For today's agenda, we're going to present our earnings results, and we have a Q&A session as well for Thai Union. That will be followed by TFM, and then ITC as well, and then we will have lunch together. I would now like to introduce our executives who are here today to present. The first is Mr. Thiraphong Chansiri, President and CEO of Thai Union. Ludovic Garnier, our CFO. Ms. Ratinan. Without further ado, I'd like to invite our executives to begin.
Good morning to all of our analysts. This morning, it seems that we still are waiting for many to join us. Perhaps it's too early in the morning. I understand that many may show up a bit later today because they're more interested in listening to the results of ITC. I'd like to report our earnings results for the fourth quarter and for the entire year and our outlook for 2023. In the fourth quarter, our sales were quite high, almost THB 40 billion. In the past year, our operations for PetCare, the PetCare unit, were exceptional, growing by 34% or so. Our canned seafood also grew by almost 13% year-on-year. In 2021, which was also a strong year for us, we outdid that. As for our frozen business, we experienced a drop, especially in the U.S.
We have a drop of 13.1% year-on-year. In terms of our gross profit, our margin is at 17.3%. If we consider the restructuring in Germany, our If we exclude that, our growth is about 19% or so. Our operating profit in the fourth quarter has grown by 21%. Our SG&A is at 11.3%, which is more normal. It's returning to pre-COVID levels because of the improved freight costs. For some of the routes, the costs have gone down to pre-COVID levels, and our freight costs have gone down, have improved by about THB 320 million. We also have lowered expenses in other areas as well, so that has led to a strong operating profit.
Our net profit for the fourth quarter has gone down by 36% year-on-year, mainly due to the foreign exchange, which was very volatile in the fourth quarter. We also sustained an impact from our share of loss from Red Lobster and our preferred share value adjustment as well. Our net profit is at about. The numbers you can see on the screen there. We have record high sales for 2022. Our sales are at about THB 156 billion, growing 10.3% year-on-year. Our share price, we don't need to talk about that. Let's just skip over that because it's not the best, but it was. Yes, it was beyond our control. Our highlights is our net debt to equity.
You can see that from the end of 2021, it was 0.99 times. At the current moment, after our ITEL IPO, our overall financial status and net, in terms of net debt to equity is 0.54 times, which is very strong. I am confident that we are ready, whether it's in terms of new investment or regardless of what the situation globally will be like. Our financial status, we're not worried about. For the entire year, whether it's our gross profit, which has gone up by 5.8%, our operating profit has gone down 2.5%, and our EBITDA has gone down 13.7%. Our net profit is down 10.9%. Nevertheless, there are two items that I see as one-off items.
That's our preferred shares for Red Lobster and the closing of our Germany facilities. If we add these back in, our net profit has not gone down at all compared to 2021. For the entire year, we have done quite well. We're not very worried about anything. We do admit that what we have to improve on is our frozen business in the United States. We had a major loss there at about $60 million. This year, this should normalize. The market was weak for branded products in Europe. Our operating results there went down by about EUR 20 million. If we look at our fundamentals of our company at this moment, our net profit should go up to about THB 9 or 10 billion already.
We hope to see a record net profit, a new level very soon. This is what I want to share with you. On the next page, as I mentioned, our adjusted net profit, if we were to look at our Red Lobster's preferred shares, the THB 900 million that disappeared in the year before, as well as our German factory facilities, if we add those back in, we're actually looking at an adjusted net profit of THB 8 billion. On the next page, we'd like you to take a look at our dividend policy. We're still continuing to pay or to follow that policy. The DPS was at THB 0.44. Our yield. Our share price was low, but our yield is at 5.4%.
This is... We've just received approval from the board. We've also received approval for our treasury stock. This was approved earlier. It's a THB 3 billion. At the beginning of January to the end of June, we're going to have our share repurchase program. On the next page, let's take a look at our targets for 2025. Overall, we are still on track, whether it's in terms of our group EBITDA, where we want to reach $450 million-$550 million. In 2021, we already exceeded $400 million already. By the year 2025, we are not worried about reaching our goal. Our organic growth for our main or core businesses, we're looking at 3%. We actually believe we can achieve 5% or so.
Sometimes we are facing weaker exchange situations. Three percent is not a concern for us. In our productivity, we've achieved 3% for the annual conversion cost improvement. Our productivity, our policy includes continuous investment, capital expenditure. We're going to continue to improve our facilities, our warehouse. We're going to seek further automation. We have reduced our labor by about 30%-40% in Thailand in our shrimp facilities, and we're going to continue on this path. Looking at the fourth item, our revenue from innovation, we will achieve 10%. At the moment, we are at about 7%, and I'm confident that we can exceed this goal. We can exceed 10% by 2025. This year, we have decided to open up an innovation center, one more center in Holland at the Wageningen University in Food Valley.
At the moment, we are in this midst of planning our management there. We believe by the end of this year should be ready to focus on branded ambient food and also focus on the late-stage development. Here in Thailand, we're focusing on early stage or research, and this is what we'll continue to pursue. The fifth item is our turnaround or divest loss-making businesses. This is something we have continued to do. Last year, we closed our chilled factory in Poland, and we also closed Rügen Fisch in Germany. These are our continuing efforts. We have a dashboard to monitor our non-performing or low-performing businesses. If they turn around, we could either turn around or divest these. Rest assured, we are closely monitoring these.
The sixth item is, we're going to invest $500 million into new or adjacent businesses over the next five years. This can include our culinary plant, which is going to be completed. The construction will be completed by the end of this year. We also have our protein hydrolysis plant, which will also see the completion of its construction at the end of this year as well. We are very focused on continuing to invest. We're going to focus on costs more. For our new businesses, we're going to look for businesses of growth potential. For instance, PetCare, ingredients, alternative protein. These are areas where we will continue to grow. On the next page, our seventh item is grow PetCare. We want to see a growth of three times of the GDP.
