Vegetable oil firm plans regional plant
Thai Vegetable Oil Plc (TVO) will set up a manufacturing plant in neighbouring countries if their markets for cooking oil, soybean meal and oilseeds show bright prospects.
"We are conducting a feasibility study that should be finalised by the second half of next year before making a decision on investment," managing director Witoon Suewatanakul said yesterday.
The company started exporting its soybean cooking oil to Myanmar, Laos and Cambodia this year with the aim of becoming the leading distributor of soybean cooking oil and oilseed in Asean.
In the first phase, it has to gauge the demand of consumers to ensure that there is enough scale to invest in its own plant in those countries.
Its plant with a capacity of 6,000 tonnes per day is running at a utilisation rate of 80 per cent, so it can supply both domestic and export markets.
Exports would be raised from 6 per cent of revenue to 10 per cent within three years.
The company plans to ship soybean meal to feedstock producers in those countries soon.
The maker of A-Ngoon soybean cooking oil thought consumers in Myanmar, Laos and Cambodia might not be familiar with the pronunciation of A-Ngoon, so it developed new international brands – Healthy Chef for the mid- to high-income market and Queen for the mass market.
Soybean cooking oil accounts for 35 per cent of its sales. The rest is soybean oilseed for stock broiler manufacturers.
Even though the domestic economy is growing slower than expected, the outlook for the broiler industry this year is rosy, thanks to demand in overseas markets, especially Japan and Europe. Broiler producers will need to buy more soybean meal.
The depreciation of the baht is benefiting broiler exports, which will support sales of the company this year.
In the first half, TVO reported sales of Bt13.21 billion, up from Bt13.02 billion in the same half last year. The company is still targeting Bt26 billion for the whole year.
Imported soybeans go into 74 per cent of the content of the company’s products, so the weaker baht might push up operating costs. However, it has taken out forward exchange contracts to reduce the risk.
A factor that supports TVO’s profit this year is the price of soybean meal, which has turned to becoming higher than the price of soybean seeds. In the past decade, the price of soybean meal was much lower than the cost of soybean seeds. Since TVO imports soybean seeds as a key raw material, it gains from the plunge in the soybean seed price.
The change of the price structure of soybean meal and soybean seeds began to be seen in the second half of last year due mainly to the recovery of the US economy. That structure is expected to continue to |the first quarter of next year, he added.
