Good morning management, analysts, bankers, investors, and our guests. On behalf of Thai Union Group, I would like to extend a warm welcome to you for quarter two 2021 result presentation. Once again, we meet virtually. I hope you all are well and ready to join us for the result announcement. The executives joining us today are, of course, our President and CEO, Khun Thiraphong Chansiri, and our Group CFO, Mr. Ludovic Garnier.
Hi. Good morning, everyone.
Our Investor Relations Manager, Khun Kalvalee Thongsomaung. As usual, Khun Thiraphong will present to you the key highlights and recent developments. Followed by the financial result with Khun Ludo , financial result by business outlook with Khun Kal. Khun Thiraphong will end the presentation by presenting to you the business outlook. Any questions you may have during the presentation and Q&A, please feel free to type it down in the chat box. Without further ado, I would like to invite Khun Thiraphong to begin the announcement. Thank you.
Good morning, dear analysts and bankers. Thank you very much for joining our analyst meeting for our second quarter this year. Let me go through the first section, executive summary, and then I will have Ludo and the team to walk you through the details. Page slide number five. First, I'm very pleased to announce the result of this quarter. Even though our top-line growth is at 8.6% year-on-year, this is our best record high net profit in one quarter. The reason for our exceptional growth of our top line are from frozen sales, which was up by 29% year-on-year. Thanks to the strong turnaround in our food service businesses and export. Also our PetC are and value-added sales was up by 13%, thanks to growth in new and existing product.
Ambient sales, although is dropped by 6.8%, but for us, it's kind of normalized, due to the fact that last year, second quarter, it was a kind of pantry loading when we first had the first wave of COVID-19. Gross profit margin is also one of our all-time high at 19%, up 82 basis point year-on-year. Our continued high gross margin is from frozen margin recovery, PetC are and value- added. Very strong demand. Also from the new and innovative product. Even though we have a slight drop in our ambient sales, but we still were able to sustain the good ambient margin. Operating profit also a record high at THB 2.5 billion, supported by strong gross margin.
SG&A, although it's slightly high at 11.9%, it's due to the higher sales and also due to the marketing cost. Thanks to our effective cost management. Net profit all-time high at THB 2.3 billion, up 36.5%. I think this is all the key highlight from our second quarter. Thanks also to the turnaround in Red Lobster. Very strong in our second quarter. Next, please. This page, for the first half of this year, our net profit was up by 51.7% year-on-year, with THB 4.1 billion. Our share price so far this year, from January to August, up by 64.2%. Even though it looks very strong, the fact is that our P/E multiple still remain below 15 times multiple.
Net debt-to-equity, slightly higher in this quarter, ended at 0.98 times. It's also due to the fact that we have made some investment, one in Rügen Fisch and one in one of the listed company in Australia, and I will share with you later in details. Look at the financial summary. You can see, again, net profit up by 51.7%, EBITDA up by 26.4%. Top line, growth by 4.4%. Next, please. With this strong net profit, we have announced our first half interim dividend of THB 0.45 per share or dividend payout growth by 40% compared to the year ago. The ex-dividend date would be August 23rd, record date 24th, and payment date will be on September 7th. This is the payout ratio of 52%, comply to our dividend policy.
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Next, please. Again, key development during the second quarter. You can see that we had Yueh Chyang , our Vietnamese factory was closed on July 12th for five weeks, with plans to reopen on August 16th. We have our vaccine implemented in Seychelles, U.K., and U.S. They are in advanced progress under core program with the local authorities. Songkla Canning. We have closed the factory for two weeks during the fourth wave of COVID-19, and have reopened on July 5th. So far, right now, they are operating as usual. In Samut Sakhon, we are still operating as usual. So far, we never closed any of our factory in Samut Sakhon. We continue to work closely with the local authority. We doing active case finding through antigen test kit, extending our factory accommodation isolation.
I think we have basically a good experience during our third wave in Samut Sakhon from December last year. I think overall we have all the key measures in place. We are confident that we can manage through this COVID-19. Next, please. This is the investment that we have made in the second quarter. We acquired the remaining 49% share in Rügen Fisch. Basically, right now we own 100% in our German business. As you recall, in 2016, we acquired 51% at EUR 43.5 million, and we acquired the remaining at EUR 44.8 million in May this year. Rügen Fisch, with the revenue over EUR 140 million per year, and it's the number 1 brand in Germany. Next. New product initiative towards our 2025 strategy. We have expanded healthy living portfolio. We have implemented and introduced value-added tuna product, with more functionality in the market.
For example, John West Australia have launched tuna with protein and calcium, and it's in the market since July this year. We also have enriched with calcium from natural ingredient. Our tuna bone calcium is a patent technologies. Besides John West Australia, we also have introduced similar product right now in our France through Petit Navire and also John West in U.K. We also launched our new product line under Bellotta and Marvo in Thailand. We launched a new dry pet food product in July this year. Next, please. Again, we have released our eighth annual sustainability report, published in May 2021. We also get recognition from UN Global Compact SDG Pioneer Award. Dr. Darian McBain was recognized as an SDG Pioneer, one of the 10 business leaders for her work towards a sustainable ocean economy. We also continue to support local community impact by COVID-19. Next, please.
These are the key step to our 2025 corporate strategy. Besides strengthening our core business, we also have implemented our new business unit. That is tuna bone calcium powder at Songkla Canning in 2021. We have launched plant-based seafood and meat in the first half of this year, produced from Thailand. Our refinery in Germany has already started back to operation again this year. We have established and launched Thai Union Lifescience this year, and the first batch of products right now in the market from August this year. We are introducing calcium oil and collagen into Thai market. Functional beverage and medical product joint venture will also be launched through JV with ThaiBev this year, end of this year. Our culinary project, the new factory, will also be ready by end of next year.