In our feed business, we're looking at a turnaround at the moment, and we believe it is on the uptrend, and you can hear the information from Thai Union Feedmill. There are some raw materials that they're still struggling with, but they will provide more information. The eighth item is scale up our ingredients and culinary businesses. We will continue with this effort as well, and you will be seeing more information, more results towards the end of this year. By 2025, in the ninth item, our new and adjacent businesses are going to contribute more than one-third of EBITDA overall. From 2022, we have achieved one-third thanks to strong growth and margins from i-Tail. Our packaging business is not one that we talk about much. We don't talk about that much, but it has strong operational results, especially Asia Pacific Can.
Today, it has expanded in Thailand. Most recently, it is manufacturing cans for Seychelles as well. This is the first step for our packaging group, the first step abroad. They've done very well in Seychelles. We're looking at other opportunities in other countries. As for our printed materials, Thai Union Graphic has done well in the past 30 years. It is looking at flexible packaging right now, a joint venture with Starflex. The 10th item, SeaChange. In the third, we're going to launch our SeaChange 2030. The new topics in our scope are climate change. We've already expressed commitment for zero emissions in terms of greenhouse gases by 2050, and we are in line with other leading organizations around the world.
As you know, last year, our company was chosen to be first in food products industry index by Dow Jones Sustainability Index. Looking at the 11th item, our commitment to move to sustainable packaging by the year 2025, we are on track. By 2025, we will achieve more than 80% of this target, especially in terms of our branded business, whether it's reusable, recyclable or compostable packaging. We continue to move forward in our efforts in this area. The 12th item, we're going to continue on with sustainability-linked financing or blue financing. We have already converted 50% of our long-term portfolio to blue finance, and our next goal is 75%. In the future, we see 100% blue finance.
Lastly, we have driving synergies and profit contributions from our strategic investments, whether this is our joint venture in India with RBS or Avanti. We are investing in Mara, which produces algae oil in Canada. We're going to continue to work with them. We're investing in Iceland. It's not a big investment, but they produce cod liver, canned cod liver, which is a product that has high demand. It's the Oscar brand, and we own 50%. We have a shareholding of 50%, and we plan to increase that to 75%. It's not very big, but in Iceland and Norway, these are the two countries that have cod liver. They are the source of cod liver. In Iceland, our market share is more than 30% of the global industry.
Lastly, through CVC, we've invested in a company known as Algama, which produces ingredients from algae oil as well in France. We have invested in Jellagen, which produces its startups in Scotland that manufactures jellyfish-based products, collagen. Those are our CVC investments. We have Flying Spark as well, which produces insect protein, and it has begun its operations. We have facilities in Phetchaburi. We're starting operations there. We also have Alchemy, which produces ingredients for diabetic products. This is what we continue to pursue. Jellagen, we're looking for opportunities to use jellyfish in Thailand. There are many opportunities, and we're in the process of studying this and working with the team in Scotland. On the next page, this is ITC. It has been very successful. We have...
It's the largest IPO, of THB 21 billion. Thai Union is the largest shareholder at 78%, and we will continue to stay at this level. We don't plan to sell off any of our shares. We want to unlock the value of this business, and it has strong operational results. This is a look at our investments, whether it's ITC, which is worth THB 73.5 billion or Avanti in India, which is at THB 5.35 billion and Thai Union Feedmill, which is at THB 2.5, almost 3 billion. Thai Union's investment in these three companies is a total is more than the value of Thai Union itself. This is the information we wanna share with you to provide a clearer picture. We already mentioned some of these. We have our minority investment. We've invested in Mara.
RGA, we have 50% shareholding. We're a major shareholder now. Our joint ventures are in India with RBF. We have a joint venture in terms of cold storage with JWD in Samut Sakhon. We have a strategic partnership with Shrimpish or the company known as Ish. This is for alternative protein. Our global portfolio, as I mentioned earlier, we closed our plant in Lübeck. It has been finalized, and we sold our facilities in Poland as well. Algama and GELITA, I already mentioned these, so I'm just going to skip over this slide. In terms of our SeaChange efforts, we continue to strive to be a leader in our seafood space. SeaChange is what differentiates us from our competitors. SeaChange is what will enable us to develop our relationships with our partners, especially the leading companies around the world.
This is our strategy that we will continue to uphold. These are just some scores we want to share with you. We have been invited to be a member of DJSI. This is our ninth year. We ranked number one in 2022 and ranked number one in 2018 and 2019 as well. These are our records, our achievements. We continue to support the local community wherever we have investments, whether it's in Ubon Ratchathani. We donated products to those impacted by the flooding. We also are working with a foundation in the States to educate students about food waste and nutrition. We have become an official partner of the British Paralympic Association as the protein partner. This association only chooses one partner in each area. We are the single protein partner. We have received numerous awards.
You can just take a look at the documents that you've been given to see the awards. Here, this is about our upgrading to... From stable to positive by the Japan Credit Rating Agency, Ltd. MSCI has given us an ESG score of A. These are our latest results, I'd like to hand things over to Ludovic to provide the financials.
Many thanks. Everyone, very happy to be with you today. Just wanted to deep dive a bit on our numbers in Q4. First of all, as usual, we'll start with our five years track record, okay? I think this is one of the picture where we are very proud. You can see over the last five years, we have 12 quarters in a row of top-line growth. I think this is a very strong achievement. The gross profit development also is very strong. We told you five years ago, we were at 11.6%. That was horrible. That was in Q1 2018. We told you at that time, we focused on really improving our gross profit margin. Now we have seen over the past three years that we are always exceeding 17%.
We are always in the 17%-80% range, okay? Of course, in 2022, we are a bit impacted. We have a small dilution compared to last year. You know the context, you know the context of inflation, logistic cost crisis, I think we can be very proud of this performance overall, in terms of growth profits. Bottom line, of course, you can see a bit of more volatility. You can see here in Q4, we have a drop by 36%. In Q3, it was the opposite situation. We are growing by 31%. Overall, very proud about this journey on this five years trip on this one. We have also some good news to share with you on the logistic costs. I told you it was, for me, it was a headache since one and a half year.
