Good morning, managements, analysts, bankers, investors, and distinguished guests. On behalf of Thai Union Group, I would like to give you a warm welcome to our last analyst meeting of 2022 for quarter three result announcement. My name is Pimchaya Sakangkang, and I'm your MC today. I hope you guys like the new event as much as we do. If you don't have a presentation in your hand, and if you would like one, please raise your hand, and our team will hand you the presentation. Today, we have the two products showcased for you. One of them is tuna slice in QFresh Lite. This is our award-winning innovation product. We have two flavors for you. It's smoke and paprika. I believe some of you might have tried it before.
What we have for you today was tuna slice and cheese and croissants, and then tuna slice and melon skewers, and then tuna slice with cheese lava spring rolls. This product is actually very healthy. It has very high vitamin, high vitamin B12 and selenium. There is also no MSG and no food preservatives added. Most importantly, it has 0% fat. Those of you who actually care about fat content in your food, this may be one of your option in the future. For those who haven't tried, we will also still have for you during the break before TFM announcement. This product will be launched in next quarter, so in quarter one for 2023, so please stay tuned. The second product showcase we have for you today is our pet care product from i-Tail Corporation.
For a pet lover, we have brought to you our own brand of pet food and treats. Bellotta for cats and Marvo for dogs, and ChangeTer for both cats and our doggo friends. i-Tail is actually the second-largest pet food producer in Asia. We focus on human-grade, good quality pet food and treats, and produced with our innovative technology, aiming to better our four-legged best friend quality of life. Our pet food is actually human grade. You can try if you wish, but be warned that it's made for pets, so, you know, the taste is optimized for their taste. Moving on to quarter three result announcement. Our key speakers are Mr. Ludovic Garnier, our Group CFO. He will walk you through the key financial result and FY 2022 guidance. Ms. Ratinan Wongwatcharanon, our head of investor relations, she will present to you the business performance.
Ms. Neroli Gomez, our Investor Relations team, she will present to you the key development and strategy update. As usual, this section will take approximately 15 minutes, and it will follow with Q&A for 30 minutes. We will then have 15 minutes break and follow with TFM result announcement. Without further ado, please allow me to invite Mr. Ludovic Garnier to begin the presentation.
Thanks a lot, Pam. Good morning, everyone. Very happy to see all of you this morning. First of all, I want to apologize, Thiraphong is not able to join today. He's on a business trip. He wanted to see you because we have very good numbers. He wanted to share the good information with you. We will try to replace him, okay? I hope you did enjoy the tuna ham. I think this is a product we've been working on since few years already, and I'm sure you are also delighted with some few samples coming from our pet food business. I must admit, I'm very impressed with what we are doing. Sometimes we're a bit confused. Is it for human or is it for pets? The pet seems to love that, so that's good. Okay?
I want to walk you through the financial performance in Q3. I'm sure you had a view already on the numbers yesterday. It's a very strong performance for us in Q3. We had a record high sales, record high gross profit in absolute amount, and a record high net income. I think that's it. There is no more to say on this. For the first time, in terms of sales, we're exceeding THB 40.8 billion by growing 15%. Of course, we have a portion of this one which is explained by FX, but we have also a very strong impact coming from the volume growth, and then we'll elaborate on this one after. Also the pricing also are the key drivers on this one.
In terms of category, we have two very strong growth. The pet care and value added is really growing a lot versus last year. The same for the ambient. The demand in the ambient business and especially for the OEM product in the ambient is very strong, okay? The growth for the ambient, and the team will elaborate on this one, is around 14%. The frozen business, we are still facing some challenges. You will hear TFM after this discussion, and overall, we still see some kind of normalization in the U.S. However, the frozen in Asia is doing well, and our chilled business, chilled salmon business in Europe is also recovering. This is for the sales. Now moving to the GP. The GP amount to THB 7.4 billion. Quite very strong in terms of GP margin at 18.2%.
Once again, the two key drivers are the pet care and value-added category and also the ambient one. The frozen is dropping also a bit. We're not happy about this one. We can see again this normalization that we already mentioned in Q2 regarding the U.S. We are not yet out of this period, so it still continues in Q3. In terms of OP, it's at all-time high because the SG&A are still a bit high. We are still facing some inflation on the logistic cost for the whole quarter, something around THB 300 million in terms of spot price impact in Q3. The good news for us and also for you, I think in September, we see really the price of the container reducing and also the lead time between Thailand and the U.S. also reducing, okay?
We need to see over the next weeks if it is confirmed that the direction is clearly downwards. I think it's a very good news. You know, we have been facing with this inflation of logistics costs since few quarters already. Very good news for us and the business to see this decreasing. The total OP at THB 2.3 billion growing by 24%. I think this is an excellent performance. The good news is on top of the very strong operating performance, below OP we also have some good news. The good news are mostly coming from the FX gain. You can see in Q3 very strong FX gain, and we will elaborate on this one a bit further after. Also tax credit, which are also growing compared to last year. Of course, they are partially offset by Red Lobster.
The share of loss is growing versus last year. We're not happy about this one, and I will elaborate why after. We are not benefiting also from the other income from Red Lobster. In a nutshell, THB 2.5 billion, this is all-time high for us. First time we are exceeding THB 2.5 billion, so we are extremely happy about this performance. Now if I move to the nine months performance, and again, you can see revenue, growth profit really growing versus last year. The OP is still declining, almost 10% versus last year. The EBITDA also declining by 11.5%. Net profit now is very close to last year, and this is something which is very interesting, I think. If you do remember, last year was for us all-time high.
That was the first time we did exceed THB 8 billion net income over 12 months. Here after nine months, we had 5.9. 5.9, we are just below last year. Last year, after nine months, we were at THB 6.1 billion, okay. Keep in mind also that in our 5.9, we have the restructuring, the Rügen Fisch restructuring effect that we did announce in Q2. If you exclude this one, we are on track with last year, which was our best year ever, okay. This is very encouraging, I think, given all the challenges we are facing around inflation, around tensions in the world. This is really an excellent performance. Very happy about this one. The long-term view, so this is the view of the last five years. Very happy about this one.
I think the sales story has been extremely strong. You can see double-digit growth is something we're not really used at Thai Union. You know, usually we were saying a few years before COVID that the market was mature. We were not used to deliver this kind of double-digit growth. We have been delivering very strong growth over the past few years, okay. Keep in mind that our focus is not on the top line, okay? Our focus is the bottom line. We want to improve the bottom line. Yesterday during the analyst call, there were some questions regarding the sales for next year, the sales guidance. It's too early at this stage. We are not concerned at all. We are not at all concerned by this.
There will be a few impacts, and we can elaborate a bit further in the Q&A. Very unlikely we deliver another year of double-digit growth next year. Very unlikely, okay. We will target a single-digit growth for sure next year. Inflation will still continue. If you look at the fish price, and we have one specific slide on this one, the tuna price in 2021-2022 went up, compared to 2021. 2021, we are very lucky with the fish price. 2022, we see some inflation. We do expect to see more inflation in the tuna business next year. The salmon price was record high in 2022. We do expect to have some kind of normalization, yet still very high also next year. The shrimp price was a bit up and down.
Despite all these changes, you can see, I think, our growth profit margin performance since the beginning of the year has been extremely interesting. You remember two years ago, we said anything above 17%, we were happy, okay. You can see that now we have been exceeding the 17% now since 2020. Of course, now expectation is growing, and you know that our ambition by 2020 is to be in the range of 20%, okay. The net profit also, I think is very interesting in terms of net profit margin, and we've been really growing this year. We are still facing some challenges. Inflation is still there, okay. We see some positive sign on some topics. You can see here, look at the graph on the top left.