The new factory of protein hydrolysate and collagen peptide now is started construction, and we hope that it will be also completed by end of next year, 2022. Based on our corporate strategy, by 2025, we expect the revenue from innovation will be at least 10% with gross margin over 20%. We expect 3% annual conversion cost improvement from our core businesses. We expect to achieve EBITDA between $450 million-$550 million by 2025. Next. Culinary project. You can see that from the picture on the right boxes, we are completed the piling right now, and we do hope to complete the construction in 2022. Total production area would be almost 10,000 sq m with new automatic cold storage. Capacity will be increased by 38%. Total CapEx is $1.1 billion. We plan to launch commercially in the third quarter next year. Next, please.
Expanding into new attractive value-enhancing area. Thai Union Ingredients focused on valorizing part of our fish into value-added marine ingredient under the brand UniQ DHA, UniQ BONE. This is going to be B2B for sales channel. Protein hydrolysate and collagen peptide factory will be completed in 2022. Thai Union Lifescience, B2C business. Product is now launched in the market in August this year. That will be under the brand of ZEAvita supplement. There will also be a ZEAvita joint venture with Interp harma for hospital channel. There will also be ThaiBev joint venture for functional beverage. Alternative protein. We have launched OMG in Thailand. We have also collaboration with international FMCGs to launch plant-based meat in Asia. You will see more significant revenue from next year. Although we just started end of this year, the number still relatively quite small.
We aim to achieve $30 million revenue for our alternative protein by 2025. Next. This is the latest investment that I want to share with you. We have invested up to 10% in the company called Clover Corporation, a listed company in ASX market as of July 2021, at a total purchase price of AUD 29 million. Clover Corporation own Nu-Mega Ingredients, producing encapsulated DHA oil, including tuna oil and algae oil in the market, serving infant formula market. Encapsulated is kind of in the dry form for tuna oil. If you are aware, Thai Union produce tuna oil in liquid. Clover is one of our strategic partner who buy our oil and then make it in the dry form. Headquarter is in Australia with majority sales in Asia, followed by Europe.
We turn from business partner to strategic partners from our investment so that we can broaden our product portfolio, our customer reach, and geographic coverage. Next, please. We are launching supplement under ZEAvita brand in Thailand. It's going to be first time ever the most enriched and natural supplement from 100% deep sea tuna parts. Patented in Japan for better functionality. The market opportunity in Thailand, the size is THB 30 billion. We have introduced product in August but will be officially launched in September. Focus now on key product, collagen, calcium, and fish oil. Right now we have exclusive partnership with Watsons and the top 100 independent pharmacies. We will drive sales from both offline and especially online channels. Next. Alternative protein effort so far. Key success, we have built a multiple product portfolio across category. We launched OMG Meat in Thailand from March this year.
We have a contract OEM partnership with leading FMCG players, well-positioned plant-based startup and strategic customer. For example, major U.K. retailers. We unfortunately cannot disclose the FMCG clients due to confidentiality agreement with them. In Thailand, we also collaborate with V Foods from June 2021, and partner startup More Meat to co-develop new product. We have ambition to reach THB 1 billion revenue by 2025. Next. We continue to invest in our food tech startup via our CVC fund, $30 million. The latest investment that we made in June, July, one is ViAqua, a biotech startup focused on disease prevention for aquaculture based in Israel. We have invest in the company called Aleph Farms, a leading cells cultivated meat company based in Israel. We will continue to maintain a very active pipeline for further expanding our CVC portfolio in these strategic areas.
Next section I will pass to our CFO, Ludo. Thank you.
Thanks a lot, Khun Thiraphong. I'm very happy and pleased to be with you this morning. As you could hear from Khun Thiraphong, we have many good news to share with you this morning. Our financial performance in Q2 is exceptional. You have here all the key takeaway. Top line, I will not comment further. Khun Thiraphong already mentioned this one, that the growth, we are very happy with the growth. We have just for you to remember, a positive FX coming from the euro and the GBP, but even if you exclude the FX, the growth is still very strong at +7%. I think for me, the key takeaway for this quarter is really the record high gross profit margin at 19%. If you remember in Q2 2020, it was already our record high, our previous record high at 18.2%.
Here in 2021, we are really overachieving this performance. I think this is really coming from a unique combination where we have all three categories performing very well at the same time in terms of gross profit margin. I think this is one of the key success, and we will get back to this and explain and elaborate further in Khun Kal's section. As a result, the OP is at THB 2.5 billion, a record high for us, improving versus last year. Even below the OP, we have some very strong improvement. If you do remember, Q2 2020, Red Lobster, most of their restaurants were closed at that time. Now the situation in Q2 2021 is completely different, and we will elaborate further, but they are mostly operating almost all their restaurants.
As a consequence, the loss from Red Lobster has been reduced dramatically, and this is also one of the key driver for our strong performance. Bottom line, net profit, we are generating THB 2.3 billion bottom line. We are very pleased with that. This is a new record high for us for a quarter. Again, the key drivers are our operations. We are doing very well in terms of sales and OP, and also below OP, we have a lot of good news also to share. Next. Another thing which is very important, and you know that sustainability is really one of our key assets since many years now within Thai Union. Since last year, we have been really trying to develop everything around the blue finance.
If you do remember, in Q1, we told you that we have been launching a new sustainability-l inked term loan, SLL. That was in February 2021 for a THB 12 billion amount. What we can announce to you is now in July 2021, we just launched successfully a THB 5 billion sustainability- linked bond. It is a bond this time. It is not a loan anymore. It was the first time that we did that something like this was performed in Thailand. The regulation is very completely new. I think it was a loan only since May. Again, we had a lot of success coming from this one. You can see here the amount of oversubscription, more than two times. This is very happy. We can see a lot of appetite coming from the banks and coming from the firms on this kind of tool.
The KPI, again, we have some sustainability KPI to be respected, and they are almost the same that the one we had for the loan before. We have three of them. DJSI is one of them, carbon intensity is another one, and the last one is related to electronic monitoring. You can see here it will be a seven-year maturity, senior, and secure, you can see here the interest rate, which is, I think, very, very attractive. Great success from our treasury team, from Yongyut and all his team. I think we are very pleased to be the first one to launch this kind of tool in Thailand. I think at the end of 2021, we will have something like 40% of our long-term debt which will be based also on sustainability-linked KPI. This is a lot.
