April 30, 2007


Thailand's GFPT PCL incurs losses in Q1 due to high feed prices



A 12.6 percent rise in the price of corn this year has squeezed GFPT's gross margins in broiler and feed mill businesses and will make it difficult for the company to raise feed mill prices as it is subject to the regulations of Department of Internal Trade, Thai analysts said.


GFPT is expected to post a THB21 million net loss in this year's first quarter due to high corn prices which surged to THB8.13 per kilogramme (/kg). On the other hand, local broiler prices averaged just THB 28/kg in first quarter, similar the company's cost level.


Although first quarter earnings are expected to be weak, the company's domestic broiler prices are likely to jump up in the second quarter due to lower supplies in the domestic market. Feed mill prices are expected to increase because of higher costs. The company will also realise revenue from its new cooked product line of 15,000 tonnes per year, which is expected to begin operations in August. GFPT is expected to record a 2007 normalised profit of THB142 million, but still down by 24 percent year-on-year.


GFPT has poured investments in three new projects: a feedmill plant with capacity of 512,000 tonnes/year; a new cooked product production line with capacity of 15,000 tonnes/year and; a chicken farm with a capacity of 1,160,000 chickens/year. These 3 projects are believed to boost GFPT's earnings over the long term.


Note: US$1 = THB32.85

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