This is excellent news here. We have, first of all, the costs are re-normalizing, we are getting much closer compared to where we were before COVID. That's very good news. You know that we are very exposed, especially for the cost of a container from Thailand to the U.S. The second good news is the lead time. The lead time is also improving a lot, we don't need that much time now to export from Thailand to the U.S. We are still facing some inflation. Don't get me wrong, okay? In 23 overall, we are still expecting some further inflation to happen. We have some good news on some packaging, some ingredients, also some further inflation is expected to happen again in packaging, in ingredient, and also in raw materials. I will talk to you about that. Okay?
All what we have been implementing in 2022, we'll have to do the same again next year. We'll have to negotiate some price increase with all our customers. We have to be very efficient and to work towards more automation in our factories. I think we're able to reduce our net working capital. Our net working capital is too high for the time being. It was explained because the logistics crisis was there, but now that it's normalizing, that will have a positive impact for us in terms of net working capital. Now if we focus on the raw materials, you can see the tuna price has remained high during the whole year. Very often, we will tell you, we have a comfort zone between, which is between 1,300-1,400 to 1,700.
During the whole year 2022, the skipjack has been around THB 1,600-THB 1,700 during the whole year. Okay? It was coming on top of the inflation coming from the other packaging and ingredients. We do expect the tuna price to remain high next year. This is only the skipjack, but we have also some other species like the yellowfin or the albacore, which are also very high. Okay? It's of course for us one of the challenge because this high inflation on the raw materials is coming on top of some further inflation coming from the ingredients and packaging. Salmon is... You've seen these prices. We have seen some record high prices, so hopefully in 2023 we can see some kind of normalization. The shrimp price went up. They have been kind of normalizing but increasing a bit.
You can see over the last three quarters they are within the range of THB 150-160 per kg. Just a quick word also on the FX. Of course you'll see a very strong volatility on the USD in Q4. I do remind you at the end of Q3 we were at THB 38 for $1. Okay? We went down to 34 and even 33 in January. Now we moved up a bit. We are between 33-34, 34-35 right now. This is one of the key factor. We have been beneficiating from the USD deterioration in Q1 to Q3. In Q4 we have the opposite situation and this is why the key driver for our FX loss in Q4, and I will elaborate a bit further.
GBP and euro, they have been depreciating compared to the previous quarters. No change compared to Q3 on this one. Next slide we try to explain to you the FX loss. It's a bit unusual for us to have some FX loss below OP, we try to simplify and sorry, I know it's very technical and complex. First of all, if we look at the table, okay, on this table we try to isolate two impact coming from the FX. We have the 1st one which is including the line sales. We call this line sales adjustment. Okay? We told you we always hedge the vast majority of our operation. Okay? We do record the impact of the sales hedging in this line sales. Okay?
This is the first time you can see in Q4 it was negative by THB 822. We have a second big impact which is below the OP, a line called FX Gain. The amount in Q4 is THB 468 million. Here we do record the pure translation effect. We have some AR which are denominated in AP, of course, which are denominated in USD. Every quarter you have to revalue positively or negatively. Here in Q4, I told you we started from 38 in terms of closing rate at the end of Q3 and we ended up the year around 34. This is a key driver why we have some FX loss below the OP. Okay? The surprise is also our sale adjustment including the sales is also negative. Why is it negative?
You can see here on the graph on the top right you have two lines, okay? The orange line will be the spot rate on average, and you can see it has been really increasing until the end of Q3 and then really decreasing in Q4. Then the blue line will be our hedge rate, our average hedge rate. In fact you always have a timeline between the orange line and the blue line. The blue line will always follow the orange line but with something like three to six months delay, okay? Because when we do some hedging depending on the businesses, ambient, PetCare, frozen, on average it's three to six months, sometimes it could be up to one year. The blue line will always have a bit of delay compared to the orange line.
This is why we are such negative. You can see in Q4 the blue line is really below the orange line and this is why we have such a negative impact in our sale adjustment in Q4. The good news you can see of course at the end of December they are crossing each other. The orange line will be decreasing further. The blue line will increase a bit further. We can expect some more positive news to happen on this part for the year 2023. I think overall in the FX we told you we don't try to speculate. We never try to speculate because we have mostly an OEM business.
Again we do hedge the vast majority of our operations, so we are not really exposed except if in one quarter you have some drop by 5, 4 THB for $1 or some increase also. Here we can be temporarily exposed but I do expect over the next quarters the situation to really normalize. Just to focus also on Red Lobster. We told you since the beginning of 2022 Red Lobster is our key challenge. In terms of operation, you can see from the numbers, this remains our key challenge in terms of operation in the U.S. Here, the share of loss from the operation, THB 344 million, okay? Last year it was THB 147 million.
Keep in mind, last year we did receive some proceeds from the U.S. government, especially in Q4. You need to add back something like THB 100 million before tax. The real number was lost by THB 247 in Q4. We are deteriorating compared to last year, yet the gap versus last year is improving, okay? In Q2, in Q3, in Q1 also 2022, we told you the gap versus last year was really huge. We were suffering from Omicron in Q1, the very strong inflation. I think we have been doing all our price increase. We told you we did increase a lot our prices in Q2 and also in Q3. Now this is effective. Now we have one challenge, which is the guest count.
The guest count, attracting more people in the restaurants is of course a challenge when you have been increasing your prices and when the country is facing some recession. The situation is still difficult here. All the other line, the share of loss from the lease is same as usual. The other income, we did not record any preferred interest. We told you that was the case for the whole year 2022, and all the rest remain kind of stable. We told you that we have some covenants at Red Lobster. We have different covenants, two of them. First one is liquidity. I think we don't have any issue. On terms of liquidity, the cash situation is okay at Red Lobster, but we have also some EBITDA covenants.
Here, Red Lobster has to deliver certain amount of EBITDA for their quarters, okay. This is a challenge. Of course, given this performance, this is a situation which is challenging, and this is why we write down that the covenant situation is under pressure at Red Lobster. Remember also that we did provide a guarantee, $65 million guarantee in Q3 last year, 2022, to Red Lobster. Here, if Red Lobster is not able to repay the interest for the loan or is missing some of the covenants, then the guarantee could be called out by the lenders, okay. Just for you to remember, we have a debt which is around $260 million at Red Lobster. This is roughly... This guarantee is covering roughly 25% of this one.
