Charoen Pokphand Foods yesterday announced a 63-per-cent drop in its second-quarter net profit, the fall being mainly attributed to the declining domestic price of chicken as a result of continuing fears over bird flu.

Thailand's biggest producer and exporter of chicken reported net profit for the April-to-June quarter of Bt1.02 billion, or Bt0.14 a share, compared with Bt2.73 billion, or Bt0.51 a share, for the same period last year.

CEO Adirek Sripratak said the company's sales for the first half of the year were Bt60 billion and net profit was Bt1.57 billion, down 61 per cent from the same six months last year.

He said the main reason for the fall in net earnings was the global spread of avian influenza, which had adversely affected prices of chicken meat both in the domestic market and in countries such as Turkey, where CPF also operates.

Its gross profit margin fell to 15 per cent in the second quarter, from 19 per cent for the same period a year earlier.

CPF stock closed yesterday at Bt4.96, down 7.29 per cent on the previous day.

The firm's second-quarter revenue rose to Bt31.88 billion from Bt30 billion in the same period last year, while its production costs jumped to Bt27.12 billion from Bt23.66 billion.

The year-on-year fall in net profit was also due to the absence of any one-off gains. The company booked Bt812 billion in gains in the second quarter of 2005 from selling its investment in Makro, the local wholesale cash-and-carry chain.

CPF will pay an interim dividend of Bt0.07 a share for its second-quarter performance on September 1. The share registration book closes on August 18.

Second-quarter exports, which account for 16 per cent of revenue, slipped 4 per cent year on year to Bt4.96 billion.

During a tour of one of CPF's processing plants outside Bangkok, company officials insisted it had overhauled its operations to make its exports safe from bird flu, even if the country suffers new outbreaks beyond the current scare over the deadly H5N1 strain of the virus, in which one person in the North has died.

Countries around the world slapped bans on raw poultry from Thailand shortly after the first bird-flu outbreak more than two years ago. But the Kingdom has managed to adapt its industry to work around the bans, and is still the world's fourth-largest exporter of chicken, with overseas sales rebounding.

Chanchai Waimaleongora-ek, CPF's vice president for corporate research and development, said the company had turned its focus to exporting cooked chicken, which poses no bird-flu risk and is not banned.

"The new trend is to produce cooked products," he said in an interview during a tour of one of CPF's processing plants.

The company now produces about 100 processed products mainly for export to the United Kingdom, CPF's biggest buyer, followed by Japan. CPF used to sell a higher volume of raw poultry, but Chanchai said cooked chicken now fetches a higher price.

Bird flu could still pose a threat to the firm if its chicken were to become infected. To prevent that from happening, CPF veterinarian Payungsak S Tanagul said the company required that all the chicken it buys be raised in enclosed farms, with strict limits on transport in and out of the facilities.

The company has also launched an education campaign for its 36,000 workers to prevent them from bringing disease into processing plants, such as the 240,000-square-metre facility in Saraburi.