August 9, 2007

CP Foods Q2 net profit dipped on lower margins

Charoen Pokphand Foods reported on Wednesday (August 8) a much less than expected 6.7 percent fall in quarterly net profit due to lower profit margins.

Thailand's biggest chicken exporter said it had a net profit of 954 million baht (US$28 million) in the second quarter, lower compared with a net profit of 1.02 billion baht a year earlier and a net loss of 1.13 billion baht in the first quarter.

However, Reuter analysts said it had expected the company's net profit averaged at 510 million baht.

Sales for the quarter rose 9 percent to 35 billion baht, the firm said but gross margins for the quarter dropped to 13.4 percent from last year's 14.9 percent, according to a Reuters' calculation.

Its average domestic chicken price in the quarter was 32 baht per kg while cost was about 29 baht per kg, but pork was only 36 baht per kg, below its cost of 41 to 42 baht per kg, analysts said.

CP said they are expecting this year's sales to grow 5 to 10 percent from 125 billion baht in 2006, in line with analyst forecasts, as overseas subsidiaries would help expand sales.

It had a net loss of 180 million baht for the first six months and would not pay an interim dividend, the company said.

Eleven analysts polled by Reuters Estimates forecast its 2007 net profit would rise about 9 percent to 2.74 billion baht.

At the midday break, CPF shares were up 0.4 percent at 5.0 baht and the overall stock market was up 1.22 percent. ($1=33.95 Baht)