Moving on the initiatives, what are we doing? The idea, the price increase are already effective. We did increase also some specific items in Q4, but we didn't do global price increase. The idea is always to try to bring the costs down, okay? We have been working on the, on the costs, removing some items from the menu to really bring all the costs down. We have been also working on a lot of marketing. One explanation is of the, of the deterioration of the performance compared to last year, we have been restarting our marketing expenses. Just for you to remember, in 2020 we cut our marketing expenses to a very low level. This is not sustainable for such a brand. In 2021, we started to increase again a bit, but in 2022, we really increased again.
This is part of the explanation. We want to do much more activities. You know that Red Lobster model is to do a lot of promotion. Right now, we have Lobsterfest. You have the picture here on the top right, which is one of the key promotion activity that Red Lobster is doing in Q1. You know Q1 for them is very important. You have Valentine's Day. You have also the Lent period in the U.S., this is where we see really an increase of the guest count. This is not new. This is happening. Q1 from calendar year is always a very high season for Red Lobster. The idea is always to cut the expenses, to try to be more efficient, and more lean in terms of organization.
We did also some changes in the structure, in the top management. We did share that with you already in Q3, this is still still active. Something new that we did also in Q4, we did close some of the restaurants. If you know Red Lobster, every year, usually they were closing one to two to three restaurants every year. In Q4, we did close 16 restaurants. We try to be a bit more dynamic. It's not an easy operation. Why? Because we have very often some 20-year lease contracts, we are kind of stuck sometimes with very long lease periods, it's always a trade-off between the lease fee indemnity you would have to pay if you want to stop earlier the lease and also the loss you take from the operation. This is new.
I think it's also a good message for the whole organization that we are really pushing to turn around the business. The idea is really to turn around the business. The situation is very challenging, but we are determined to turn it around. The guidance for 2023, the loss for 2022 was THB 1.2 billion for the whole year, very close to what we achieved in 2020. Very clearly, we're not happy, we're not proud about this one. The idea is to reduce the loss at least by 50% in 2023. The share of loss from operation is targeting to be at THB 600 million for 2023. The impact from the lease accounting adjustments should be improving a bit. It was 422 in the year 2022.
Now it will be a bit less than THB 400 million. Remember, the amount will decrease until 2030. After 2030, it will become a positive amount, just for you to remember. The preferred interest, we have a lot of discussion on this one. For the time being, our assumption is to say we do expect the interest rate in the U.S. to continue to increase again in 2023, okay? Maybe it will be a bit less compared to 2022, but for the time being, we prefer to be conservative. We assumed in our own forecast no interest from the preferred shares from Red Lobster in 2023. We will see how the situation is moving on the interest rate. If we have some good news, maybe it will be possible for us to record anything.
For the time being, we prefer to be conservative. We did not have anything in our guidance from that. I think another good news to share with you is we will end up in 2023, four major CapEx projects. You can see here, we talk about these ones in few quarters. You have the culinary new factory that we're building in Thailand, the new protein and collagen factory also in Thailand, the PetCare expansion. All the three are in Thailand. The last one is a cold storage that we have in Ghana. The four investment combined is a 5 billion THB investment. 5 billion THB. It's like a yearly CapEx for us. These are some really major projects, of course, we had a bit of delay in the setup, but it's under control.
We do expect the commercialization to happen during the year 2023 for all of them. You will not see yet in 2023 a lot of impact coming from this one because you have some ramp up, you have some commissioning period, yet we are very happy about this one and this is moving in the right direction. Just a quick one also on the ratio. Of course, you can see here the impact coming from the ITC IPO. We got THB 21 billion additional equity, THB 21 billion lower debt on this one, so the Net Debt to EBITDA is really dropping at 3.67. Very often we tell you our own internal target is to be between 4-4.5, so I think this is a key change. Our balance sheet is extremely strong at the end of 2022.
The net debt to equity also, our target is to be between one to 1.1. Now we are at 4.54. Okay, very, very good, very good developments here. Of course, we have a bit of negative impact on the ROE and the ROCE impact. Our equity has been increasing, you can see. That's why the ROE is dropping to 11.1 and the ROCE at 6.8%. I think we have a bit of more work to be performed on the net working capital. You can see we have some improvement overall. It was THB 56 billion at the end of Q3. It went down to THB 53 billion. I think the normalization of the logistic flows will really help us. We want this number to decrease, compared to where we were in 2022.
It's too high, we give a very clear guidance to all our businesses to see this one dropping on this one. Our net debt bridge, you can see we have a strong EBITDA in 2022 at THB 13 billion. We are a bit lower compared to last year, but we are in line with 2020. Our CapEx at THB 5 billion is fully in line with our guidance. It's under control. It's a net CapEx. Remember, we did sold a bit of assets like in Merianos Poland, as Khun Supan mentioned. We have the dividend, which is THB 4.4 billion, then we have the THB 20.6 billion proceeds coming from ITC IPO.
There is one box that we don't like, which is a THB 7.2 billion net change in net working capital, okay. This is a key impact we had again to face in 2022 with an increase of our net working capital. We want to see some positive impact from this one in 2023. Of course, it's not easy to achieve when you are facing some inflation, this is clearly our direction. Very quick one on this one. You can see here the overall situation by currency and also the maturity. The maturity has been improving overall. We have been repaying some debt with some proceed from the ITC. You can see also the exposure in terms of fixed float interest rate. We have a vast majority, almost 65% of fixed interest rate.
We are still a bit exposed to the increase of the interest rate, but overall, I think it's fully under control. Now I hand over to Khun Jeeji to go through the business performance.
Thank you, Ludovic. I'd like to show you that our core businesses are usually three, but since the fourth quarter onwards, we have four categories. You can see how our value-added and PetCare have grown. Our ambient seafood is still the majority at 43%. Frozen and chilled has dropped compared to the year to 2021. The contribution is down to 36%, and PetCare is doing very well for our total group. In 2021, it was a 10% contribution, and in 2022, it grew to 14%. Value-added and others continue to grow as well, and their contribution is now at 7%.
