July 2, 2004

 

 

Malaysia's Sinmah Lose RM6.3 Million In 1st Quarter Due To High Chicken Feed Prices
 

Malaysia's Sinmah Resources Bhd's results for the first quarter ended April 30 are an indication that poultry farmers are still hard hit by high prices of chicken feed. However industry officials say the situation is stabilising. 

 

Going forward, most of the output will be from fresh stock and much less will come from the cold room,'' said an executive in the poultry business. 

 

Sinmah Resources announced on Wednesday a net loss of RM 6.3 million, or 12.42 sen per share, for its February-April quarter, compared with a loss of RM 963,000, or 1.91 sen per share, in the previous corresponding period. Revenue, however, surged to RM 92 million from RM 65.5 million. 

 

Leong Hup Holdings Bhd had for its final quarter ended March 31, posted a net loss of RM 22.2 million, or 14.67 sen per share, from a loss of RM 14.7 million, or 9.67 sen per share, in the previous corresponding period. Its revenue rose to RM 114.5 million from RM 90.1 million. 

 

Sinmah's higher revenue was largely attributed to higher feedmill prices and volume sales. Higher feedmill prices, however, was the main cause of the loss during its first quarter. The company said the increase in the price feedmill was caused by more expensive raw feedstuff like core and soyabean meal, plus higher freight costs. Corn and soyabean account for about 50% of the cost of poultry feed. 

 

Corn and soya bean prices have about doubled to RM 800 and RM 1,400 per tonne since the commodities boom started last year. 

 

Apart from higher feedmill prices, the poultry business have had to deal with a sharp fall in broiler prices and demand for chicken brought about by the bird flu fears during the early part of the year. 

 

While the financial results of integrated poultry farmers such as Leong Hup and Sinmah indicated tough times ahead for poultry-based operations, with production costs sky-rocketing and selling prices plunging, industry officials were of the opinion that the second half of the year would be much better than the first. 

 

Demand for chicken has gone back up. And normally, the second half of the year is much better than the first,'' the executive said. 

 

Production costs are also expected to stabilise while broiler prices are expected to rise with breeders no longer supplementing sales with stock kept in the cold room. Farmers keep a huge number of chickens in freezers when demand slumps.

 

That has seen broiler prices rise to around RM 3 per kilo, which is above the cost of production by integrated farmers, the executive said. 

 

We are not expecting a big profit for the second half of the year. Margins are still smaller than during times when conditions in the industry were normal,'' he added.