This is the freight cost, okay. If you remember, the freight cost for our ambient business before COVID was something around $2,000. $2,000 from Thailand to the U.S., which is for us our key exposure. Then it went up to $12,000 or even $15,000 during the year 2020. Huge inflation. We talked to you already about this one. You can see here, we show the number for September. September, we are $6,000, okay. This is a very positive news. The prices are normalizing, okay. We are not yet back to where we were before COVID. I think it will still take a bit of time, yet I think this is very encouraging. You can see also the lead time went up really.
Initially, before COVID, we were around 35. We went up to 60 days. Now in Q3, we're at 47. The trend is really good. You know, this is one of the key driver for the increase of our inventories. When I will discuss about our net debt, you will see our inventories are record high at the end of Q3. This is clearly one of the key driver. As soon as you see this kind of normalization happening, you will see our inventories declining. Apart from this one, you can see we put some few examples on utilities, on the steel, on some ingredients. You have the sunflower oil, you have the gasoline, you have the coal. Overall, we have some positive news. I think the situation is different depending on the regions.
Meaning we can see still a lot of inflation happening in Europe. In 2022, it was already very high, very likely because of the war between Russia and Ukraine. It will continue next year. This is something we need to be very careful about. The inflation will also happen in the U.S. and in Asia. However, we do expect to get a much lower level compared to Europe. On the right, you have our solutions, of course, to mitigate with the inflationary pressures. Of course, the pricing negotiation has been extreme, a deep activity for us in 2022, and it will remain again in 2023. I can tell you in 2022, the discussion were okay because the retailers and our consumers and our customers, they could see inflation happening everywhere.
We do expect in 2023, we don't expect them to be so open for price increase. Why? Because the inflation has been so strong in 2022 that it has some impact on the volumes in their business. Okay, so we do expect the discussion on the pricing to be much more difficult in 2023. Apart from this one, we continue our hedging strategy. Sometimes on the raw materials, you know that we can hedge the salmon price, for instance. We cannot hedge the tuna, neither the shrimps. We are continuing also our strategy on the hedging on the FX. You've seen that the year 2022, in terms of FX, we have seen a lot of volatility on the USD and also on the euro and the GBP. We have been pushing a lot of our inventories.
That was one way for us at the beginning of the year to say, we know inflation was coming, so we decided on purpose to increase our level of inventories. Because of course, when you have some inventories, you are kind of protected versus the inflation. However, right now, I think the level of inventories is extremely high for us. Some of this, of course, is explained by volume increase. There is some pricing, of course, effect on this one, but we do expect inventories to drop in Q4. Apart from this one, really trying to optimize our operations is key for us, okay. We shared with you in Q2, some examples of automation we have been doing in all our factories.
We will share with you a video on our pet food business, and we are also pushing a lot on automation and how to gain more in terms of efficiency, okay. Why? Because the labor costs are increasing everywhere. We will talk at the end of the presentation regarding the minimum wage increase, which happened in Thailand at the beginning of October. This situation will remain. We want to remain very agile. I think the feedback from the top management is to say here, there is a lot of uncertainties right now going on in the world, okay? Political, you heard all the tensions right now happening between South and North Korea. You heard the tension between China and the U.S. You heard also the tensions in Iran. Many things can happen.
Of course, the war between Russia and Ukraine, we don't have any clue what will be the end yet of this story. Here, the feedback of the top management is to say very happy about the performance in 2022, but we have to remain very agile and really cautious about what we are doing, because there will be more uncertainty also in next year, okay? This is our life now since COVID-19. We are not scared about this one, okay? We know that there will be some good and bad surprises happening in the future. That's fine. I think over the past two, three years, we have demonstrated that we were able to manage this one. Our usual focus on the fish price, you can see the tuna prices was around THB 1,700 in Q3, growing a bit versus Q2. That was expected.
You know, Q3, this is the quarter where we have some FAD ban on this one. We told you we're expecting a bit of inflation. It's still in what we call our comfort zone, between 1,400-1,700, so no big deal on this one. The salmon price, we told you in Q2, was all-time high, 97 NOK. This is something which is completely unusual. It was all-time high. It is kind of normalizing in Q3. Let's see in Q4 where do we go, but of course, it's easier for salmon business to manage this kind of price. Now the shrimp price was very high in Q1. Now in Q2 and in Q3 also, it has been kind of normalizing. The FX, the next one, of course you know the USD is very high.
In Q3, it was an average of 36.4, but growing a lot versus Q2, growing a lot also versus last year. You can see the trajectory has been always growing since at the beginning of the year, okay. This is good for our business. Of course, we are mostly an export business, so we have an exposure which is mostly on our conversion costs. Our conversion costs in Thailand are denominated in Thai baht, so we are exposed on this one. As soon as the Thai baht is depreciating versus USD, the competitiveness of our factories is improving. Clearly this is one of the key driver for our strong volume and our strong sales and our strong profitability in 2022. Different situation with the GBP and in Europe.
They have been declining versus Thai baht in Q3, and also versus USD. We have the next slide, and yesterday we had a lot of comments and questions on this one, so apparently it's not so clear. Sorry for that, because we wanted to clarify with the FX. I will be quick on this one. We have in the appendix, we will show you in another slide, we will remind you what we did communicate three, four years ago when we did move to IFRS 9, and I hope it will be clearer with an example with numbers. But what I want you to keep in mind is when you look at our Q3 numbers and nine months number, we have one line where we have all our FX gain, okay?
You can see in the middle, maybe if you can show it here, we have THB 800 million, 792 for three months, and +THB 1.3 billion, okay? Sometimes I have the feeling that your perception is this is an impact in our bottom line. This is not correct, okay? Why? Because we have some other impact from the FX which are including in our sales, and usually we don't detail them a lot, okay? This year, this quarter, they are very negative, okay. You can see here. Can you show them again? Nine hundred for Q3 and then -THB 1.2 billion for nine months. Why? So the net impact in our bottom line, purely from the accounting effects, if I may call this one, is kind of limited in our numbers, okay.
The THB 2.5 billion we have in terms of net income for Q3, it's a real 2.5, okay. We don't have 0.7 or 0.8 coming from the FX, and I think it was very important for you to have it in mind. Why do we have this situation? We always explain to you that our hedging strategy, we do some hedging all along the year, okay. When we have some orders, as soon as we have some orders, we do hedge, okay? In general, for the vast majority of our business, we have a maturity of our hedging, which is between 4-6 months, okay? For a smaller portion of our business, we have a maturity which is much longer, okay?
Meaning all the forward that we are executing right now, we took them five or six months ago, okay? At that time, of course, the FX, the USD to Thai baht was much more unfavorable compared to now, okay? Now when we do settle this forward, it triggers some negative impact for us, okay? It's not a big deal because we had a very positive impact at the bottom, okay? Remember, the goal for us in our hedging strategy is really to secure the spot rate. We want to beat the spot rate by a bit. We don't want to generate huge gain or huge loss, okay? I will provide you after in the Q&A session if you have more question, more details about this one, but I hope it clarifies a bit. Red Lobster.
Red Lobster remains one of our key operating challenge. In Q3, you can see the performance. The contribution to our net income is THB -500. In Q3, the share of loss is higher compared to expectation at THB -339. Apart from that, all the rest remain kind of stable. The lease, the interest expense, income tax is a bit low this quarter. I do agree there was a comment, a specific comment yesterday. The tax in the U.S., and especially for Red Lobster, is something very complex, okay? It's a combination. If you have more question, we can address in the Q&A, but it's very difficult to predict, and to have something which is kind of stabilized, okay? I can elaborate further in the Q&A, if you want.