For the full year, you can see that we have diversified our businesses significantly, even though there was a period where some of the businesses were softer. Overall, our top line has reached a new high of THB 155 billion. Our value-add and others are at 33%, quite strong. PetCare is 76% and percent increase. Let's take a look at our ambient seafood now. You can see that in 2022, the growth was a good number. Compared to the fourth quarter of 2021, it's grown by about 13% or so. We adjusted prices. We have higher selling prices, and for some countries, sales have dropped temporarily. For instance, Germany, U.K., and Italy.
In France and in Asia and in the U.S., we've seen growth there offsetting that drop in the other countries. Our ambient sales are still healthy. Private labels are at 21.5%. We have our portfolio adjustment, and some of our customers have switched from buying banner products to buying our OEM products in some periods. For the full year, you can see that our ambient seafood has grown very well. Even though last year we had recessionary concerns and inflationary concerns, our ambient seafood was seeing strong demand. This is protein that is not expensive compared to other kinds of protein. Our canned food, our pouches, those are shelf stable. They can be kept for long periods of time. Consumer behavior has changed from eating out to cooking in.
Our ready to cook and ready to eat products are doing very well. In the past year, Chicken of the Sea in the U.S. was rebranded, a major rebranding in 20 years, and we have modernized the logo. It is more attractive to the consumers. It looks cleaner as well. It's easier to read. We have also redesigned their website to make it user-friendly, customer-friendly. In 2023, after 2022, we faced inflation and high raw material costs. We expect in 2023 to adjust our prices higher in this early part of the year. We believe we will be able to cope with the increasing investment cost. Looking at our frozen business, last year, in 2022, it was a soft year for the frozen products.
This has been offset with strong sales in Europe. We saw a drop, particularly in the U.S., offset by strong sales in Europe. The volume dropped mainly from our feed business decline. If you look at the fourth quarter, the gross profit margin, we have a significant recovery from 6.4% or 6.6% to almost 9%, which is almost normalized. In this year, our margin for frozen will be a key driver. For the full year, the sales have dropped because of the drop in volume, even though we did have some favorable exchange incidents. What TU is doing is we are trying to uplift our margin by increasing new products, whether they have higher margins. We're talking about ready-to-eat and ready-to-cook. Looking at the right-hand side, you can see examples of these from Red Lobster.
These are new frozen retail products that have been launched in the U.S. in over 5,200 stores. They're available offline and online. You can go to Red Lobster, the website to see these. This is to capture a new customer base as well and also, cater to our existing commander's demands as well. Aside from the end user, we are expanding to premium dining, whether it's hotels, restaurants, or catering. We are partnering with leading restaurants to launch campaigns like, Bar-B-Q Plaza. Thammachart itself, Thammachart Seafood, has new products. There's Japanese soy sauce and teriyaki sauce, and this has increased the product line that is available for our customers.
I may not speak much about PetCare because we will have the PetCare session later on today, but we wanna show you that the sales have grown significantly by 34% or so. This is thanks to the higher selling prices and a greater volume of 32%. Our gross margin is at 23.3%. Our guideline was 25%, but we had the one-off impact from our recruitment expenses at about THB 66 million, and we also had higher labor costs from the minimum wage increase. The growth is in line with the fourth quarter. It's gone up by 48% year-over-year, and we are on target. The gross profit margin, which is about 26%. We are looking to uplift our margin for the PetCare as well.
We're going to launch new products that have functional benefits, for instance. In the fourth quarter, they have also established a new company in China and in the Netherlands. As you know, in China, that is the fastest growing pet care market in the world. We have partnered with 2 online platforms there. In the Netherlands, this is to capture more of the European market because they have a high contribution to pet care globally. There's our ESG focus, and we're looking at sustainable packaging. Lastly, our value-added business. This is a mix of many categories. The biggest category is packaging and value-added and also new value-enhancing businesses that we have just started, which are supplements, alternative protein and ingredients, for instance.
The sales for the fourth quarter dropped down a bit from the fourth quarter of 2021 because of the product mix. Our gross profit margin is still strong at 27.3%. The majority of the contribution is coming from packaging. The demand is high for this. TU itself, we have increased our exports to Poland and Seychelles, and we have adjusted our portfolio according to customer behavior from large cans to smaller cans. This is our full year look. We're still growing 15.6%. Gross profit margin is at 28%. The key driversOur packaging. As you can all see on the right-hand side, we have expanded our exporting to Poland and to Seychelles. We have there... The products are focusing on convenience and sustainable packaging and value-added.
For the value-added business, we're going to have a culinary plant that will be finished by early this year, and this will handle our value-added products ready to eat: dim sum, rice noodle, curry puff, and our various sauces. Once our culinary facilities are ready, this will support our business and improve our production capacity. These are our value-enhancing businesses that we just launched. The first is the ingredients, which has grown quite well. We started with tuna oil and expanded to salmon, cod liver, and vegan algae oil. We have invested in Mara in Canada, and last month we joined hands with Algama, a subsidiary of Mara, which is producing omega-3 from microalgae, and this is to be replacement for fishmeal. In terms of ZEAvita, it grew very well last year.
It's on target, which is THB 200 million per year. They have a goal of more than 70% growth this year. We have partnered exclusively with Watsons. We have partnered with Lazada and Shopee. In the past month, ZEAvita was listed in 7-Eleven in more than 20, 12,000 branches of 7-Eleven. We have collagen, whitening, anti-acne products, and the pouches are THB 49 per pouch. We'd like you to try those out. In 2022, the growth may not be that significant yet because the market is still looking to grow. We are focused on alternative seafood. We have shrimp and crab. That's where we're going to start with our alternative seafood.
We're going to co-create with our own brands with OMG Meat or John West in the UK, and we're going to build partnerships through our CVC investments, whether it's Alchemy, Algama, for instance. This is what will drive our margin for TU. In the last part, I would like to invite Khun Chang, Khun Tilapong to provide the guidance for 2023. In 2023, for the management, we continue to be conservative. We will monitor the economic situation globally, whether it's in the States, in Europe. For instance, our sales, our guidance is at 5%-6% year-on-year. We're going to be looking at the Thai baht value. We're looking at our base is THB 35 at the end of the year last year, and we have a remark down below.
