Domestic edible oil manufacturers will benefit from rising commodity prices and continue to raise product prices, contributing to positive sales growth in the first half of this year, a researcher said yesterday.
“Edible oil prices are expected to go up further, which will in turn help boost company revenue. However, whether the price increases will offset rising costs will require further observation,” Chang Chien-yi (張建一), a deputy director at the Taiwan Institute of Economic Research’s (台經院) research division, said at an investor conference yesterday.
Prices for higher-end edible oil products such as sunflower oil — which does not readily see price increases — have also increased since the fourth quarter of last year to exceed that of soybean oil.
Because soy bean and corn futures prices both reached record highs in the second quarter of this year, Chang said that local companies were likely to further increase their product prices this quarter.
Despite higher purchase costs, companies would be able to generate profits months later.
As a result, the pressure stemming from rising costs did not appear in the first half of this year, Chang said.
DAIRY PRODUCTS
The dairy products manufacturing industry experienced declining sales and production volumes because of the declining market in flavored milk and fermented milk in the first quarter of this year.
In light of the poor sales in the first quarter, many dairy product businesses began to launch promotional activities with convenience store chain operators.
However, the second quarter’s growth rate would decline slightly because of high commodity prices.
Major dairy products manufacturing companies’ gross margin saw a slight decline in the first quarter, but with improved operating processes, operating profits nonetheless showed an upward trend.
Although the second quarter is the traditional peak season, an incident involving a diseased cow in April had an impact on dairy product sales and would likely result in a declining year-on-year growth rate.
FLOUR
In regards to flour prices, which surged 54.76 percent year-on-year to NT$650 per bag [22kg] last quarter, Chang said domestic consumption of noodles would be unaffected by rising domestic commodity prices and was expected to grow this year.
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