T Mill poised to up wheat price as drought cuts supply
SET-listed TS Flour Mill (T Mill), a maker and distributor of wheat flour, is poised to raise the price of wheat to be sold to major domestic food processors as a drought in major producing countries has cut wheat supply and pushed global prices of the crop to substantially higher levels.
T Mill managing director Charnkrij Dejvitak said major wheat producing countries, particularly China, have been hit by drought, adding China supplies the bulk of wheat imports to Thailand, which does not grow enough of the grain to supply to the local food industry.
“The global wheat price has risen by US$30 per tonne, bringing the price to $380390 a tonne since early this year, as drought hit major producing countries,” he said. T Mill will start raising the price of wheat in the third quarter of this year, he said.
However, Mr Charnkrij said the rise in the price of wheat was unlikely to have an adverse impact on consumers. He explained that since the profit margin for the food processor was quite high, they could cut profits to ensure the prices of finished goods remain unchanged.
He said the company expected its sales revenue growth may be flat this year due to rising wheat prices. However, T Mill planned to cut production costs, aiming for a higher profit of 1.3 billion baht even in the event of flat sales growth this year, he added.
Mr Charnkrij said T Mill has revised its net profit target to 20% this year, up from the previous target of 10%, thanks to rising demand in the north and northeastern regions of Thailand.
T Mill was founded in 1977 as a subsidiary of Thai Sugar Group, which was primarily owned by Khon Kaen Sugar Plc.
The company planned to raise its capacity to 700 tonnes a day from the current 500 tonnes.
That could mean a rise in annual production from 180,000 tonnes a year to 252,000 tonnes a year, Mr Charnkrij said.
T Mill currently supplies wheat flour to domestic customers, including bakeries, along with food such as bread, noodles, instant noodles, pizzas, pies, donuts, biscuits, steamed buns, deep-fried stick dough, feed etc.
Mr Charnkrij said the company is conducting a feasibility study to develop high value-added products (HVA), such as a ready-to-eat products, which would help them secure a higher profit margin and also
help diversify their business.
“Currently, most of the company’s products are commodity grade, such as wheat and sugar, which generate a low profit margin. The development of HVAs is one of our strategies to help increase our profit,” he said.
He said T Mill was previously in talks to acquire a foreign company to carry out the plan. However, Mr Charnkrij said the company’s acquisition price was too high.
T Mill reported a 4.8% rise in revenue in the first quarter of this year at 333.5 million baht, while net profit surged 149% to 41.9 million baht.