We want to push further for next year also, but we are really pleased to drive the whole industry in this direction. I think it really shows the commitment of Thai Union toward more sustainability. Next one. Even if we have some great numbers in terms of financial performance, we are facing some challenges like any other companies. I will not comment further COVID-19 challenges because Khun Thiraphong already mentioned this one, but the situation is clearly in our radar. I will get back to the container shortage issue. If you do remember, we talked about these topics in Q4 2020 already. We told you in Q1 that the impact was an increase of our selling cost by almost THB 200 million. We have roughly the same situation and the same exposure happening in Q2. Again, we are facing some container shortage.
We have some delay in the shipments. Of course, we try to pass through the cost to our suppliers, to our customers. It's a commercial discussion. We are trying to mitigate all of this, but eventually, at the end of the day, the impact in terms of selling cost was THB 200 again for Q2, so this is total for H1, something around THB 400 million. I told you already in Q1 that we're expecting the situation to improve. It is improving. However, it is much slower compared to our expectations. Now we expect the situation to continue until the end of the year. We expect to have roughly the same impact in H2 compared to H1, and we expect the situation to kind of normalize in Q1 2022. It's a huge impact. Of course, it's impacting everyone.
Just to give you an idea, the cost of a container moving from Thailand to the U.S. or to Europe has been multiplied by 4. Pre-COVID-19, it was something around $2,000 for one container, now we are moving in a range between $ 8,000-$ 10,000. Of course, this creates a lot of challenges in terms of supply chain, because it delays all the deliveries. Again, nothing to be concerned about. We are managing the situation already since six months, we know how to deal with this one, this is clearly one of the challenge that we have to face with. On the top right, you can see another challenge that we have, which is related to inflation. In our business, mostly coming from packaging and also coming from oils.
I'm sure you have read a lot of articles coming from all the industries and especially the food company mentioning this kind of inflation already impacting us a bit in 2021. We are having some discussion with our suppliers, and we're trying to find some way to mitigate this inflation. However, we have to face with this one. For us, it's a watch out for H2 2021 but also for 2022. We have already most of our purchases which are hedged, or performed, or sourced already for 2021, so the majority of the impact should come, if it is confirmed, should come in 2022, and this is something watch out for us to keep in mind. Again, some challenges, we need to keep them in mind. Nothing to be concerned. I think this is part of our usual day-to-day operation. Next slide.
Quick focus on the tuna prices. You know that tuna prices is one of the key driver for our performance. In Q2 2021, the average skipjack price is around $1,323. We have an increase by 4.5% compared to last year. A bit of inflation here. We told you, as long as we remain in this gray area between $1,300 and $1,700, we believe this is comfortable, and this is sustainable. On this one, we believe it is okay. Just to give you some outlook on H2, we are still planning to have a bit of inflation there. However, it should be again under control. We are not anticipating some huge increase or significant decrease of the fish price in Q3 and in Q4. Next slide.
Next slide is the overview over the last three years of our performance, and I think we are very happy about this one. You can see the top line has been positive. We have been generating some growth over the last six quarters in a row, and the last one in Q2 2021, at almost 9%, is very interesting for us. The gross profit margin is also very nice. We have been able to generate some top-line growth together with some profit increase also. Gross profit margin at 19% is record high. Again, the previous record was at 18.2%. If you look at the net profit, net profit margin at 6.5% is also record high. Very pleased with these numbers. Again, we will get back to this in the category analysis to explain to you further where does it come from. Next.
We are just starting the deep dive on the financials, and here you can see the performance in terms of sales. We already commented the performance in terms of Q2. Just to show you the numbers for H1, THB 67 billion in terms of sales. We are growing by 4.4% compared to 2020. If we compare to 2019 pre-COVID situation, we are growing by almost 9%. This is very interesting and very attractive for us. The story that we have in Q2 is almost the same that we had in Q1, if you remember. In Q1, we had the frozen regrowing. We had also the PetC are and value- added growing, and we had the ambient category kind of normalizing. We had the same situation happening in Q2, except that in Q2, our frozen business also in Asia is back to growth.
We told you in Q1 it was mostly our U.S. business which was growing, but the frozen business in Thailand was still a bit soft. The situation is moving in Q2, in Q2, we can say that now our frozen business, both in U.S. and also in Thailand, are back to growth. This is why the frozen is growing so much. Also true that the comparison, the baseline in Q2 2020 was really soft because of the pandemic. We have an opposite situation in the ambient, maybe you can get to next slide. You will see here the view that we had. You can see on the left the chart, the bridge between Q2 2019 to Q2 2021, Q2 2020 to Q2 2021. You can see all the ambients are declining. Tuna, sardine, mackerels, salmon are all declining.
You can see all the next boxes, which are all green and growing again. This is very interesting to compare to the same bridge we presented to you last year. Last year, we had exactly the opposite situation. On the right, you can see that the ambient was really growing. This was coming from the COVID-19, the pantry loading, and the panic buying. You could see that the frozen was also decreasing. We had exactly the opposite situation. Now, the ambient is kind of normalizing, the frozen is recovering, and the PetC are and value-added and other products is still growing. Very interesting chart, and I think it shows how resilient and how strong our portfolio, our product is.
Last year we had a lot of discussion regarding how sustainable is the performance for Thai Union. You can see in 2021, we are able to grow, even compared to last year, where we were benefiting from COVID-19 situation. Next slide is our usual focus by regions. I think we can see here some growth in Q2. This is mostly the U.S. and also Europe. If you do remember, Europe in Q2 2020 was a bit soft. We were facing with some out-of-stocks situation in these markets. We had to cut all the promotion activity at that time. Situation is different now. In Q2 2021, we have been able to restart again all the promotion activity in the EU. This is why you will see that the U.S. is very strong and also Europe is also very strong.
