June 15, 2004

 

 

Thailand's CPF To Resume Chicken Exports To South Korea

 

Charoen Pokphand Foods Plc (CPF), the largest agri-business conglomerate in Asia, said it will resume processed chicken exports to South Korea within this month. This move comes after the export order was suspended following the bird flu outbreak early this year.

 

"South Korea has placed an order of 3,000 tonnes of processed chicken to CPF and we expect it to increase this to 8,000 tonnes later in the year," said Adirek Sripatak, president and chief executive officer.

 

CPF expects chicken sales this year to reach 93,500 tonnes, worth about 11 billion baht. The expectation also includes more orders of processed chicken from Japan in the third quarter, as Japan's frozen chicken stocks are depleting due to higher domestic consumption.

 

More than 50 percent of Thailand's chicken exports go to the European Union (EU) and Japan. The EU still continues to buy 15,000 tonnes of chicken each month.

 

Japan stopped buying both frozen and processed chicken from Thailand since the bird flu spread in January. The EU will only stop buying processed chicken until this August.

 

"It is good news for the Thai chicken industry as many countries have now opened up for Thai chicken, particularly processed chicken that adds value and price to the products," said Adirek.

 

He expects Thailand's chicken exports this year to be 370,000 tonnes and worth 37.8 billion baht.

 

The Cabinet recently exempted a 20 percent tax charged on corn imports. Feedmill costs make up about 40-50 percent of CPF's operating costs, while CPF expects the tax exemption to help reduce its feedmill costs.

 

CPF previously posted its sales revenue in the first quarter of this year reporting a rise of 10 percent to 19.13 billion baht. The figure is up from 17.4 billion baht in the same quarter last year due to a larger export base.

 

The increase came from the expansion of its production base in Thailand and the acquisition of a chicken farming facility - CP Standart Gida Sanayi Ve Ticaret (CPS) in Turkey. CPS is an integrated chicken farm, which was acquired by CPF on January 29, 2004.

 

However, the company still posted a net loss of 598 million baht, a 27 percent drop from 826 million baht in the same quarter last year. It was affected by the bird flu epidemic, which hit Thailand late last year until early this year, and the US government's dumping fee on Thai shrimp.

 

CPF will increase its production of processed chicken products as the plant in Nakhon Ratchasima is scheduled to start in July this year.

 

CPF has reduced its net profit projection growth for 2004 to 4-5 percent from an earlier forecast of 20 to 25 percent due to the bird flu outbreak. The company previously expected this year's earnings growth to be in excess of 20 percent on the back of rising exports to markets such as the EU.

 

Last year, the company reported a sales revenue of 83 billion baht and a net profit of a little over 2.2 billion baht, an increase from 75.15 billion baht and 2.61 billion baht from 2002 respectively.

 

Nonetheless, the company still sees a bright future for the chicken market after it bought a number of poultry farms in Turkey for $22 million to help compensate for the loss of income from farms in the US that it sold. The operations in Turkey are expected to post annual sales of five billion baht.