Chicken Exports to EU Boost GFPT's Profit20 November 2013
THAILAND - Poultry integrator, GFPT, has announced a net profit for the quarter of THB116 million, following a loss in the same quarter last year and based on increased poultry meat exports to the EU.
In its report for the third quarter of 2013 (3Q2013), GFPT Public Company Limited stated that it operates fully integrated poultry business involving the production and distribution of feeds, frozen chicken meat, processed chicken and its by-products under both the customers’ and the company’s brand name for both domestic and overseas markets.
GFPT says it is committed to be the leader in the poultry processing industry by focusing on the highest quality of food and safety standards throughout our operation, right from the animal feeds through to the end products delivered to our customers.
Result of operations
The Company described its operations in the third quarter of 2013 as "impressive", mainly from the increasing of the export volume and the remarkable achievement and a turnaround of GFN, which was better than expected.
GFPT is delighted to announce that the third quarter of 2013 result of operations is better than our expectation, resulted from an increase of both export volume and selling price (+19 per cent year-on-year) of cooked chicken products.
The gross profit margin increased from five per cent in 3Q2012 to 18 per cent in 3Q2013.
This combines with the increase in sales revenue by 13 per cent year-on-year, from THB3,876 million to THB4,376 million, has allowed GFPT to enjoy a net profit of THB607 million in 3Q2013, a nice turnaround from the net profit of THB2 million during the same period in 2012 (restated).
While export numbers were strong, the award for most remarkable growth in this quarter must go to GFN. For three years, GFN had been operating in net losses due to difficult market environment as well as the falling in domestic commodity price.
The EU ban lifting of raw chicken products last year provides GFN with a new source of revenue stream. The volume of GFN’s export of raw meat to the EU has increased more than three times since it started the raw meat export process in July 2012.
In addition, GFN’s profitability improved through further lines extension, which is complete and started to operate since May 2013.
The combined THB1,500 million capital injection from GFPT and Nichirei in 2012 has also massively reduced GFN’s interest expense.
Consequently, GFN recorded net profit of THB116 million in 3Q2013, up from net loss of THB50 million from the same period in 2012.
Revenue breakdown by business segment
Chicken Processing: In 3Q2013, revenue from chicken processing still represents the largest portion of GFPT, amounting THB1,851 million, an increase of THB407 million or 28 per cent from 3Q2012.
The export volume of chicken products in 3Q2013 was 5,300MT, an increase of 400MT or eight per cent from 3Q2012.
Feed: In 3Q2013, revenue from feed sales was THB1,277 million declined by THB100 million or seven per cent from 3Q2012 due to the EMS outbreak, which drastically impacted the shrimp feed sales to domestic farmers and also the decrease in animal feed sales.
Farm & Day-Old-Chicks: The revenue from chicken farm has become a consistent major source of revenue for the company ever since we have started supplying live birds to GFN.
The revenue from live birds in 3Q2013 was THB1,024 million, an increase of THB115 million or 13 per cent from 3Q2012.
Processed Foods: The processed foods segment’s growth looks promising as the revenue from food products such as chicken sausages, meatballs and other processed foods.
In 3Q2013, the revenue from processed foods was THB224 million, grew by THB78 million, a 53 per cent increase from 3Q2012.
This growth came from the expansion of 12 additional retail stores in 12 provinces including Phuket, Hat Yai, Nakorn Pathom, Bureerum, Chiang Mai, Lampang, Surat Thani, Nakhon Sawan, Chiang Rai, Ubon Ratchathani, Tak and Phetchaburi. GFPT has plans to continue its expansion in the retail store in preparation for the Asian Economic Community in 2015.
Cost of sales
In 3Q2013, the Company had total sales of THB3,580 million, decreased THB85 million or two per cent decreased from the same period of 2012 due to a decreasing in price of feed material price particular corn and soybean which are the key raw material used in feed production.
In 3Q2013, the consolidated gross margin was THB797 million, increasing 277 per cent or THB585 million from the same period of 2012, driven by sales growth in the period and the capability to control production cost.
The gross margin was 18 per cent in 3Q2013, significantly increased from five per cent in 3Q2012, which is the highest gross profit margin (quarterly basis) of the Company since the year 2010.
In 3Q2013, the other income of THB47 million decreased THB19 million or 29 per cent from 3Q2012 mainly from a decreasing in foreign exchange gains and tax refund from section 19 bis in 3Q2013.
Selling general and administrative expenses
In 3Q2013, the Consolidated SG&A expenses totaled THB264 million, decreased THB5 million or two per cent from 3Q2012.
Share of profit from associates
In 3Q2013, the Company's share of profit from associates under the equity method in the amount of THB78 million, an increase of THB72 million, or 1,151 per cent from 3Q2012, mainly from the investments in its joint ventures, McKey Food Services (Thailand) Co., Ltd. (McKey) and GFPT Nichirei (Thailand) Co., Ltd. (GFN).
In 2Q2013, the operating results of GFN can be turned from a loss to a profit due to the hike in export volume of frozen chicken meat to the EU market since 3Q2012.
In addition, the higher production capacity of cooked chicken products from the new production line which increased the amount of cooked chicken products from 1,400 metric tons per month to 1,800 metric tons per month since May 2013 also helped boosting performance of GFN.
Financial costs of the Company include interest expense and bank charges.
The Company's finance costs in 3Q2013 were THB43 million, up THB4 million or 11 per cent from 3Q2012 mainly from the fact that the Company has higher level of short-term loan from institutions comparing to the same period last year.
The net profit in 3Q2013 was THB607 million or 0.48 baht per share, an increase of THB606 million or increased by 33,793 per cent from the net profit of THB2 million in 3Q2012 (restated).
The Company's sales revenue in 3Q2013 increased THB500 million from 3Q2012 due to higher export of processed chicken meat, higher average selling price of processed chicken meat and higher selling price of day-old-chicks.
The Company's gross profit in 3Q2013 increased THB585 million from 3Q2012 due to higher export of processed chicken meat and higher sales of live chicken.
Thus, the gross margin improved to 18 per cent from five per cent in 3Q2012.
The share of profit from associates of the Company increased THB72 million.
The Company's EBITDA was THB890 million, an increase of THB645 million or increase by 263 per cent from 3Q2012.
The increasing in EBITDA resulted from the hike in the sales growth and its ability to control cost.
The EBITDA margin in 3Q2013 was 20.35 per cent, an increase from 6.43 per cent in 3Q2012.
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