In terms of mix between branded and private label, we don't have a lot of change. I think this is situation as usual. Next slide. We just show you just a quick focus on gross profit margin. I already did comment the performance for Q2, so I will not get back to this one. Again, I think 19% is coming from very strong combination with these three categories performing really well. Okay, frozen and chilled seafood, we told you we are back to a very strong top line. PetCare also a very strong top line, and these two businesses have been generating some very high gross profit margin. Especially, you will see the PetCare and value-added business has been generating a record high gross profit margin, higher than 30%, which is great.
The ambient, even if we are kind of normalizing in our top line, has been also generating a very high gross profit margin at 22%. You will see this one. Over H1, now we have been delivering on average 18.4% gross profit margin. This is much higher compared to our initial expectation for the year at 17%. This is also above last year where we were at 17.3%, and above two years ago when we were at 15.8%. You can see in terms of numbers, absolute amount, we stand at THB 12.3 billion at the end of June 2021. Next one, just quick focus on the OP. You may have some questions regarding the level of SG&A. This is correct. Our SG&A has been growing a bit. Now they represent 16.6%.
They are increasing by 16.6%, and they are representing 11.9% of our sales, which is in the high range of our usual guideline, between 11%-12%. A few things that we have to highlight. First of all, we have, of course, the impact in this quarter of the logistic cost. I did mention to you that our estimation was something around THB 200 million. Plus, we have also some increase in our marketing activities by almost THB 200 million. I told you that Q2 2020, we cut a lot of marketing activities because basically we are facing out of stocks. Now we get back to a normal marketing activities, and this creates an increase in our SG&A. Last one, I will get back to this one. We have one one-off item to mention to you this quarter, which is a goodwill impairment regarding our business in TMAC.
TMAC, if you know, this is our shrimp hatchery business, and we get back to this a bit after. Despite this SG&A increase, thanks to a very strong gross profit increase, we are delivering a record high OP at THB 4.4 billion over six months. Okay. In terms of margin, this is 6.6%. Again, very high and very pleased about these numbers. Next slide. As a consequence from a very strong OP, you will see the EBITDA is also very strong. Over six months, we stand at THB 7.6 billion. THB 7.6. Last year, we had almost THB 6 billion, kind of flat versus 2019. Growth of the EBITDA by 26%. Of course, we are benefiting from the strong OP increase from Red Lobster recovery, and also from the FX gain that we are having.
Just one thing maybe to mention on Avanti. You know Avanti is our Indian partner. They are doing the feed and frozen business, and they have been suffering a bit in 2021 on their frozen activity. You know the COVID-19 situation in India is not great, and they have been facing with some shortage in terms of labor force. In terms of share of profit, this is a bit declining, still very strong, but a bit declining versus last year. We do expect the situation to kind of normalize in Q3 and Q4. Their feed business is still doing well. Of course, you know this is a listed company, this is public information. The rest, and especially Red Lobster, is strongly recovering and fully offsetting this impact. Next one, just a quick focus on net profit. We mentioned this one.
I don't get back to Q2. You can see 2.3. The previous record high was 2.1 in Q3 2020. 2.3, we are super high. Over six months at 4.1, we are very pleased. We are growing by 52% compared to previous year. Next slide. We have only one, one-off to report to you this quarter. I mentioned to you the impairment of TMAC. Just maybe some few words about this one. TMAC is one very specific business, one unique business we have within TU, where they are doing the hatchery business, and they are also playing the role of R&D center. For our frozen business in Thailand and also in the U.S. This business has been loss-making since few years. We have a very strong action plan in order to turn around the picture here.
Over the last few years, we have been improving year- on- year, and we have been reducing the losses. However, in 2021, for different reason, we are not improving anymore, we are not getting back to break even. This is a trigger event for this goodwill impairment, for THB 105. This is a one-off that which is reported to you for this quarter. Should you exclude this one-off, the net profit would be even higher at THB 2.4 billion. Next slide, just a quick focus on the earnings per share. For Q2, we stand at THB 0.49, and for six months we stand at THB 0.86. Again, this is a consequence of the very strong net profit. Again, we are delighted about these numbers. Next slide. Just a quick focus on Red Lobster.
If you remember, Red Lobster was really painful last year because they have been generating a lot of losses coming from the closure of most of their restaurants. The situation is very different in 2021. If you do remember, if you look at the first line here, you can see the share profit coming from Red Lobster. Q1 2021, they have been able to generate some benefit, some profit. If you do remember, Q1 is always supposed to be the best quarter for them. They have a lot of events, they have the Lent, they have a lot of commercial activities also during this quarter. Q2, they are generating a loss by THB 49 million. However, we have much more in a much better situation compared to Q2 2020. Q2 2020, if you do remember, they have been generating a share of loss by THB 700 million.
If you do remember, they have the vast majority of their restaurants which was closed during this quarter. That's why we have such a huge improvement. Now almost all the restaurants are open. We have been doing many changes, and I will get back to this in next slide within Red Lobster, and we are very happy with the performance. Just a quick focus on the second line here, you can see share profit from the lease accounting adjustment. If you do remember, we introduced this topic in Q1 already. We told you we have some accounting differences between U.S. GAAP that Red Lobster are applying and Thai GAAP that we are applying here in Thailand. The impact is we are recording, it's a pure phasing difference. We are recording some expenses ahead of them. We have some negative impact. It's a pure accounting adjustment.
There is no cash impact at all. The impact is quite large. There was a one-off impact of THB 300 in Q1 2021. Going forward, we expect to have an impact around THB -100 million per quarter. Total for the whole year, we expect to have some lease impact around THB -600 million for 2021. It will continue in the next years to come. It will reduce further. At one stage, it will remove and then it will become a positive adjustment in few years. Apart from that, the other line, other income, interest expense, don't change a lot. We have a lower income tax. Why? Because we have lower share of loss coming from Red Lobster. We are enjoying less tax credit on this part.
Next slide, we just want to show you a quick focus on all the changes we have been doing at Red Lobster. One of the most important is, of course, you have heard about this one, Kim, the CEO of Red Lobster, has been retiring, and we have a new CEO who has been joining since last week, Kelli. She has a very strong background. She was leading the Black Box Intelligence, and she has been also leading the Chili's Grill & Bar, where they are operating more than 1,600 restaurants. We are very happy and pleased to have Kelli on board. We had her on the call this morning. Of course, this is her first week. We know she's clearly an expert of this category, and we are very confident that she will be able to improve the situation at Red Lobster. Guest count. We mentioned this one.
