New high for earnings in third quarter of fiscal year 2014

GFPT now forecasts third quarter of fiscal year 2014 profit of THB424 million, reports The Nation of Thailand. This is higher than previously forecast by 28 per cent from THB330 million, sharply up year-on-year from a loss of THB24 million and up 40 per cent quarter-on-quarter.

Gross margin is 13.5 per cent, against 11.07 per cent last quarter and 5.66 per cent a year ago. Profits started to improve in June 2013 at around THB150 million, with profit for each of the following three months at THB120 to THB160 million, boosted by better export and domestic sales volumes and average selling prices.

Associates GFN (49 per cent held by GFPT) and McKey (49 per cent) expect to contribute THB76 million in the third quarter of fiscal year 2014, +1,122 per cent year-on-year and +21 per cent quarter-on-quarter.

Broiler prices and raw material update

Broiler price has slid to THB38 to THB40 per kg from a high of THB47 per kg in July and August 2013, reports The Nation. Average selling price in the third quarter of fiscal year 2013 was THB45 per kg - four per cent lower quarter-on-quarter but 25 per cent higher year-on-year.

Second and third quarters are traditionally the highest for chicken exports and in third quarter of fiscal year 2013, GFPT's exports are estimated at 5,700 tons or 1,900 tons per month. However, the end of third quarter of fiscal year 2013 (September and October) is normally low season for local consumption because of the vegetarian festival and broiler prices on the domestic market have thus fallen to under THB40 per kg. GFPT expects this to be temporary and to have negligible effect on spread since feed raw material prices have come down at the same time.

Feed raw material costs, corn and soybean meal are also falling; corn is nine per cent lower quarter-on-quarter and 16 per cent lower year-on-year. Soybean meal is four per cent lower quarter-on-quarter and 17 per cent down year-on-year, thanks to new harvest with good yields in Brazil and China.

Export high season in third quarter

According to The Nation, GFPT reports that it has done very well in third quarter of fiscal year 2013. This was the high season for exports to Japan (GFPT export volume up 40 per cent) and the EU (up 52 per cent).

Current price of broiler exports to the EU average US$4,200 per ton and US$5,000 per ton for exports to Japan. The EU has given Thailand an annual export quota of 92,000 tons of frozen chicken and 160,000 tons of cooked chicken, a sharp increase from last year. GFPT has a five per cent share of this export market.

Market watchers expect good news soon, including the successful resumption of fresh chicken exports to the Japanese market by the beginning of 2014, at an estimated 180,000 tons per annum which is the same level of Thai fresh chicken exports to Japan as in 2003 - before Japan closed its doors to Thai imports in 2004 because of avian influenza.

Subsidiary turnaround lifts

The Nation's report adds that GFPT's two subsidiaries are doing much better. In th first half of financial year 2013, GFN and McKey contributed THB92 million to GFPT, up from losses of THB111 million in 2011 and THB74 million in 2012. The company expects profit-sharing of THB233 million and THB257 million in 2013 and 2014. GFN contributed more than 80 per cent of the profit in 2013.