You can see that we have an impact, estimated impact on our top line of 0.7%-0.8% for every 1 Thai baht to US dollar change. Our guidance is, for gross profit margin is 18%-18.5%. We are still confident that we can reach our 20% target by 2025. In terms of SG&A, we are looking at freight costs which have lowered, so our guidance is now 11%-12%. As for interest, the interest rate, we believe it will increase from 0.5%-1%. This is our cost of funds because of the rising interest rates around the world. Our CapEx will be THB 6 billion-THB 6.5 billion and our dividend policy will continue to be at least 50%.
That will be our dividend payout ratio. What will help us to achieve better operational results will be mainly our frozen business in America. We believe that it will normalize within this year. From last year, if we look at from last year, we're looking at $60 million more. In Europe, we believe we will reach our target. We're looking at EUR 20 million more. These are the buffers that will help our operational results. In terms of our net profit, it should grow more than our top-line growth because we have room for improvement. We have significant room for improvement. The raw material increases, the tuna prices. We believe it will be at a level that is not worrisome. Currently, it's at $1,600. The prices are dynamic.
In the first quarter, the raw material prices are low, and in the second and third quarter, they will increase. In this year, the prices started out quite high from the beginning of the year. This is one of the reasons, and it's remarked, we have a remark about a softer first quarter, mostly from first, the higher tuna prices. Consumers may stock our products. They have a higher stock of products at home, whether it's our ambient or frozen foods, due to the logistics. They're ordering more than usual to prevent a shortage. In the first quarter, we're looking at a lowering of stocks because the freight costs are normalizing, and at the same time, the higher fish prices in our first quarter have led our customers to take a wait-and-see stance. This is the dynamics of the prices.
In our frozen business, I don't see anything that we need to worry about. In terms of our PetCare, we'll hear from our PetCare group later on today. They have plans to have double-digit growth, continuous double-digit growth in their margin. They will maintain a high margin to reach the targets that we have set. For 2023, I see this as a year that will be a good one compared to last year. Last year, we faced two or three issues, and those that impacted our operational results, making them not as not what we wanted. Thai Union in 2021, we had THB 8 billion in profit.
In 2022, even though it was a year personally for me, all of us here, the managers were, and the management were not happy with that year, but our top line grew by 10%. We are strong. I think what we've presented, it shows strength. We want our analysts to see that we have our strengths. We are ready to handle any situation that we're faced with. We don't want you to be concerned with the raw material prices going up and going down. The prices go up and go down all the time as it's a part of life. There's not much to discuss here. As for the Thai baht, sometimes it's been at 28 or 29 to the US dollar.
It's now down to about 32 THB per US dollar. Analysts say the Thai baht is appreciated, is too strong. I just want to re-emphasize that no matter how high the Thai baht appreciates, Thai Union will survive. We will be the last if it's so strong, if the Thai baht is so strong, we will be the last standing. The raw material prices, don't worry that they will run out. The prices of the raw materials, it's the prices are THB 1,200-THB 1,800. That's the range. This is an acceptable range. Our investments in automation, our margin continues to improve. At this moment in time, our financial status is so strong.
Our financial position is strong, we're quite confident. Our i-Tail IPO is a successful milestone. We are ready to look for new investments, we are reactivating our M&A team to be more active. We want to take a look at what is, what we should invest in, what would be worth investing in, what would lead to a good return. That's what I'd like to share with you. If you have any questions, please, we're happy to take your, entertain your questions.
If anyone has a question, you can raise your hand, our team will take the microphone to you.
Hello there. I'm Chatri from Kiatnakin Phatra. I want to ask about Red Lobster a bit more. If you could explain this year your loss will go down by 50%?
Can you share after this year and onwards, do you think when will it break even? In what year will it break even? What are the criteria if it doesn't reach this break-even goal? What will you consider? Are you going to consider exiting the business? How are you gonna deal with this problem in the future?
We've told you all along, and you can see that Ludo here has shared information with you. He's been very transparent, very detailed, so that all of you can see the real picture, can see the real situation. Let's not consider the break-even. Let's just get past the third and fourth quarter for them. We've said many times, $60 million EBITDA in the third quarter, $30 million in the third quarter, $30 million in the fourth quarter, added together will be $60 million. That's what we wanna achieve first.
We don't have many more months left, and we'll see what happens. Let's take a look at the trend. It's getting better. We're monitoring it very closely. We have daily monitoring. We have to get past this milestone first. If we can achieve a EBITDA of $60 for the next two quarters, for quarter three and quarter four, our next goal will be the entire year at $80 million-$100 million US dollars. Our break even for Red Lobster will be at about $120+. If we can't achieve that, our options are not many. There's the exit option, selling out or selling off.
That's clear. Thank you very much. I'd like to ask about the preferred interest rate for Red Lobster.
In the future, are we looking at a booking of profit or you're not going to book the interest here anymore?
Before you record the preferred interest, it's a fair value calculation, okay. Every quarter, depending on the interest rate, you do some fair value calculation. Of course, you've seen during the year 2022, the interest rate went up. Basically the fair value did not increase. It was not possible for us to record anything. Right now, you're seeing from our guidance here for 2023, we do expect the same to happen, okay. Because we do expect the interest rate to continue to grow again in 2023. It's a bit conservative, okay, in terms of interest assumption. You know also that in 2022, we were expecting something like THB 1.2 billion coming from this. We get nothing. Of course, we prefer to be a bit conservative in 2023.
Right now we are seeing no preferred interest, but if there is some improvement on the interest in the U.S., we may be able to record something in the future. Right now, our guidance for 2023 is no preferred interest.
I'm from Patanasin. Your PetCare, you're going to let them talk later today. Your guidance for sales of 5%-6%. If we take a look at the ambient business, last year it was 13%. Your sales growth was 13% this year. What numbers are you looking at? What are your numbers going to be? In terms of frozen last year, it was -2%. What about this year? You're going to recover from what you discussed earlier. What are you looking at in terms of sales growth?