This is a challenge for Red Lobster since few years, and this is really the key challenge we gave to the management team. We told them we want to see the guest count improving. Of course, it is improving compared to last year when we were facing the COVID-19, but overall, compared to the competition, we want to regain some market share. This is a key challenge that we gave to Kelli and the whole management team. Just in terms of people, we told you that in 2020 we cut a lot of employees. Now that we are re-operating all the restaurants, we have been hiring 20,000 people since January 2021. 26,000 people. This is huge. Of course, you can imagine how challenging it is to train all these people and to integrate them into Red Lobster.
We are fully confident that Red Lobster will be able to integrate all these people. We are very happy to get back to a more normalized situation in the U.S. of course, we continue to follow up very carefully the situation of the COVID-19 in the U.S. You know that we have an increase of the number of cases in the U.S. We are very far away from the situation that we have in Europe or even in Asia, still, this is a watch out for us. The vaccination campaign has been very successful, we believe that we are in a much better situation this year compared to previous year. In terms of financial performance, if you do remember, last year they have been generating a loss by THB 1.2 billion.
At the beginning of the year, we told you that we are planning Red Lobster to improve by 0.5%. We are planning to have a loss by almost THB 600 million. Considering the very strong H1, which is above our expectation, we revised this target to be a loss by THB 200 million-THB 300 million for the whole year 2021. You can see over H1 we have a small profit. For H2, we expect to have a loss and especially in Q4 where usually they are generating some losses because of seasonality. Next slide. Free cash flow. I think this is maybe the only KPI where we are turning a bit below our target and our plan. I think we have some good reason for that. In Q1, we have been generating a negative cash flow. We are catching up in Q2.
We have generating THB 1.6 billion. The total of H1, we have been generating THB 1.5 billion. We are revising down a bit our CapEx, because we didn't spend as much as we planned in H1. Maybe we can move to next slide. This is our net debt bridge, and here you will see. We are generating in H1 a very strong EBITDA by THB 7.6 billion. However, we have a very strong increase of our net working capital by THB 4 billion. Why? Because we took the decision to invest in our net working capital. You can see that right now you have a lot of demand for our products everywhere in the world, and we want to be able to face with this very strong demand. We have decided to increase our volumes of inventories.
You do remember in 2020, we have been facing some out-of-stock situation in some regions in the world. We want to avoid having such a situation, we have been increasing our level of inventories. Keep in mind also that for some specific activities, like our frozen business in the U.S., we have a pretty large pricing effect. I'm sure you have seen in the news some price increase on the lobster, on the crab categories. Even if you keep the same volume, you have a very strong pricing effect. CapEx. Over six months, we have been spending THB 2 billion. This is a bit below our forecast. We told you at the beginning of the year the full year plan was to be between THB 6 billion-THB 6.5 billion.
You will see in our guidance, we are revising down this guidance to THB 5 billion for the whole year. We have a bit of delay in some projects, because we were anticipating the COVID-19 situation to really normalize in 2021. We all know this is not the case. We are revising down a bit our CapEx project. However, no concern for the plan. I think everything is under control, and we will be able to catch up in 2022, so it does not change our commercial plan, which is a good thing. All the rest is almost normal, except for the investing part, and Khun Thiraphong mentioned this one. We have been investing into Rügen Fisch for the buyout of the minority shareholders and also in Clover Corporation and few other investments.
Our net debt has been increasing from THB 52 billion to THB 57 billion, and net debt to equity has been increasing from 0.94 to 0.98. We believe the situation will improve in Q2, and we'll get back to a better situation. Next slide, just a quick focus on our usual funding. You know we have been refinancing, in Q2 2021, a very large portion of our debt, and this is why you can see some changes, in terms of currency, and also in terms of maturity. We are very happy again about the successes and the achievement we had in Q1 and in Q2. We're getting the sustainability- linked bond and loan, and very pleased about this one. Last slide, just a quick focus on the profitability ratio. You can see I don't need to go through all of them.
The situation is improving everywhere. Of course, the profitability is very strong. We have been very fortunate. The inventory days, you can see here, are increasing from 120 to 126 days. In terms of absolute amount, you can see the increase of our inventories. At the end of Q4 2020, we were close to THB 39 billion, now we are THB 43 billion. We are much above compared to Q2 2020. Clearly, we were not happy with Q2 2020 performance because it was too low. It was not sustainable, we were facing some out of stocks, that's why we are much more happy with the situation at the end of Q2 2021. Net debt to EBITDA, I think we are below 4. Net debt to equity also, we are exactly where we want to be.
Now I will hand over to Khun Kal to go through the performance by business unit. Thank you.
Thank you, Khun Ludo. For raw material price, tuna price in second quarter remained relatively stable at $1,323 per ton, positive 4.5% year-on-year. We expect some reasonable inflation for tuna prices during the FAD ban or the fish aggregation devices during July to September. In July, tuna price was $1,500 per ton, but this is of course within our manageable range. Seven months for this year or year to date, tuna price remained at a low level, still at $1,300 per ton, unchanged compared to the same period of last year. Shrimp price in second quarter was stable. Also in July, we see the price drop as well. Seven months this year, shrimp price remained in our budget. Same as salmon price was NOK 63 per kg. In July, salmon price was stable and of course seven months was still in our budget.
On the currency. In second quarter, Thai baht weakening against euro and pounds, while strengthening against the U.S. dollar. Average FX year to date still support our sales growth. We have three core businesses compared to second quarter last year. We saw a higher sales portion from frozen and chilled seafood, Pet Care, and value-added business unit, while the ambient sales portion normalized from last year exceptional sales from the pantry loading. We go more detail on this. Thai Union delivers solid performance. You can see from the right chart of the first half earnings, it grew 4.4% from last year and 8.8% from pre-COVID. You can see our gross margin has been in upward trend. We go more detail in each business. In Q2, ambient sales declined 7% due to the mixed performance in key regions. We go for the U.S. and Asia.