The key challenges we are facing. We told you in Q2, we will increase the prices, and we did increase the prices by 9%, okay, in August. We don't have the full quarter impact. We are still penalized in terms of profitability at the restaurant level, okay? Our margin at the restaurant, at the cost of the food over the whole quarter is not yet where we want to be, okay? We told you in Q2, we're going to increase our prices, so the cost of goods compared to net sales will drop, and this is what we see already in Q3. However, we are not yet where we want to be, okay? This is one of the key driver of the deterioration versus last year, because the inflation has kept growing also in Q3.
Very likely also we'll have to execute another price increase in November. This is the first challenge we are facing. In terms of also of labor optimization, I think we have to do better at Red Lobster. You know there have been some ups and downs in the guest count over the past few months, and we need to make sure that we have the right number of workers and staff in the restaurant. This is another topic we are facing. We have been spending more also in marketing. You know, the last two years, 2020 and 2021, we have been reducing our marketing activities. Now we do increase again.
Finally, we had a small impact because last year in Q3, we had some support from the U.S. government, which is not happening again in 2022. Apart from that, no interest in the preferred shares. Same situation that we had in Q2. We told you that if you saw yesterday, the Fed announced another increase by 75 point. That was expected, okay? In Q4, we do expect it will be the same situation, where we not record any positive or negative amount in this line or the income, okay? You may have some question about 2023. It's a bit too early to communicate at this stage, but very clearly, if you read the Fed minutes from yesterday, the trend will continue next year, so the interest rate will increase further, okay?
We can comment a bit further if you want in the Q&A. Our guidance for 2022 for the full year, we have been deteriorating our guidance. Of course, we need to acknowledge that the performance in Q3 was not exactly aligned with our expectation. Now the full year guidance is THB 1.1 billion, okay? Again, we are not happy with this one. I think we can understand with the Omicron in Q1, with the inflation coming in, all the challenges, we can understand this one, but we don't accept that. I can tell you the management of Thai Union is really committed to improve the performance at Red Lobster, okay? You know Thiraphong has been visiting 50 restaurants a few months ago. I've been in the U.S. also twice already this year.
We are much deeper involved in the management of Red Lobster. It will take time, okay? We know it will take 2-3 years to turn around the business. Now I think our understanding of the business is much deeper compared to what we had before. You know, before it was really managed by our other partners. Now since the beginning of the year, we really stand up in the management. The last breakpoint is important. I think we did communicate on this in August. Thai Union did provide a financial guarantee to Red Lobster amounting to $65 million. Of course, you can understand given the recent performance of Red Lobster, there are some discussions happening between the lender, Fortress.
It's a consortium, but the key one is Fortress, and they wanted to have more security on their lender. The next one, we just focus on the strategy, and the strategy does not change. We have many initiatives in order to increase the guest count and the sales traffic, so we do insist a lot on the value deals. Of course, you can see in the U.S., the inflation is around 9%-10%, okay? So all the consumers, they are looking for value proposition, okay? So we are taking away from the menu some very expensive item, and we try something which is attractive also for the customers. We are doing some promotion. Right now you have the Endless Shrimp happening in the U.S. It's one of the biggest promotion of Red Lobster, and I've been eating this one.
These are very nice products that we can have in the US. The second one is we have some actions on how to decrease the impact on pricing and how to optimize the menu, okay? Same story. It's a dynamic change on this one, and I think we are going in the right direction. I think the third breakpoint is the most important. We have been doing a bit of restructuring within the organization at Red Lobster. We have been removing some layers, especially in the operation, okay? We want the operations to be leaner. There were many layers between the top head of the operation and the managers in the restaurants. We did remove some layers. It's also part of the explanation of the cost that we have this year.
We do believe that with something, a much shorter link between the top of the operation and the restaurant, it will improve the operation. Lastly also, we did a lot of staff training in Q3. We told you that the execution in the restaurant is a bit inconsistent from time to time, so we did very strong push on the training, and it's also one of the explanation of the additional expenses. Because for us, it's a financial investment. We send many people, many managers from the restaurants, many staff to the training to remind them, okay, this is the way we do expect at Red Lobster the meals to be served. This is the way we expect the cleanliness of the restaurant to be. A lot of things are happening here.
On the last one, we talked already about this one, so I don't mention this one. The next slide is more on an anecdote, but I think many of you have been trying this one. We have been opening the first Thai Union restaurant, the first Red Lobster restaurants in Thailand. This one is operated by ThaiBev, okay, not by Thai Union. You know, ThaiBev is one of our historical partner, and they are really the specialists of the restaurant in Thailand. What will be the benefit for Thai Union? We are providing all the seafood in the restaurant. Okay, it's only one restaurant, so it's not huge volume, of course, but the idea is to grow. I was very positively surprised with all the excitement we could see there. Okay, of course, we are a bit careful.
We know how it is in Bangkok. You have a lot of new restaurants opening every day and then closing a few months after. We hope it will not be the case. Here we are testing the concept. If it is successful, there will be some more opening. It will not be 10, 20 like in Japan, but we are targeting two, three, four, five, depending on the success on the concept. But I really encourage you to go there. I think I was very happy with the dinner we had all together a few months ago. Net debt situation. I mentioned to you the inventories are all-time high, so our net debt has been increasing also in Q3. Keep in mind also that in Q3 we did pay also the second portion of our dividend, okay? This will not happen in Q4.
Now at the end of Q3, our net debt amount to THB 72 billion, okay? Increasing versus the THB 61 billion from last year. The EBITDA is quite strong, okay? We have a THB 10 billion EBITDA, but you can see the impact of the net working capital is almost offsetting completely this very strong EBITDA. The CapEx under control, we told you at the beginning it would be THB 6 billion for the whole year. We did revise down to THB 5 billion. I will share with you that in my guidance. Apart from this one, the net interests are growing a bit. The tax payment are kind of consistent with last year, and the dividend is here. We have also a small impact coming from the FX.
You can see this is on the 1.9 box on the right, and we have also some additional lease liabilities, okay? We don't have any concern. Overall, our net debt-to-equity is at 1.13. It's a bit higher compared to our target. You know our target to be between 1 to 1.13. You can see also that the cost of debt, the average one, has been growing a bit, okay? This is 2.87% for the year 2022. For the year 2021, it was 2.62%. We are a bit exposed on this one, yet I think it's kind of reasonable, and we do believe we can manage. Moving to the next one. We give some information. We're getting the breakdown by currency, by maturity and interest rates. You can see by currency the yen proportion has been increasing. Why?
Because we did some refinancing already at the beginning of the year, so the proportion in yen has been increasing a bit. The short-term maturity also increasing a bit. Why? This is to finance our net working capital, okay? We do expect this to drop in Q4. We added also another pie on the right with the interest rate. You can see 60% of our interest rate are fixed, 40% are variable. Yes, we are a bit exposed to the increase of the interest rate. However, it is kind of limited. Finally, moving to the ratio information. You can see I think the two topics I want to highlight on this one is, first of all, the level of inventories.
You can see the inventories amount to THB 56 billion at the end of Q3. It was THB 45 billion one year ago. So we did invest THB 11 billion in twelve months. Again, it was a strategy to push our inventories. We had also to face with the higher lead time. The direction is clearly to reduce. In Q4, I think we will start to see really some reduction on this one. But this is why you see the inventory days growing at 144. This is a key driver for the increase of our net debt in Q3. The ratio, 1.1 on the ratio on the right, net debt to EBITDA, we're at THB 5.26. This is a bit higher compared to our target. This is purely linked.
This is purely temporary and linked to our net debt. As soon as our net debt will be decreasing, and in Q4 it will be decreasing, this ratio will improve. Net debt-to-equity, I mentioned this one, 1.13. It's a bit higher but not far away from our target. We do believe our balance sheet is very strong, okay. We don't have any issue regarding liquidity, regarding debt. We do believe we are very happy about this one. Now I will hand over to Kunjit for the business performance.
