking towards the future we will be launching new prototypes of bioplastic, bio-based and new protein applications as part of our overall push to improve the portfolio.
Although the net profit decreased in 2020 compared to previous year, we remain in a strong cash position with a strong balance sheet. We continue to invest with discipline by measuring Returns on Invested Capital and our policy on generating long term equity value for shareholders, focusing on improving operating cash flow as one of our key performance metrics. This filters down to the way we manage supply chain, working capital, maintenance and renovation and new capital expenditure. Overall, our net operating cash flow improved in 2020.
All-in-all, the Company’s net profit for the period from 1 January to 31 December 2020 based on its consolidated financial statements amounted to Baht 38 million (Baht 0.04 / share). On this note, the Board of Directors has resolved to recommend a dividend payment of Baht 0.134 per share in respect of the full financial year ended December 31, 2020 which is subjected to shareholder’s approval at the Company’s Annual General Meeting on 23 April 2021.
We are also proud to announce that Thai Wah was selected to list on the “Thailand Sustainability Investment (THSI)” in 2020 by the Stock Exchange of Thailand (SET) and were awarded the Sustainability Disclosure Award by Thaipat for the second consecutive year. This is driven by how we embed sustainability targets in farming, environment, safety and health standards and strive to operationalize our sustainability framework. In addition, we won the Winner of The International Innovation Awards (IIA) 2020 for Bean Vermicelli Double Dragon Balance (DD Balance) product by Enterprise Asia and received the Outstanding Disability Employer Awards of the year 2020 from the department of Social Development and Welfare for the 4th consecutive year. We are proud to have received “Excellent CG Scoring” rating for the first year in 2020 for our corporate governance from IOD. These awards are testament of our passion to drive change, accountability and transparency across our entire value chain.
Looking forward to the next decade, the Thai Wah family remains focused and committed to deliver our vision in creating Innovation and Sustainability from Farm to Shelf. While uncertainty and chaos may seem the new normal, we continue to build our foundations the Thai Wah way, in pursuit of creating value from farm to shelf.
Mr. Ho Ren Hua
Chief Executive Officer