We've seen tuna sales drop, reflecting the exceptional sales push in Q2 last year, and also some effect from the global container shortage. It was partially offset by the higher demand in Europe, because last year there was a stock out situation during the pantry loading in Europe. Overall, we see high gross margin continue at 22% because of the raw material price and also the improving salmon business. If you compare to the pre-COVID-19 level, ambient business still expand on sales and its sustained margin. Frozen business in Q2, sales recover very strong, 29% year-on-year, and that also supported by sales volume growth. We see the business recovery in shrimp, lobster from food service and retail business in the U.S. That help a lot for the gross profit margin recover strongly to 11.5% this quarter versus 7% in Q2 last year.
Of course, we compare to pre-COVID-19, both sales and margin expand firmly, particularly for shrimp and lobster business. We go more what our strategy that we growing the profit. First half of this year, profit we record THB 3 billion, up 72% year-on-year, that beating first half pre-COVID and even first half last year. We have two strategy, both from the sales top line and also the cost reduction. We mentioned already about the recovery of the culinary channels in the U.S. We do more on secure more contract for the OEM, for the new customers. We introduce more value-added products to customer as well. Of course, for the cost side, we install more automation machines and streamline the production base. We continue to do this in the next quarters.
The highlight on PetC are and value business is increased 13% year-on-year. We launched the products and also we expand the customer base. We have the greater performance in packaging business as well. Gross margin continue at a high level of 30%. Of course, we continue to deliver this high profitability and innovation product launch to help on this business. With this one, we see the upward trend of the sales and margin. Of course, the Global PetCare Innovation Center is working closely with the new and key existing customer. We co-develop the innovative pet food. You can see from the picture that this is the example that we launched, ChangeTer, our brand that bring delicious and the kidney-friendly cat treat. That comes in different formula to help in the digestion, skin, joint and bone, that for example.
Into the geographic diversity. In first half of this year, we see the slightly increase for the North America, thanks for the recovery of the frozen and chilled seafood business. We going to North America, increased 12% on sales year-on-year. That driven by the frozen seafood sales, of course, partially offset by the ambient business. Overall, it still grew a lot at 12%. We see the Red Lobster improving performance in Q2. The performance solid compared to pre-COVID. In Europe, sales also increased 15%. We have higher demand in blended business, also we doing well in the chilled salmon and other seafood business in Europe as well. We benefit from the higher FX currency, also we have the strong performance on pre-COVID. Thailand recover up 14% year-on-year.
We have business on the frozen chilled seafood together with the PetC are business. Even we have some lower sales from the ambient, our sales remain growing at 2% from pre-COVID-19. On the emerging market and the rest of the world, we see sales decline 10% year-on-year, and that from the ambient business, particularly in the Middle East market, in Japan, but we see some markets growing like China. Overall performance remains challenged if you compare to pre-COVID, but we see increasing trend. Overall summarize, we deliver 19% gross margin and THB 6.8 million gross profit for this quarter. For the full year financial guidance, we adjust two items on the gross profit margin and the CapEx. We maintain our sales 3%-5%. Gross profit revised up to 17%-18%. Of course, CapEx revised down to THB 5 billion.
That because we postpone some CapEx into next year. This wraps up the presentation. Khun Thiraphong, maybe you can give more on the outlook, or guidance for this year. That would be very grateful.
Well, looking ahead to the end of the year, we still find the demand in the market, it's still quite strong. We expect also Red Lobster to perform as per our plan. The forex Thai baht to dollar is also very favorable, given the current level right now. It would be very supportive to our business. You see from the guidance, I think we are, a lthough the top line growth, 3%-5%, I think we are very much determined to deliver at 5% or more, if we can. Gross margin 17%-18%, I would expect to see it on the upper side. That would be my expectation. I think everything still going as planned. Fundamentally, our business still very strong. We don't have any issues baggage with us. We still managing our non-performing businesses, things still going as planned.
I think let's open for Q&A, please.
Okay. Thank you very much, executive, for presenting. Moving on to Q&A session. Please feel free to type your question in the team chat. Keep it coming.
I think that I see the list of the question here. Number one is regarding the functional drink. I would say that we cannot disclose in details because this is a joint venture between us and ThaiBev, where we are both listed company. I would hope that you could appreciate our joint venture partner, which is ThaiBev, that they don't expect to do anything small. I do hope that with our joint venture with them would lead to a sizable business. Another question regarding the supplement market, THB 30 billion. This is a very fragmented market right now. Nobody really own or dominate this segment. You may know the famous name like Blackmores, Mega, et cetera. The market is still relatively very fragmented. We do believe that there would be a space for us to be in this market.
As we mentioned, our product are very much different from what available in the market because it's all natural from marine base. With the management team that we recruited, the managing director for this unit, it came from what's her name, Ludo?
Nivea.
The business that she was in charge before.
Nivea.
Nivea.
Yeah, Nivea.
From Nivea. Okay.
Yep.
Hopefully with her knowledge would help us to penetrate into this segment. Regarding Thai baht assumption, assume around what?
Yeah, go ahead. Go ahead, Thiraphong.
Yeah, go ahead, Ludo. I think our budget was what?
THB 31.
THB 31.
Now it has been increasing and in our forecast, we are assuming THB 32.5 for the rest of the year. We had some discussion yesterday with some analysts because right now indeed, the FX is around THB 33-THB 34. We have been discussing with some banks in Thailand, and the expectation is the Thai baht will be increasing in Q4. We don't expect to remain at this THB 33-THB 34 level, and that's why our own assumption for the rest of the year is THB 32.5, just for you to keep in mind.
Ludo, why don't you also share with the analyst about our expectation from Red Lobster in third quarter?