Thank you very much. I'd like to start with the diversification from our portfolio. We have been trying to diversify our portfolio through the three businesses. In the first nine months of this year, our businesses have continued to grow strongly, especially in terms of pet food. Our ambient seafood is 22%. It's the majority. Frozen and chilled seafood has softened compared to the two other businesses, and the contribution has reduced to 37%. Pet care and value-added is at 21%, up from 17% the year before. Acquisition ambient seafood was 42%. Overall, for these three businesses, we have achieved a new high for each business, starting with ambient seafood that has grown significantly compared to 2020. Last year, it was 2.8%.
We have saw a growth, significant growth, and the margin is above 21%. Our frozen and chilled seafood, compared to 2020, we've seen great growth, 19%. Last year it was a high base. Even though it was a high base, we can still grow at about 2% compared to the year before. The last business is our pet care and value-added. You can see that the growth is very good compared to 2020. Since then, in 2021, we have had double-digit growth each year and 42% compared to the last year. Overall, we have a new high at THB 115 billion, and this is significant growth compared to the past years. Our gross profit margin is still very strong at 17.5%.
In the third quarter, we have very good gross profit, as Ludo mentioned, compared to the year before. We also have a one-time item from Rügen Fisch. If you look at the ambient seafood, it has grown, but the volume has dropped a bit compared to the last year because there's salmon and mackerel. The tuna ambient has been growing significantly and has low single-digit growth. Our gross profit margin has improved from the year before significantly and is at 2.9% compared to the years before, and this is very, very strong. At the moment, ambient seafood in Asia and in the U.S. is growing, even though we have the recession concerns and inflation because the ambient seafood is canned seafood that is affordable and the protein is easily accessible and easy to store.
Looking at the results for the nine months of 2022, this is in line with what we want. We have double-digit growth at 13%. We want to deliver. We are growing in each key market and the positive factors are the higher selling prices that were increased throughout the year and the increased demand in our key markets as well. Also the benefits from the FX, looking at the exchange rate between the Thai baht and the U.S. dollar. We have 21.4% in the gross profit margin. I'd like to have you take a look at what we're moving it towards, is to have our portfolio to have higher margin products to match the trends, consumer trends, and to provide a better margin than our overall portfolio.
We have introduced new flavors and have line extensions to cater to the health and wellness customers. Lastly, we are looking at single portions, for instance, because families today are becoming smaller and they want products that are more convenient and in smaller portions. In addition to this, we are focused on core efficiency in terms of our product cost efficiency. We have solar panels in Seychelles, and we'll talk about this later today. We also have our new cold storage project in Ghana, and this is going to help us in terms of inventory management efficiency. As for our frozen and chilled seafood, for quarter three this year, it has improved by 6.6% compared to the last quarter, which was low. The first half of ours, we were impacted by the recession and inflation, especially in the U.S.
This impacted our frozen business, softening it compared to the ambient business and pet care business. If we take a look at our sales, the volume drop did not come from our frozen products, but more from our feed business, where we had a shakeup of our portfolio towards higher profit margin products. In quarter three, compared to last year, we are in a high base. Last year, we enjoyed seafood prices in terms of crab meat and lobster that were in an uptrend, but this year it's in a downtrend. In terms of nine months, we're looking at the same trend. The growth has been influenced by the FX, especially in Asia and in Europe. The frozen business is continuing to grow in Asia and Europe for the nine months. What has offset that or softened it is the U.S. market.
On the right-hand side, you'll see what we're looking at. What we're focusing on is our new development, new products, our innovations. We're not focusing on OEM products. We are looking at higher margin products. Secondly, we focus on ready-to-eat and ready-to-cook products. We want to increase the portion of these. Lastly, we want to drive our products through brand awareness, such, we want to promote our QFresh or Thammachart products. They're launching new products all the time. Thammachart just recently has a new market segment. They have entered cosmetics and if the feedback is good, but this at the moment, this cosmetic product is still free. But if the feedback is good, they may continue to develop in this area. We hope that you had the chance to try the products outside.
We've also had taste testing for our tuna ham. This has not been launched yet in the market, but we are going to launch it in the first quarter of next year. This is an innovation, a new product that has 0% fat and will be under the Qfresh brand and will be for those who are health-conscious. Our last business, pet care and value-added, is growing very well, 66% compared to last year compared to the other businesses. It's because of the increasing sales price, higher sales volume that has grown by 34% and new products as well. This is matching the consumer trend. Last year was low base for pet care products. We had to close our factory for two weeks in July to ramp up the production. This ended by September.
It's back to normal as of September. We're looking at pet care and value-added. Normally, it's only at 26-27%, but we're looking at gross profit margin of 28.7% for our pet care business. The nine months for 2022 is growing at 41.8%, and the gross profit is 27.6%. Our pet care business, we're looking at expanding our capacity and our production efficiency. We'll talk more about this later. We're going to also launch warehouse automation. We're aiming towards 100%. We have over 200 cats to do product testing so that we can provide the best value to our customers. In terms of packaging, we're looking at more automation as well. I'd like to show our technology in terms of automation for pet care.
The products in our pet care business, even though most of them are OEM, we do have our own brands which are displayed outside the hall today. Bellotta is not only sold in Thailand, it's also sold in Myanmar and Vietnam and India, and we received. The feedback has been very good. Marvo and ChangeTer are sold in Thailand first. ChangeTer is a premium product for dogs and cats that have kidney issues. We're trying to meet customer needs. After we launched the products for the kidney conscious pets, now we're looking at improving fur condition, for instance. We want to offer food for dogs and cats and pets like, for the food to be like medicine for them.
We don't want them to feel like they're having medicine as food, but make the food medicine tastier for them. We're gonna show by region now. At the moment, the global economy is volatile. There is high inflation in many regions, and there is recession as well. We'd like to share that our business in each region is very strong. Let's begin with the U.S and Canada. It is still growing by 15% compared to last year, and we have a positive impact from the exchange rates, from the higher selling prices and from FX. If we take the FX out, we're still growing very well in the U.S.
In Europe, our sales have grown by 6% compared to last year, and we have higher selling prices and evolving growth even though the Thai baht compared to the euro or the pound, we've seen the appreciation there. If we remove the inorganic, our organic growth is double-digit, almost 12%. Our sales in Europe are still strong as well, especially in France, Germany and Italy. In this year, the country that has softened in terms of sales is the UK. For Thailand, it has grown very well by 31.4%, mostly from our value-added businesses which are packaging. We have been able to increase our customer base for TU and outside TU. Lastly, our emerging market and the rest of the world has also seen double-digit growth, 19% year-on-year.
The drivers are from Japan that grew by 28%, the Middle East 45%, and Australia 43%. I'd like to go quickly through the rest. You'll see that the best growth is from our tuna and salmon, and we've seen improvement compared to earlier in the year, and pet care and value-added have all grown. In the next session, I would like to ask Lena to take over. Thank you very much. Our company has invested to support and drive our core and new businesses. Today, we have projects, 4 projects. The first is our culinary business. This is our culinary project in Samut Sakhon province. This is a facility that produces ready-to-eat products, namely dim sum and bakery. We have three factories that we've merged into one new one in Samut Sakhon. We have also increased automation there.
We have an automated warehouse or ASRS, and we're going to increase our production capacity by 38%. We expect that we'll be able to produce within the second quarter of next year. We have invested CapEx of around 1.2 billion THB. The second project is for our ingredients business, and this is for protein hydrolysate and collagen peptide. We're going to use the head and skin of fish to make it into protein powder. This is to expand into our Asian market. We are in the process, and we are on track. We expect to be able to produce by the first quarter of next year, and our CapEx is at 1.1 billion THB. The third project is our pet care business.
