April 21, 2008

CPF forecasts Q1 profit of US$21.7 million

CPF is forecasted to earn a profit of THB 683 million (US$21.7 million) in the first quarter of 2008 compared to a THB 1.1 billion (US$36.1 million) loss in the same period in 2007.

Gross margin is estimated to rise by 6 percent. The profits would come from soaring pig and broiler prices, which have increased to THB 55 per kg and THB 38 per kg respectively year-on-year. The prices are expected to remain at these levels due to high feed costs and low supply.

The profits would be the result of rising feed costs and a lower pork supply due to a swine epidemic. 

The feed business, which accounts for 29 percent of CPF sales, is forecast to remain profitable despite high raw material costs. However, the gross margins of the feed business could be hurt if the Ministry of Commerce approves the selling price adjustment that is currently on pending.

The egg business is forecast to become profitable after prices rise to THB 2.4 per egg. Domestic shrimp sales are also expected to grow due to the company's focus on high-margin value added products.

CPF's livestock and aquaculture business in Asia are forecast to grow 10-15 percent per year. Chicken and shrimp exports could also grow by 10-15 percent due to higher export volumes and price adjustments that balance the strong baht.

The increase in pig and broiler prices is expected to help CPF's 2008 normalised earnings to jump 237 percent to THB 3.3 billion (US$105.4 million). Higher feed costs and an appreciating baht are projected not to significantly impact company performance.

CPF's overseas business units are also expected to have a continuous growth.

THB 1 = US$0.03 (April 21, 2008)