Sure. We mentioned, you can see already over H1 we have a small profit. If you combine Q1, which was THB +80, and then Q2, which is slightly negative. We mentioned to you that we expect to have for the full year the share flows by THB 200 million-THB 300 million. We expect Q3 to be slightly negative, and we expect Q4 to be more negative. You remember, in seasonality, Q4 is always the loss-making quarter. It was quite large last year. Last year, they did quite well in Q3, we expect them to generate a small loss in Q3. For the full year, what you need to remember, we do expect to have a loss between THB 200 million-THB 300 million. This is just coming from the operation. It does not include any lease accounting impact, okay? Lease accounting impact is something which is different.
Overall, very happy with the performance of Red Lobster.
Okay. Let me ask next question for you. Question from analyst. This year we have extra expense from the container shortage around THB 800 million. If the situation solve for early next year, that would be THB 100 million add back to the profit. Is that the right to say?
No. I think we just show you the incremental cost affected us. Having said that, we have been able to pass on most of such cost to our customers. When the situation improves, get back to normal, it will help us to be even more competitive to offer our customer even better price.
Absolutely correct, Khun Thiraphong. Just to add on what you're saying, you're absolutely correct. The THB 400 million we have been sharing, it's just an impact in our selling cost. It's not an impact in our bottom line. It has to be very clear. We were able to pass through some of these costs. Again, just be a bit careful when we say we do expect to have roughly the same exposure for H2. This is just an estimate at this stage, we don't know if at the end of the year it will be THB 800 million or not. I think the key message that you need to keep in mind is, until now, we have been able to face with this situation, we have been able to generate some very high profit despite this challenge.
Just be confident that we can continue to cope with this challenge. I think this is a key message that you have to keep in mind.
I just want everyone to understand that the business has been always challenging with all the issues that we encounter. We have proved our ability to mitigate the risk. With our scale, with our relationship with all the vendors, we should be able to manage the situation at better than our peers, I would say, in Thailand.
Okay. Next, can you please share with us how long Thai Union hedge the raw material price, including the oil and the packaging?
Maybe, Khun Thiraphong, let me take this one, and you can add if you need anything else on this. I think we have different practices around the regions. We can talk about Thailand. Thailand is mostly an OEM business, so we don't have very long-term hedging in terms of packaging and oil. We mostly have some quarterly costing. We have in some regions, some different practices, especially in Europe, where from time to time we are doing some long-term hedging, especially for the oil. For the packaging, sometimes we have something like six months agreements on the prices with the packagers. Keep in mind also that we have some inventories, also to offset this kind of inflation. I can see the next question regarding the percentage of growth.
Just to share with you, we have some requests which are quite high for the timing, around 8% inflation right now, the packaging, and apparently more to come also in 2022. This is a pure commercial discussion right now. It doesn't mean we will accept that. We are trying to find everything, of course, to mitigate with this cost. It's not only applicable to us. I think you will see a lot of communication from all the industries saying we are facing with this inflation. We report to you because this is a watch out. However, you can be confident that we will be able to cope with this situation. We are used to that.
This year it seems to be a bit higher because, of course, you have a lot of industries getting back to normalized situation after COVID-19, so there is a lot of demand for all the steel and all the materials. We'll be able to face with this situation. It may imply passing some tariff increase at the end of the day to the consumers, and you could hear already some very large consumer product company announcing some inflation for the next year. We try to do whatever we can do to protect the consumers and to limit the price increase as much as we can, but we follow very carefully the situation here.
Next is on the currency. How and what percentage do we hedge foreign currency revenue and the cost?
Maybe Khun Thiraphong, I take this one. We are very conservative on the hedging. We don't try to play. We have different practices. In the OEM business, we usually try to hedge as soon as we have some sales and also part of our inventories. We don't try to play at all with the currency. It means, of course, that sometimes we lose some opportunity. That's correct, but we don't want to play. We have some different practices in our branded business, where sometimes we take some hedging for more long-term view. Like in Europe, sometimes we hedge for six to nine months in advance, and we try to do it gradually and to increase all of the quarters. Okay. We are very flexible on this, and we have some very specific rules, which are there and we are applying.
We don't want to speculate at all. Right now we can see the FX is going the right direction for us because we are an export business and, of course, if the Thai baht is depreciating versus the other currency, this is good for our business, but it can go also the other way around. Okay. We have very clear guidance to say, "Okay, we need to hedge X percent of our full year commitment and also our sales and inventories.
Yeah. To add on top of Ludo, we have a very clear policy for hedging for the entire group, They must follow a policy in managing the currency. I think so far, this has been part of our doing business, and we have proved our ability to manage the forex quite well in the last 40 years. I think you can be assured that we don't try to speculate. Okay. Our policy is to be very conservative. We try to just minimize loss. Overall, we always gain. We don't speculate on the currency.
Thank you. Next one, should we expect the same operating profit margin for third quarter as it was in second quarter?
Khun Thiraphong, maybe I take this one.
Ludo.
Yeah, I take this one. We tell you that right now in Q2, we are achieving a 19% gross profit margin. This is record high. Okay? We don't expect this to remain at 19% in Q3 and Q4, just to manage the expectation. We share with you that we have been revising up our full year guidance. At the beginning of the year, we are planning to end up the year at 17%. Now we are growing our guidance from 17%-18% range. I think we will end up the year in the high part of this range. Very happy about the gross profit margin development that we have until now. We do expect in Q3 and Q4 to have a bit lower gross profit margin to end up the year around between 17% and 18%, and maybe closer from 18%.
The key explanation for very strong gross profit margin in Q2, we have a unique situation in our frozen business in the U.S. Okay? We mentioned that already in Q1, but we have really, here in this market, an unbalanced situation between demand and supply. We were expecting the situation to kind of normalize quickly. It is normalizing, but the situation is lasting a bit longer. We have also a very strong performance from our PetC are business, from our packaging business, basically everywhere. We do expect a bit of normalization to happen in Q3 and Q4. Overall, we are very confident in our performance in terms of gross profit margin. We will end up the year in a range between 17%-18%.
I don't think we'll be able to replicate the same Q2, the same performance than in Q2 for the different reasons I just mentioned.