This is a factory for wet pet food and pet treats for dogs and cats, and this is at Samut Sakhon as well. We are going to increase our production by 18.7%, and we have our automated packing line as well. We are on track to commercialize in 2023. Our CapEx, we expect to be THB 2.1 billion. Lastly, in Ghana, we have our cold storage for raw materials of tuna to produce ambient products. This will include a wastewater management facility, and we're investing THB 550 million, and we expect it to be finished by the first half of 2023. These are some examples of our innovation products in terms of pet care, and many of you probably saw from the display outside.
As many of you already know, i-Tail, our pet care business. We are going to focus on premium products and innovative products that are able to provide a higher margin. We are using the concept of humanization to provide products to owners of pets, like our ice cream swirl. We've transformed that into what you can see on the screen right now. We have chips, for instance. People like chips, and we've used that idea to create dog chips with-- that are made of 100% chicken. The company has launched many innovations and continues to launch innovations. Our new business begins with our ingredients, and this business is a B2B one, and it was started to increase the utilization of tuna. Parts of the tuna that were not used in our canned tuna.
At the moment, we have tuna oil already, and we have a factory in Samut Sakhon for this, and also at Seychelles and Ghana and in Germany. Right now, we're going to expand our protein hydrolysate and collagen peptide plant. You can see the picture on the left-hand side. This is the progress in terms of construction. This will take the powder and use it for supplements and cosmetics, for instance. In the past quarter, we have invested in Mara Renewables. We talked about this in August. This is the second largest in the world in terms of algae oil. This is to increase our Omega-3 portfolio to cover tuna oil and algae oil too. We have launched a new product in terms of medical food, the medical food category. We have Fish Pro Low Sodium Snack. This is a seaweed flavor.
It is a snack, and it has high protein. It has high vitamin B and selenium. A high level of selenium as well and is low sodium. This is an alternative product for kidney patients, and they can have this instead of egg white. Research backs this. We have research from Phramongkutklao Hospital and also from Thai Union. This is a product launch through a joint venture with Inter Pharma in last October. At the moment, we are selling this through hospital channels and pharmacies. In our next business, this is our supplements. This is a B2C business that we launched in the third quarter of last year under the brand ZEAvita, and we have gotten very good customer response. This is the number one brand for collagen in the Super Hyper chain and also in online channels.
We've seen tremendous growth, for instance, in Shopee. In the last quarter, we launched our line extension in terms of collagen. Whether it's Gluta or zinc or astaxanthin. The fourth thing, the latest one is our PrevoFit. This will include extracts from white kidney bean, and this is for those who want to manage their weight, and this will be launched this month. This business, we're going to focus on a target achievable of THB 1 billion by 2025, and we expect to achieve sales of more than THB 200 million in 2022. As for our alternative protein business, we are going to remain committed to drive our business. In the third quarter, we announced a partnership with a leading business in the U.S. known as The ISH Food Company.
This is to help our growth and our market presence in the U.S. The shrimp dumplings that we launched in the last quarter also received very good consumer feedback, especially in terms of texture and taste. Many of you who have not had the chance to try this last year, you can buy this under the OEM brand in the supermarket. SEALECT in Thailand has launched new products under the concept of healthy living as part of the thirtieth anniversary. We focus on products for people who are health-conscious and also seeking convenience. We have our new packaged tuna. We have the Doraemon design. We also have delicious-tasting products with high omega-3 and no MSG, and it's all for the health-conscious consumer.
On the right-hand side, you'll see we have our tuna plus collagen product, and this is for people who are very health-conscious. It's in spring water, and it includes collagen equal to 2,000 milligrams. This is the first time in Thailand for this product, and it is on sale in Tops. We're going to launch it this month very soon. This is another commitment from us to strengthen our core business and to expand our portfolio in terms of healthy living and to focus on innovative products that can provide a higher margin. In terms of our CVC, we continue to focus on food tech. We have a corporate venture fund of $30 million. From last year, we have 8 start-ups, and there has been significant progress, especially in terms of alternative protein that has received investor interest, high investor interest.
We invested in two businesses in insect protein. The first is Aqua Feed, and this is the owner of leading brands in Thailand for snacks that are made from insect protein for dogs and cats or pet dogs and pet cats. This is made from insects, and this is to help the circular economy. They have a factory, a new factory in Bangkok that began production in last April and plans to expand next year. At the moment, Thai Union has also started OEM production for Aqua Feed. This is 100% production of Aqua Feed and their pet treats, and this is from Thai Union. On the right-hand side, you can see Flying Spark. This is another company that we have invested in. This company is listed in Tel Aviv in Israel.
We have a project to build a factory to breed insects, and this is ongoing in Phetchaburi Province. We're going to explore how we can apply their products that are insect protein in our businesses, whether it's in terms of pet food or aqua feed or ingredients. In terms of sustainability, we are committed to healthy living, healthy oceans, and we are still the leader in the industry in terms of sustainability. We are very happy to inform you that we have received evaluated, evaluative scores from S&P Global. This was an evaluation to be included in the Dow Jones Sustainability Index or DJSI. Our score is 86, which increased from last year by 2 points. We have the highest score in the food industry in terms of sustainability and for society. We also got 100%—100 as a score.
S&P Global. We'll announce the results in December. Aside from this, Mr. Thiraphong Chansiri, our CEO, our chairman, has been appointed as the chairman of SeaBOS, which is Seafood Business for Ocean Stewardship. This is a joining of 10 of the world's largest businesses in seafood. It is an opportunity for us to work together in terms of fishing and aquaculture and aqua feed to increase the sustainability of the industry. This is our solar panel project. This is another important project for sustainability. It's for renewable energy. We have installed solar panels in our factories in Thailand and in our foreign factories. This is the factory in Seychelles, which we just completed the project in September of this year, and we invested around THB 12-13 million. This accounts for 8% of our total energy consumption.
This is not a very large project, but it is in the direction that we want to have greater focus on to reduce our utilities costs, as Ludo mentioned earlier, especially in Europe, and to increase our use of renewable energy and to support our commitment to reduce our greenhouse gas emission in the supply chain, leading up until the year 2025. The company has received credit rating from TRIS at A+, and the trend is also plus, positive. It's a positive outlook. It hasn't changed from last year. We have our Japan credit rating also, JCR. We expect that to be announced very soon.
This reflects our strength, our financial strength, as well as our ability to drive our value-added businesses and new businesses and our expansion plans in terms of production facilities and our ability to manage our costs despite the effects of inflation, logistics, FX volatility or raw material prices or even the increasing interest rates. These are awards that we have received. We've received awards from global institutions, whether it's in terms of HR, human rights, in terms of CSR, and in terms of innovative products. You can see more details on these. Other details are available. Lastly, let's take a look at the minimum wage in Thailand. The minimum wage has been increased by about 5% on average since the first of October from up to THB 353 in Samut Sakhon, and we've seen an impact from this.
The increase in the minimum wage, we expect just a small effect, a limited impact, in fact, at only 0.2% of annual sales. The company has put in place plans for automation in our production for the past two years already, especially in our frozen and pet care and value-added businesses. We continue to strive to do this, to increase our production efficiency and to reduce our labor intensiveness and to be a factory of the future in our facilities. You can see the breakdown of the costs. The labor costs are about 5.7% of the cost of goods sold, and this is not very high. This has decreased, in fact, compared to the nine months from last year.
This is one factor that may impact our costs, but it is not a main factor compared to other factors such as our raw material prices and packaging. I'd like to hand things over to Ludo now. Also maybe a few words on this.
