August 7, 2006

 

Charoen Pokphand Foods' earnings fell 63 percent for second quarter

 

 

Charoen Pokphand Foods (CPF) reported its second quarter earnings fell 63 percent due to declining domestic prices and a weak performance in its operations in Turkey.

 

Thailand's biggest poultry exporter blamed lower domestic prices for chicken for its weaker performance, not bird flu.

 

Net profit in the three months to June stood at 1.02 billion baht (US$270 million) with sales down 10 percent at 31.9 billion baht.

 

The company said it had overhauled its operations to make its exports safe from bird flu, even as the country continue to suffer new outbreaks.

 

Thailand detected the H5N1 bird flu virus in two northern provinces last week.

 

The country's fresh poultry exports were banned after the first outbreak in 2004. By converting raw poultry to cooked exports, Thailand has now become the fourth largest poultry exporter in the world.

 

The company now produces about 100 processed products mainly for export to Britain, CPF's biggest buyer.

 

Although the volume of cooked products has not matched pre-ban levels of raw poultry, exporting cooked chicken has become more profitable because it fetches a higher price.

 

Still, CPF is not taking the threat of bird flu lightly: the company requires that all the chicken it buys be raised in enclosed farms with strict standards on poultry movement. The company also launched an education campaign for its 36,000 workers to prevent them from bringing disease into processing plants.

 

In the first half of the year, Thailand shipped 140,000 tonnes of chicken overseas. The target for the year is 350,000 tonnes.

 

Chanchai said Thailand would take a long time to eradicate bird flu, which poses a problem for smaller exporters without the resources to build new facilities to process raw chicken. The government should try to open up the markets of raw chickens despite the bird flu threat, he added.