Dynamic categories for us would be PetCare and value added, no surprise next year. They will be the key driver for the 5%-6% on average. I think the ambient, we are still planning for some growth also next year, in the next year, but in 2023. In 2022, we do achieve already a very high top line. Of course, part of this one is coming from inflation. We don't expect the inflation to be that high in 2023 compared to 2022, so you will lose a bit of effect on this one. Still generating some growth on the ambient, but it will not be exceeding this guidance for the ambient. The frozen is a different story. We told you in 2022, there was this normalization impact in the U.S.
We are rethinking also a bit our business in the U.S. We are reconsidering, do we want to be active in all the categories we are doing right now in the U.S. We are doing right now some analysis to say which one are really profitable, we want to invest. You have also the cost of the network capital, which is increasing, so we are doing some kind of rationalization. We're not planning for a high growth in terms of for the whole frozen category next year. That should be the lowest in terms of growth compared to all the other categories.
The frozen business, we're not looking at the top line. We're looking at the bottom line. In the U.S., our company, we don't want to see more growth. If it grows anymore, it's already $1 billion. It might be too big. Right now we're reviewing every business that they're doing, and we want to do right sizing. That's our aim.
Could you explain, the frozen business, It's looking at -2%. You're not looking at target for sales growth. You're looking at the margin. Last year it was about 7.7%. This year, will it increase? Will it get better? From what you said, the frozen business in the U.S., it should recover. Is that right? Can you provide guidance on your gross margin for the frozen business this year? How much will it be? What %?
In 2023, the frozen business will recover. I think we will not be able to get back yet to 2020 numbers in terms of percentage, but we will normalize. Normalization will happen in Q1 and Q2. You can see already in Q4 2022 it is improving compared to Q2 and Q3. We do expect the continuous improvement in Q1 and in Q2 2023. Overall, over the whole year 2023, we do expect a strong improvement on the gross profit margin. You know, this was one of the key driver for our gross profit to go down in 2022. We want to see this one improving. Again, the key factors are the frozen business in the U.S. You will hear also our feed business. Our feed business has not been doing well in 2022.
We want them to improve in 2022. We have also in this one our chilled business in Europe. Our chilled business has been impacted by record high price from salmon in 2022. We do expect all the components of the frozen business to really improve in 2022. There is one maybe watch out, which is our frozen business in Thailand has been extremely successful in 2022. We want to deliver the same performance, okay? That will be kind of a challenge because the performance was extremely high in the year, in the year 2022. The key driver will be really the frozen business in the U.S.
Okay. Regarding to the sales by quarter in frozen product, in the first quarter of last year is the lowest one. Do you think in the first quarter of this year will be a lot better than last year?
I think what Thiraphong Chansiri mentioned is overall, we do expect in all the categories.
Mm-hmm.
Some sales which are a bit softening in Q1. What we can see is we have one good news, which is all the logistic costs are improving. The lead time also is improving. The impact is right now, all our customers, they want to decrease their safety inventories. Right now, in all categories, they have some inventory. We do expect to have overall a softer Q1 in terms of sales, but we catch up after in Q2, Q3, Q4. We do expect it to be near the one time during the whole year. This is why for the whole year, we are targeting for this 4%-5%-6% in terms of growth.
Okay. Go back to Red Lobster. Actually, the first quarter should be the best quarter for a year. Do you think this quarter Red Lobster will have a profit or not?
In Q1, you're right. Normally, in terms of seasonality, if you look at the track record, it's always the best quarter. We have many promotions. The Lobsterfest is happening during that time. We have the Valentine's Day. Valentine's Day, we do three times the normal day. We have the Lent period. We do expect to have a strong EBITDA. This is one of the key challenge we want to face. Are they going to be profitable? We don't know yet. We, we'll see on this one, but the numbers are very encouraging, okay? It's a challenge over the next month and quarter to confirm and to deliver the EBITDA that we have to deliver as per the covenant. It will definitely improve, but the question is that breakeven?
Definitely, it will improve compared to the last year because we had Omicron in Q1 last year.
Look at the first quarter or third quarter last year. It's got to be better because last year it was hit by COVID.
Sure.
Omicron.
Okay.
That's all for me.
Are there any other questions?
I'd like to ask about the new investments. Before this, you're lowering debt. Can you share what you want to what regions you want to invest in and what businesses you want to invest in? I would appreciate if you can provide more information.
Of course, today, the ambient and frozen businesses, those are. We're not interested in those. If it's lower margin, we're not interested. We're looking at businesses that have great growth potential, like pet care. Our pet care team, what potential do they have? The second is the ingredients business. We have invested, and we have partners, and we're going to review what we should do, what more we should do. We have the flavors, ingredients. These are things we'll look at, and also our related culinary businesses.
We don't have a clear answer for you right now, but I want you to know that we are starting to look at these very seriously. After the past three to five years, those were not, these were not priorities. Today, our M&A team, it has been reactivated, and they will review the businesses that will be considered interesting. They will decide on what is interesting, and that's how we will proceed.
Are you worried about anything? For EBITDA for Red Lobster, if we look at 2021 into 2022, what are the numbers for EBITDA?
Specifically the EBITDA numbers, I think it was kind of a surprise for Thiraphong Chansiri to share some stuff. Usually, we try to avoid. It's one of our specific components, and we never disclose any specific component like this. Sorry for that.
I'd like to ask about the gross margin targets. They're better than last year, right? The drivers, which segments do they come from? What is the gross margin improvement for all of your sectors? Is that what you're looking at, or is there anything that's special?
Here are few things. First of all, we are expecting some improvement from all categories. The key one will be the frozen business. Okay. The frozen is really the one which was dragging us down in 2022. We do expect some normalization. Again, in 2023, we don't expect to be back to normal during the full year, but we need to be on good paths on this one. We do expect the ambient to improve PetCare. You will hear a bit more from the team. Value added, we are planning for further course. Keep in mind also that in our numbers in 2022, we have the impact of the restructuring that we did in Germany. Okay. We don't expect to have some large restructuring happening next year, so that will be a negative one-off which will not impact us next year.
They will be all the key drivers on across all our categories.