Just a quick comment on this one, and we mentioned it in Q2. This is not a surprise. We knew that there will be some minimum wage increase happening in Thailand, and now it's effective beginning of October. Honestly, we were expecting more, okay? With the expectation that we had, we are a bit higher compared to this average 5% that we have. Of course, it will impact us in our Q4. You can see we don't expect a huge impact coming from this one. We'll have to adapt our prices also moving forward, but it's not a surprise, and it will happen everywhere. I'm sure you saw that everywhere in every country you have some discussion regarding what should be the inflation rate.
Just to be very direct also, we believe this minimum wage increase is justified. Okay. We have to acknowledge also the prices went up, so of course, we want our employees to have a decent life and to be able also to buy what they want. We are very happy with this one. Again, we're expecting this increase to be a bit higher. Just a quick word on the full year guidance. Here we change only one compared to our Q2 communication, when we change the CapEx guidance. It was THB 6 billion in Q1 and Q2. In Q2, I told you very likely we will revise down, and we do revise down to THB 5 billion CapEx. Few things on this one.
First of all, each time we provide you with the guidance, the THB 6 billion, it's a gross amount, meaning if we do any sales, the amount of the sales will offset partially the amount of the CapEx. We had a bit of sales happening in Q2, and also we are not able to execute exactly all the projects that we have. You've seen also with the pictures of the factories, we are doing huge progress, especially in the culinary factory. We had a bit of delay. We are still facing some logistic issues from time to time, and this is why we do revise down a bit our CapEx. All the rest remain the same. In terms of target for the sales, we are targeting 10%-12%.
Right now after nine months, we are at 13%, so we are planning a Q4 with single-digit growth in terms of top line. If you get back to last year, Q4 2021 was a record high top line. We are growing by 15%. The baseline is very strong. The baseline in Q3 was a bit lower in 2022. The GP margin, we maintained 17.5%-18%. After nine months, we are at 17.5%. I do expect for the full year we will be in the low range of this guidance. Keep in mind that usually Q4, this is a quarter where the mixed category is a bit unfavorable. What does it mean?
In Q4, we sell a lot of frozen products, which is a less profitable business for us, and usually our ambient business and our pet care business are declining a bit in Q4 because of the seasonality. One thing also to keep in mind is our sales in both the pet care and the ambient have been extremely strong in Q3. We don't know the level of inventories in the customers, okay? Usually we are a bit careful after such a very strong quarter. It can happen that the inventories be very high at the customer level, and we can expect maybe the sales to be a bit softer in Q4 compared to the rest of the year. That's why we have this target in terms of sales and GP.
SG&A to sales, I think right now we are between 12.6%-12.7%. The target for the year, for the year-end is to be between 12%-12.5%. Clearly, we do expect a reduction in Q4. Okay. I mentioned to you the logistics costs are declining right now, so we do expect that will be the key impact and the key driver for such a reduction. All the rest, there is no other change. Okay. In a nutshell, very happy about the Q3 performance. I think we have been doing extremely well. We are facing some challenges. Red Lobster is not where we want to be and our frozen business is also not where we want to be. However, our ambient and our pet care and value business are extremely strong.
I think this is really what I want you to keep in mind. Despite the inflation, despite all the uncertainties on the environment, Thai Union is performing really well. Shall I move to Q&A?
Okay.
Thank you.
Thank you, Ludovic Garnier, for the presentation. Now let me open the floor for any questions you may have. Please raise your hand, state your name and your company, and our team will give you the microphone.
May I please ask of the Red Lobster progress? Can you share more details about whether you have found a new CEO, and you know, who the new CEO is and what the new management team is planning on doing in terms of turning around, improving the business? Maybe also if you can share like overall industry trend for casual dining restaurant chain business in the U.S., how the industry overall is doing and what the, you know, expected trend is gonna be in the next year.
Sure. You're right, talking about the CEO first. We told you in Q2, we have an interim CEO right now. This is Paul Kenny. You know Paul Kenny, he was a top executive at Minor. He's part of the shareholders of Seafood Alliance, so he's one of our partner of the minority interest in this one, and he was highly motivated. I don't know if you know the gentleman. He know very well the restaurant industry. He was highly motivated. He was not happy like us about the Red Lobster situation. He was the one proposing to us, "Okay, I want to go there. I want to be involved." He lives in Thailand, to make it clear, and he said, "Okay, I'm ready to spend 50% of my time in the U.S.
I want to turn around the business." Okay? This is what we did decide, and this is now effective since a few months already. He's there. He's interim CEO. It's not. The idea is not for him to become a permanent CEO, meaning we give him a few months to turn around the business, and then after, once we kind of stabilize the situation, we will be looking for a permanent CEO. This will be happening, I think, by the middle of 2023, just to give you some idea. There were also some huge changes in the management team at Red Lobster. All the positions are filled. Now we can feel really a new dynamic within the team. We do believe the team is able to turn around the business at Red Lobster.
We don't have any concern regarding the management of Red Lobster, and I think the collaboration between Red Lobster and Thai Union has been really improving, and the knowledge is really good. You have to keep in mind, the U.S. guys, when they talk to people outside of the U.S., they believe sometimes we don't know anything. Apart from the U.S., the guys don't know anything. We need to learn how to work together, and I think the collaboration has been really improving. You had the question on the industry trend. Of course, the whole industry have been facing with some inflation, and the casual dining is facing with this one. What you can see right now in our performance, you have the same, roughly for all the casual dining.
What you can see is all the fast food chain are doing quite well, okay? The McDonald's, Burger King, blah, blah. Because all the customers when they have to make some choice, they will try to go to the cheapest solution. That's why we need to be very creative and very attractive also in terms of value proposition, okay? You know, the prices went up a lot in the U.S. I mentioned to you inflation around 10%, and especially the price of the fuel has been extremely high, over the past few months. The people in the U.S. are very sensitive to the price of the fuel. You know, fuel for them and their car is something which is very important in the American mindset.
Sometimes when they have to do some trade-off, okay? I want to go out, I want to go to restaurants, where do I go? They will go to a cheap solution, okay? We need to attract to them, and this is why we push our marketing campaign, okay? We want them to continue coming in. Red Lobster, this performance is not unique in the U.S., because casual dining are facing with the same challenges. We do believe we can turn around the picture, okay? The efforts we have been doing on the training, I think is something which is really key. The fact that the execution was not consistent from one restaurant to another restaurant was not a good sign. Meaning you had some customers going to one Lobster and be very happy about the experience.
The week after or one month after, they go to another Red Lobster restaurants, and then the experience for any reason is not good. We want to really step up the standard, and we have been working a lot also on the menu, okay? I want to manage your expectation, it will take time. We know that, okay? Given the situation, given the inflation, the situation will be very different without all this inflationary context, okay? The situation is difficult, but I think we are on track. We see some positive sign from the operation side. We don't see that yet in the numbers, and I told you I will expect in Q1 2023 to start seeing some improvement in terms of financial performance. Okay?
Maybe I can ask a follow-up questions regarding the pet food, pet care business. With the inflation that you mentioned, do you think that there could be some impact on demand next year, given, you know, the rising costs?
I think we have now the example of 2022. In 2022, we have been facing with a huge inflation, not only in pet care, but in every category. Honestly, when you look at the demand and when you look at our volumes, you don't see the decline. Yes, there is some impact. We have some impact in some countries, especially in Europe, where we have been the only one in the market to react very quickly and to increase our price very quickly. In this specific market, we have been losing some volumes very clearly because the competition, the OEM and the other brand, they did not move that much, okay? Here you can see, some volume impact. We have the price elasticity, which is existing, no doubt on this one.
