March 3, 2008

CPF suffers disappointing Q4 profits, bleak outlook for 2008
 

CPF's 2007 fourth quarter net profit is at THB 148 million (US$5 million), a fall of 42 percent year-on-year and 89 percent quarter-on-quarter due to exorbitant grain prices, while a bleak outlook has been given on the company's result for 2008.

The company's fourth quarter has been disappointing despite year-on-year sales have increased by 7.4 percent year-on-year to THB 35.4 billion (US$1.2 billion).

The company's net earnings totalled to only THB 1.3 billion (US$43.7 million), down 49 percent year-on-year, even though revenue increased by 8 percent.

Problems included a weak economy, low domestic prices, rising feed costs, increasing sales and administrative costs, and an appreciating currency. All have contributed to the company's reduced revenue growth and a decreased overall gross margin of 12.5 percent from 13.4 percent.

A sharp increase in livestock feed prices is projected to control the company's earnings in 2008. Margins could continue to be low until costs are stabilised.

As Thailand's Ministry of Commerce plans to implement capping of meat prices to prevent inflation, price increase in meat could prove to be futile.

A combination of these factors could possibly lead to disappointing earnings in 2008.