March 13, 2007

Thailand's CPF expects good news from both domestic and global markets
 

Thailand's Charoen Pokphand Foods, the country's largest poultry producer, expects a brighter 2007 compared with the dismal performance seen in 2006 as both domestic and global conditions improve.

Although the company reported a 10-percent sales growth to 125 billion baht (US$3.72 billion) last year, profits fell 63 percent to 2.51 billion baht (US$74.5 million). 

On the global stage, the company expects that as feed costs rises, many smaller competitors are expected to exit the market, leaving the field open for bigger players and thus easing the oversupply situation.

Global chicken demand and exports are expected to increase by at least 4 percent to 6.7 million tonnes this year due to increased demand in the EU, China and Japan as bird flu fears recede, according to the USDA.

Last year, as bird flu fears were at its peak, many smaller chicken exporters in Thailand were forced to dump their chickens in local markets. This year, the domestic front is expected to yield a better picture as exports are back up again, meaning a cut in local chicken supplies and higher chicken prices. 

This comes as pork prices would be starting to recover from their previous lows, analysts said. Better prices for these two meats would bring more profits to the company's coffers, as they account for nearly 40 percent of revenue.

The news keeps getting better. In aquaculture, the company expects a 10 percent surge in seafood export and this could be stretched even further if US bonds imposed on shrimp exports and anti-dumping duties are successfully removed this year.

Even without these developments, growth in value added seafood products and the company's aggressive expansion overseas are expected to put more steam into an already optimistic outlook.

Although first quarter earnings are expected to be relatively weak, the second quarters should bring good tidings, analysts said.