However, the prices of our product has been growing in 2022, but the prices of all the other product has been growing a lot, okay? Now we need to see for 2023. You have a specific question on the pet care. The inflation was there, yes, in 2022, but you can see the performance of the pet care and value added in Q3. This is extremely high, okay? Keep in mind that in the pet care, our positioning is to try to be on the premium product, okay? We are the experts of the wet cat business. Most of the competition is happening on the dry dog business. We are not there, and we don't want to be on the mass market. We could be there. We don't want to be there. We want to move to the value-added product.
You have seen also with the showcase we did just before the meeting, that our products are really great, okay. There is only one way for us. We will increase our prices if we are facing inflation. We have to be innovative, and we have to be extremely strong also in the execution and in our operations.
Any questions?
Seems very clear, huh? Or very quiet. We had much more questions maybe, yesterday.
Thank you, Ludo. Fern Jai from CNS. Although you cannot give us the target of next year, but could you please give us some idea about what is. Because next year you think that the sales growth may be single digits. What is the factor, the driver, the positive driver for the sales and also, do you think the gross margin next year will be improved from this year? And what is the assumption of baht trend?
Thanks a lot. In terms of sales, we plan next year for further growth. This is good. After a year where we deliver 10%-12%, we want to grow further. We are confident overall. The sentiment is very positive in our operations. We are careful on the demand side. Of course, if we are facing as much inflation in 2023 compared to 2022, there will be some destruction of the volumes and of the demand. We are very clear on this one. However, we can see with the performance we have been doing in 2022, we are confident overall. It's a positive confident. The key drivers on the sales next year will be the volume. We do expect there will be some further growth. Question mark on the inflation.
If the inflation is growing a lot, then there could be some challenges on the demand. The FX, we have been benefiting from the FX. We don't expect to benefit from the same positive effect next year. We do expect the USD to remain quite high. Also in 2023, we did not yet formalize our guidance for next year, but we don't expect the USD to get back to 33-34. We do expect to remain at a high level. In our Q4 communication, we will share with you. There is one item that I want to highlight to you, which is what I mentioned on the logistic cost. Okay. The logistic cost inflation we have been facing for the past two years was one of the key driver for the increase of our top line. Okay?
We have some cost increase by 100, we increase our prices by 100. It's good for our sales, but it means also dilution for our gross profit margin. Now that the logistics costs are going down, at one stage, for sure, we'll have to give it back to our customers, okay? It will be negative impact for our sales, but positive impact for our gross profit margin. Okay? We are not concerned. We remain very agile, okay. You know, I mentioned a bit earlier all the uncertainties we are facing around, especially the political situation. We are very careful about this one, okay? The war between Ukraine and Russia could worsen. That would be a disaster, but it could worsen. Here you don't go.
If you go in a scenario of a nuclear war, you never know what is going to happen, okay? We're extremely careful on this one. Overall, to answer your question, we are positive on our top line, okay? I think after a year where we deliver 13%-14% growth, it's kind of normal to get back to a single-digit growth, okay? Usually over the past few years, we are always targeting 4%, 5%, 6% top line growth. I wouldn't be surprised if we are in this range next year. Okay? Keep in mind also that we have some new factories which will be up and running next year. We have one picture. Maybe you can show this picture, please. They will not be effective from the beginning of the year, okay?
They will be effective more for most of them in Q2. You need to do some commissioning, and then you need to have some ramp-up production. There will be some impact coming from this one, okay? Also our other businesses, we mentioned our supplement and our ingredient business, they will be growing next year, so they will support the top line. Keep in mind, the top line is not our priority. Okay? Our priority is really the bottom line. Okay? We told you a few years ago, we were at 14% gross profit margin. We told you we want to recover. Now we are at 17%-18%. We are happy about this one, but we are ambitious. We want to grow further. Okay? This is very clearly the direction.
We don't mind about losing some sales if they're not profitable. This is something which is very important here in the mindset of the top management in Thai Union. These are manufacturers, packers, okay? The people here, they feel very comfortable where the factories are full. Why? Because the absorption of the fixed cost is very important. Since few years already, it's not new, we are discussing with every leader, okay? We are saying, "Okay, we want you to move away from loss-making business or from non-profitable business." This is not easy in terms of mindset. We have the same discussion with our frozen business in the U.S., okay? Because the mindset is to say, "Okay, if I have a very strong top line, I feel comfortable." Okay? Our point is different.
We say, "We don't want you to waste your time, your energy, your efforts on some business where we don't make any money." Okay? We are in this journey. We did a lot over the past 2, 3 years. We did remove a lot of non-profitable business. We still have some part of our business we want to grow further, okay? We cut also some businesses where we don't see we can recover. Keep in mind, the mindset of Thai Union management is to be entrepreneur, okay? We don't like closing some factories, so we always give a chance to the business. We told you in Q2, we are closing one factory in Germany. We don't like that, but we have been trying to turn around the situation for the past two, three years, and we have overcapacity in Germany.
That's very clear. We tried different things, potential M&A, potential source or something, blah, blah. It did not fix the situation. The only situation is we close the factory. We are not happy, but we are very clear we have a program on the loss-making businesses that we have. We have some of them. The situation has really been improving compared to a few years ago. We still have some on our target list, okay? There will be some more action on this one. We want to move away from this one. There are some specific businesses, like the supplement business, we are okay to lose some money at the OP level because we are investing behind. We are investing a lot in marketing activities because we want to. It's a new brand, ZEAvita.
We want this brand to be well-known, and we want to push for the top line. This business, we have a very clear plan. The first years we lose some money, it will be beneficial in few years, okay? These are the one where we say, "Okay, we want to be very selective in this kind of business." Clear? Sorry, my answer was a bit long. Sorry for that.
Because of this slide, you revised down the CapEx from THB 6 billion- THB 5 billion. I cannot catch you. What is the reason of the declining? Is it because of the delay or the cost saving?
I think two things. First of all, when we provide the THB 6 billion at the beginning of the year, we don't assume any sale of our assets, okay? Sometimes we sell a piece of land, we sell something. When we sell something, it will partially offset our CapEx. This is what I'm saying. The THB 6 billion you have at the beginning of the year is a gross amount because we assume no sale of assets at all. Now in the amount that you have, the THB 3 billion that we have after nine months, we did some sales. Okay? I think we have something like THB 300-THB 400. Okay? If you add it back, in fact we had THB 5.4 billion, something like this. Okay? This is the first reason. We have this every year.
This is why every year our actual spending in CapEx is a bit lower because we never plan for any sale of any assets. The second reason is the one you mentioned. Also, some of these projects are very large, okay? We have been facing with some delay for some of them. The culinary is one of those where we're expecting to close earlier. The second one, also the protein and collagen is also another one where we were expecting to close earlier. We have to be a bit realistic. All the logistic issues we have been facing, we have to actually take a bit of time, okay? For the collagen, we are importing some dryer coming from Germany. It takes some time. Just simply takes some time.
Yes, there is a bit of delay, meaning my expectation for next year there will be some hold for one of these activities again on next year. Okay? The same, the CapEx amount I would expect in 2023 will be significant. Okay? There was no intention to reduce. We told you in 2020 and 2021, we had a clear strategy to reduce our CapEx to preserve the cash. In 2022, it's not anymore the situation. We do believe the pandemic, the COVID situation is much better. We want to invest, okay? Sometimes we are facing some operating topics and issues where just building some large factories take a bit of more time compared to our expectation.
Also the numbers about the CapEx of each plant. This is the whole amount or-
That's correct.
Is it the amount that you'd pay in 2022?
The whole amount.
The whole amount.
