Bangkok--21 Jun--TRIS Rating TRIS Rating Co., Ltd. has affirmed the company rating of United Farmer & Industry Co., Ltd. (UFIC) and the ratings of UFIC’s senior secured debentures at “BBB+” with “stable” outlook. As a sugar producer under the Mitr Phol Group, UFIC’s rating reflects the Mitr Phol Group’s leading position in the Thai sugar and sugarcane industry, its well-accepted brand name, and its efficient sugar mill operations. The ratings also take into consideration the highly leveraged balance sheets of both the company and the group, the fluctuations in sugarcane supply, and the volatility of sugar prices. The “stable” outlook reflects TRIS Rating’s expectation that the Mitr Phol Group will continue to maintain its leading position in Thailand’s sugar business, and UFIC will continue to be the major domestic sugar producer within the group. Due to the recent increased volume of sugarcane and moderating sugar price, UFIC’s sugar business is expected to generate sales of approximately Bt6,000-Bt7,000 million and EBITDA of Bt1,200-Bt1,500 million per year during 2007-2008. TRIS Rating reported that UFIC is the major sugar producer within the Mitr Phol Group, the leader in the Thai sugar and sugarcane industry. Of the five domestic sugar mills within the group, UFIC operates three sugar processing plants in the Northeastern Thailand, with the combined cane crushing capacity of 70,000 cane tonnes per day, representing approximately 60% of the total crushing capacity of the Mitr Phol Group in Thailand. During the last five years, the Mitr Phol Group has maintained the largest market share in sugarcane at 17%-18%. For the 2006/2007 production period, the Mitr Phol Group continues to be the largest sugar producer in Thailand with an 18.9% market share, followed by Thai Roong Ruang Group (18.1%), Thai Ekkalak Group (14.0%), and KSL Group (8.3%). TRIS Rating said that UFIC’s sugar production in the 2006/2007 crushing period was approximately 784,000 tonnes, up by 43% from the previous year and better than the 38% average growth of the industry. Its crushing yield of 108.16 kilograms (kg.) per cane tonne was better than the industry average of 104.94 kg. The company’s financial performance was satisfactory. Total sales for 2006 improved by 13% from 2005, due to the increased contribution from particle board sales. The total debt to capitalization ratio, though high, improved from 76.65% in 2005 to 65.68% in 2006, partly due to the divestment of the debt-financed power plant. The earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio decreased slightly, from 3.96 times in 2005 to 3.61 times in 2006. TRIS Rating said, sugarcane production has been very volatile, depending on natural rainfall, plantation area, and cane prices relative to competing products. After declining continuously from a historic high of 74 million tonnes in the 2002/2003 production period to 47 million tonnes in 2005/2006, sugarcane production in 2006/2007 soared to 63.8 million tonnes, due to the improving water situation and higher sugar and sugarcane prices at the beginning of the crushing period. Sugarcane production in the 2007/2008 period is expected to be at least the same level as the 2006/2007 period as water is plentiful. Though the domestic sugar price is relatively stable, the export price is volatile, depending on the world demand and supply of sugar and related products. The world raw sugar price increased sharply from 10.67 cents/lb in 2004/2005 to 18.93 cents/lb in February 2006, then gradually declined to 10.78 cents/lb in May 2007, said TRIS Rating.