Normally, we achieve 18-18.5%. That's normal for us. This is not a growth gross margin that requires much from us, in fact. What has done well, what is normalized, and we have the one-offs, we don't have any more of that. We're looking at this level for gross profit margin.
I'd like to ask Kunchang, you said earlier, I wasn't sure if I heard you correctly or not. You said the operations that disappeared, and we're going to normalize them from the U.S., the frozen business is $60 million, and you have your William branded. You have EUR 20 million in Europe as well. You're gonna normalize the numbers this year. What are you looking at? Raw materials, which were odd before, but they've normalized, or is there something you're going to do to bring...
to lead to normalization?
Part from continued growth was to say right now our frozen business in the U.S., it's our largest operation. It's a $1 billion in terms of sales, very close to $1 billion. This one we are re-reviewing the categories, and we say we are ready to downsize a bit the business, okay. Because the top line is very strong, but the bottom line, it's a pure trading business. The bottom line is not very strong. Of course, in 2022, continued, as Jeppon mentioned, we had some losses happening in the frozen in the U.S. This is really this business that we want to review. We will go next month to the U.S., the whole management team of Thai Union, and we discuss specifically about this topic. This is a key operation.
In terms of ambient in the U.S., they have been doing well. In 2022, we don't want to change anything. In terms of PetCare, they have been doing extremely well. It's only the frozen business in the U.S. where we say, "Okay, we want to review all the categories and want to see if we want to continue to operate in all of them or not.
The frozen business, it's normalized because last year was very unusual in logistics. There were issues, logistical issues. People in the market, everyone was stockpiling. In 2021, it was a very good year because it was on the uptrend. On the uptrend, people bought and bought, then in the beginning of the year, the market crashed. We believe that from this point on this year, we're going to be looking at a more normalized situation. There won't be any hoarding. Our partners have ordered so much, and the entire market, they're behaving the same way. The raw material prices, due to inflationary pressure, it had an impact. This is based on normalization. There's nothing out of the ordinary. I'd like to ask...
We're running out of time, so if we could have one or two more questions.
Hi, I'm from . I would like to ask a little bit about the inventories. I see that approaching Q4 for the inventories, position and the days has dropped. I just want to see what are the key drivers to such drop in 4Q. Some forecasts going into 2023 about the working capital change.
I think you are correct. In Q4, you see a drop of our inventories. We are trying to do this already since Q1 and Q2, okay. We are not happy at the end of Q3 to have this very high level of inventories. THB 56 billion for us was, is pretty unusual. I think we identified a few businesses where we had too many inventories. The frozen business in the U.S. was one of them. Europe also was another one. In Q4, we did manage to decrease our inventories there. We have been selling some of inventories in the frozen business in the U.S., is dropping. Europe also has been dropping a lot. We were expecting a bit more, but this is happening.
I think also, our PetCare sales have been very strong, so the inventories also in terms of PetCare have been dropping in Q4. We shared also that the logistic timeline are improving. Here, basically our customers, they need less safety stocks, okay. It's also one of the driver. We don't need also the same safety stocks because overall the logistic situation is improving. At the end of 2022, we are not back to normal yet. We are on the way to normalize everything. We do expect the situation to continue. Again, in 2023, we'll benefit from further normalization on the logistic flows. We told you also that the lead time decreasing, there will be less safety stocks required from our customers but also from ourselves.
We are not yet at the end of the story for our frozen business in the U.S. and in Europe. There will be some further improvement there. That will be the key drivers. Of course, we need to adapt our production facility, and this is our role, our day-to-day role, to always try to adapt our manufacturing footprint and to make sure that we are running the operations very, very efficiently.
One last question, please.
Sorry, can I ask one more? on Red Lobster. Yeah. They are now currently $260 million of debt on Red Lobster. And as we all know, you have provided $65 million guarantee back in August. Do you foresee any increase in Red Lobster debt in 2023? And also, under what condition you would consider or, yeah, you would consider like increasing the guarantee to Red Lobster?
Here for the time being, we're not talking about increasing the debt. I think the cash situation at Red Lobster is quite good. There is no plan to increase further the net debt over the next few months. We have some cash forecasts from them. We look at this one, they would be able to pay the interest. There is no issue with this one. Again, there is no issue in terms of liquidity. The trigger point will be if they're not able to pay some interest to the lenders. As I mentioned, it is very unlikely to happen, but they have also to meet certain criteria. Thiraphong mentioned this one. Over the next few months, they have to deliver this one, and they're a bit stretched, considering their recent performance.
Indeed, if they don't meet with this criteria, then the lenders may be able to call for the guarantee to be executed, okay? If the guarantee is executed, it means Thai Union will have to provide $65 million to Red Lobster, and Red Lobster will use this money to repay a portion of the debt, okay? At Red Lobster, it will not change anything. So far, in terms of cash and liquidity, we don't plan for any change in the, in the short term at Red Lobster, okay? Of course, we watch out very carefully the situation. You understood this is still the key, the key concern in terms of operation for us.
There is a question from online, an online question.
I think it's a good question. I think you've seen in our P&L that in the full year 2022, we had a tax credit. Not a tax expense, but tax credit. Very unusual situation. Why? Of course, the key explanation are the losses coming from Red Lobster. You can see here the fact that we did not record any preferred interest also at Red Lobster, and also our frozen US operation have been generating some losses. All of these have been generating some tax credit, and they are basically offsetting the tax expense here that we get in Thailand or for Europe from our normal operation. I think for 2023, we don't provide specific guidance, but we get back to more normal situation. We do expect to have some tax expense happening in 2023.
You can see from Red Lobster, you can already try to estimate the tax credit. They will be decreasing coming from the U.S. We told you also the frozen business in the US, we're not planning from any loss next year. We are planning to be at breakeven plus next year. The amount of tax release should reduce. Our operating profit should improve. We get back to a tax expense situation overall, which will be kind of our normal 5%, 6%, 7% that you have seen over the past previous year before 2022.
That should be it for the questions and Thai Union Group. We'd like to say thank you to the analysts today and the fund managers and all of the bankers joining us. Thank you again, and we'll have a 5-minute break, and then we'll have the ITC session. Thank you.