The whole amount which can be spread over a few years. You're absolutely correct. It's not the amount we spend specifically in 2022. This is the whole investment of this specific project.
Some of that will be paid in 2023?
Yes, you are correct, with the finalization. However, we expect the majority to be paid in 2022. At the end of 2022, they will be very well advanced. You can see the pictures. The cold storage will be finished at the beginning of next year, very beginning of next year, so we would have paid the vast majority of the amount, and the same for the others. There will be some remaining portion, you are correct, next year, but I don't expect the majority to be in 2023.
Are there any project initiated in 2023 so that the CapEx? What is the idea of CapEx of next year compared to this year?
Wait a bit. We will provide the guidance in Q4. It will be increasing.
It will be-
It will be increasing overall.
Increasing from 5,000 this year.
From the THB 5 billion that you have right now, it will be increasing for sure. We have some other very large project, very exciting projects. We have one in Seychelles. We will elaborate more in our Q4 communication. Our pet care also, we have a lot of project for getting our pet care business. You have here one portion of the business. We are discussing right now that they are planned for the next year. They are very ambitious, okay? Very likely the proportion of our CapEx in pet care will be increasing in our Q4 communication. We will share a bit more in Q4. Right now, we are in the middle of these discussions.
I would like to ask about Red Lobster. This year, the operating loss is about one-
billion.
THB 1.1 billion.
Full year.
A bit higher than that, right?
It's a guidance 1.1.
Okay.
I think if you compare to what we have in Q2 and Q3.
Yes
We do expect to have a share of loss around THB 250 in Q4. If you just do the math, if you do the 250. If you do the five-year, the full year, THB 1.1 minus nine months, you have the Q4, okay? We do expect to have.
Two something, right? It's about two something.
2:40.
240.
2,237, if you want to be exact.
That one will be slightly higher, right?
Yeah. We do expect the situation to improve a bit. However, you know Q4 is not the best season for them. Q4 is happening just before Q1. Q1, for them in terms of seasonality, this is really where they have a lot of promotions happening. This is also Lent period in the U.S. Many people going to eat some fish, seafood and all that. Q1 is always strong. Q4 is always a bit lower. Why? Because the people, they pay some their taxes. There is a lot of local reasons for that. Their seasonality in Q4 is always a bit soft. Starting again in Q1, and this is where I do expect to see some recovery happening.
This third quarter of this year is slightly abnormal, right? Actually the fourth quarter, the loss will be higher than the third quarter, but this year it might not.
That's correct. Why? Because I told you in Q3, we are penalized by the inflation, okay? The price increase we do, it won't have full effect in Q3, okay? In Q4, we will benefit from the full effect of the pricing we did in August. I told you very likely in November there will be another price increase also happening, okay? The full cost absorption will improve in Q4. We do believe, I told you also that we have in Q3 some costs related to training. We have some costs related to restructuring, okay? We do believe these costs will not happen again, okay? Keep in mind one thing. In our Q4 2021 numbers, there were some subsidies coming from the U.S. government. You remember we did communicate last year. You have the amount in mind?
I don't have the amount in mind. If you get back to last year, to Q4, it was $5 million-$10 million for Red Lobster.
THB 83 million.
THB 83 million in terms of bad for our sales, our sales profits, okay? That was in Q4 2021. Q4 2021, the real performance, you have to start from the THB 147 million and you need to add back, because we don't expect to benefit from this subsidy in Q4 2022.
About the accounting adjustment, do you think it will remain in next year?
Good question. Give me the interest rate, I will give you the answer. No, I think to make it very clear, if you read the documentation, yesterday the communication from the Fed, they are saying we are not done yet with interest rate increase. We are not done yet. There will be some further interest rate increase in 2023, okay? This is the direction, okay? I don't think it will be as big as it was in 2022, very clearly, but this is the direction, okay? Right now, we did not finalize our guidance. Our guidance, we will give it to you in our Q4. To be conservative right now, my personal feeling, I'm assuming no other income in 2023. The same situation as in 2022. We don't expect to have negative impact in 2023. We
If you look for the full year, there will be a zero coming this line other income. At this stage, it's not the official guidance for next year, just my personal feeling, just to be conservative. Just want you to take a steep step back this year without any interest coming from Red Lobster. We are very close to last year in terms of bottom line. Very close, okay? Meaning if at one stage we can start to recording against interest, our performance will improve. I think you really have to focus in on 2022 performance. It's an excellent performance, even despite the preferred interest coming from Red Lobster. I think this is really the key message I want you to keep. Clear?
Yeah. Okay. About Red Lobster, do you think the raw material and labor factor, which one is more impact to the operation?
I think if in Q2 especially, the competition was very high. We told you we had to hire many people, and all the restaurants, they were hiring many people. At that time, there were still some subsidies from the government, so there were many people who were not really incentivized to get back working. This is done. Now there is no more subsidy. So yeah, there was some inflation on the salary, and there will be some further inflation next year. The raw materials, it's a different story. Raw material, the shrimp price is kind of normal in the U.S., but we are using a lot of lobster. We are also using a lot of crab meat, okay? These prices of these commodities are declining right now in Q3. Why are they declining?
Last year, the prices of lobster and the crab meat went record high, and we have been benefiting from this, and this is why our frozen business in the U.S., we were holding a lot of inventories at that time. We have been benefiting from that. It was so high that at the end of Q4, you had many restaurants, not Red Lobster, but many other restaurants taking out the crab meat, the lobster, or declining the orders. Okay? The demand collapsed, and then the prices are going down. Okay? This is good for us in our business. Of course, depending on the level of inventories that you have, but right now, in terms of raw materials, shrimp under control, lobster and crab meat are declining very strongly.
This will help us to absorb the inflation coming from the utilities, coming from the labor, and all the other stuff. This is true for this seafood. Different story. We are also using some meat and some other raw materials at Red Lobster. Here we can see a bit of inflation.
I have a question about the average selling price for each traditional product of Thai Union. When the inflation decline, when the raw material price decline, will the average selling price decline?
I think two topics. Depending which category, you will have different answers. Okay? If I talk about the ambient-
Maybe in the ambient.
The ambient, which is a key one. In the OEM, in our OEM business, very clearly. As soon as the fish price will be declining or the total cost will be declining, we'll have to give it back to our consumers. Why? Because all the competition will do that. The question is how long, how quick do you need to give it back to the consumers? Very normal. We are used to do that. We are doing this since 40 years already. Different story in our branded business, okay? You know the branded business, and again, situation is very different from one country to another country. Sometimes they have some yearly contract, okay? Sometimes they have some quarterly contracts. Sometimes they have some six-month contracts. So here the lead time can be longer, and sometimes we can benefit from this one.
We have been penalized in our branded business in 2022 because we are not able to react very quickly because of this longer contract. On the flip side, when the cost will be going down, usually we are benefiting from this situation.
Thank you.
We have one more minute if there is one more question.
Before we end our session, if you have any other questions or any other interest in ITC, we will have an ITC roadshow in Bangkok on the sixteenth of November at Pullman. We will open for registration to attend that, and we'll provide details in the group chat, so you can inform our IR team if you are interested in joining this.
Item, of course. There was no question on the valuation we do expect. I'm very surprised. Of course we cannot communicate anything on this one, but as you know, this is very attractive business, okay? I really encourage you to go there. It's a very exciting business. We are very pleased to go through this project. Of course, it will be subject to the market condition. We told that from the beginning and also from the approval from the SEC, but this is a very exciting project for Thai Union. You know the idea is really to unlock values for our shareholders.
Okay. I think
No more questions? Thanks a lot, everyone.
Thank you everyone for joining us today. I hope you would go back and write good things about us this time and see you next quarter.
Thank you, everyone. Stay safe.