During the third quarter of 2013, CPF's net profit was B2.6 billion, showing a growth of 61.9 per cent quarter-on-quarter and 10.2 per cent year-on-year, close to the company's projection.
Excluding B1.3bn extraordinary income from investment sale - lower than expected, dropping from B3bn in 2Q13 - CPF’s normalised income revived to B887m which was better than expected, making the first normalised income in four quarters.
Earnings from its livestock business, which comprises 81 per cent of total income, was prosperous, especially in Thailand, due to the high season for food exports and a rise in third quarter livestock prices.
Pork prices rose 4.2 per cent quarter-on-quarter to B69.83/kg, while chicken prices fell slightly by 3.6 per cent quarter-on-quarter to B44.67/kg.
Meanwhile, costs for feed mill raw materials decreased -corn prices dropped by 9.3 per cent quarter-on-quarter to B9.28/kg and soybean meal prices fell by 4.4 per cent quarter-on-quarter to B17.32/kg.
As a result, the third quarter net margin from the CPF's livestock business was high, totally negating losses in the shrimp business, which comprises 19 per cent of total income, caused by shrimp disease (EMS).
Y2013-2014 forecast revised down, but profit to build in 2014
CPF’s FY2013-2014 net profit forecast has been revised down by 14.6 per cent and 23.2 per cent. The company has mainly cut shrimp sales which were previously over-estimated because of the EMS outbreak. Additional expense on prevention would decrease CPF’s gross profit margin far below its projection.
Under a new forecast, FY2013 net profit is projected to contract by 57 per cent year-on-year, but is likely to rebound 29 per cent year-on-year in 2014 due to the following reasons:
- Domestic shrimp business is likely to recover gradually. 2014 shrimp production is likely to increase by 27 per cent after shrimp farmers have more confidence in EMS prevention and resume shrimp farming.
- CPF's livestock business is likely to prosper as the oversupply problem has been solved and prices of feed mill raw materials have been declining due to higher supply.