Okay. I think the next question, what is the Thai baht assumption that we assume for 18% gross margin in second half?
THB 32.5 assumption of the Thai baht versus dollar for us for the year to go for H2 is around THB 32.5 for $1.
If we assume THB 34 per U.S. dollar in second half, would it be reasonable to assume gross profit margin reach to 19% in second half?
We don't know. We don't have any crystal ball, of course. We have been discussing with the banks, these guys are the experts. For the time being, this is not the plan. Maybe they are wrong. We will see in H2. Right now, their own forecast is a change in situation in Q3, and then in Q4 to see the Thai baht increasing versus dollar. Right now the direction is not to stay or to go in the direction of THB 34. However, of course, we watch out, we never know. We are always wrong in this kind of forecast. I think we have very good practice, and we know exactly how to react. If it go to THB 34, it will be positive for our business. There is no concern for you to have in mind.
Yeah, I think that's the key point. If it's THB 34, everybody should feel very comfortable and relaxed. Okay? Because it's supportive to our business.
Next is, are we experiencing any labor shortage of Red Lobster in the U.S.?
Maybe I take this one, Khun Thiraphong. We don't have any shortage. You see in one of our slide, we have been writing that we have been hiring 26,000 people since beginning of January. 26,000 people, this is huge, huh? Yes, of course, there is right now very high competition in the U.S. You can see the whole restaurant industry is hiring more managers, more staff in the restaurants. Yes, very heavy competition. I think the situation is very different from one state to another state. We told you that in Q1, there were still some free money provided by the U.S. administration to a lot of people. Of course, that was not a very good incentive for these people to get back to work. I think the situation is changing right now.
We have more people, and we have been able to hire 26,000 people. If you do remember, we shared with you that usually before COVID-19, we were operating in the restaurants with four managers by restaurant on average. We get to two managers last year, and now we are increasing back to three managers. Okay? For the number of staff. I think this is very important for us. We want to make sure that the experience of the people getting back to the restaurants, and we see more and more people getting back to the restaurants, is a good experience. Okay? We want to invest some money, and maybe it will penalize us in the very short term because it will mean more training cost and more people cost.
We believe, in order to improve the guest count, we need to invest in these people. At this stage, there is no warning, and I think everything is under control regarding the labor resource in the U.S.
There's still more questions on the gross profit margin. Can we expect third quarter margin to be the same level as in first quarter? Next is on the gross margin of PetC are business. Can you elaborate more?
Maybe I take it, Khun Thiraphong. Q3, we already discussed about this one. We don't expect to stay at 19%. We still expect to deliver a very nice gross profit margin in Q3 and Q4. Initially, if you do remember at the beginning of the year, we mentioned that anything above 17%, we would be happy. Okay? Now we are much above the 17%. We are at 18.4% after six months, so we want to deliver more, for sure. Now we have been increasing our guidance for the full year, and we plan to end up the year between 17%-18%, but we don't think we will end up the year, the full year, above the 18% or 19%. PetC are margin, just for you to remember, when we talk about the PetC are, this is always PetC are combined with the value- added and some other products.
It's a combination of very different topics. The good thing is in 2021, all these categories and segments were all very successful. PetC are is doing well. Packaging, we discussed about this one yesterday. Packaging is becoming really interesting in terms of gross profit margin and also our value-added business is doing well. However, the PetC are business has been generating really a lot already since last year, second half year. We do have some very strong expectation for them. I think the momentum right now is very good for the pet care industry in general, I think we are doing really good. I think our customers, especially in the U.S., really see us as a very reliable partner because we are delivering very high-quality products and on time.
Right now, due to the pressure on the supply chain in the U.S., I think the level of quality coming from the U.S. manufacturer is not great, and I think we are taking some advantage for this one. The momentum is still good. Right now you could see that the gross profit margin in Q2 was record high for this one. We do expect a bit of normalization as for the other categories to happen in Q3 and Q4. Overall for the full year, we are again very confident for this category.
Any more questions? Please feel free to type it down.
They can ask.
Yes, yeah.
Sure.
Yes. Please turn on the video so we can see who asking.
Yes, one more coming. What will happen with the pet food orders given the hiccup at the Songkla Canning?
Well, again, Songkla Canning was closed for only two weeks. We still have large capacity at TUM in Samut Sakhon. I think the impact would be very minimum.
We were having also some inventories, okay? We believe we can manage. That would be a small impact, but not that large. We are able to manage that.
For everybody's information, we have been vaccinating our workers at both Samut Sakhon and Songkhla. Especially in Songkhla, I think during that period, I think we have now vaccinated our workers in Songkhla in a very high level. I would say like 70% over plus. Okay, in Samut Sakhon, in some factory like pet food, it's over 70%. In some factory, maybe smaller. We will continue to vaccinate our workers up to 100%.
Keep in mind, if I may, that the Songkhla factory was closed only for two weeks. Now we restarted the operation. It was already partially closed in June. You have already now June numbers, so small impact and you don't see it really. We will see in Q2, but we believe we'll be able to catch up. Of course, we have a ramp-up production plan. Right now our operation in Samut Sakhon can also replace, and we can manage this situation.
One last question. What is the strong demand trend going forward for pet food, and what is the key developing for strong demand?
Well, as we mentioned earlier, especially during COVID, people spend more time at home. People adopted more pet at home, therefore the trend it's going quite strong. I think it's going to continue in every market, including U.S., Europe, and in Asia.
Okay. Thank you.
Again, we still plan to spin off feed mill to be listing by end of this year. PetC are unit will also be carved out and be listing by end of next year. We are working on it, and these are my top priorities, including Red Lobster, where I think we are on the right track, especially with the new CEO coming in. I think we're going to see even more closer collaboration between Thai Union and the Red Lobster team.
Okay. Well, that will be end of the presentation today. Thank you for joining us, and if you have any further question, please feel free to contact our IR department anytime. Please take good care of yourself and your loved ones and keep your guard up high. Really, hopefully, we can meet by the third quarter.
Thank you. [Foreign language].
Thanks a lot. Stay safe, everyone.