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CPF Confident about 2014 Business Prospects

06 March 2014

THAILAND - Sales are up 10 per cent for Charoen Pokphand Foods (CPF) and the company is expecting a substantial rise in net profit in 2014.

CPF is confident 2014 will be a good year for the company, with strong performance in terms of both total sales and net profit, even as the country is still faced with political turmoil, reports The Nation.

Adirek Sripratak, CPF's president and chief executive officer, said total sales were projected to grow by at least 10 per cent to more than 450 billion baht (THB) this year. He declined to project net profit but said it would grow significantly over the disappointed earnings result in 2013.

Last year, sales grew nine per cent to about THB389.25 billion, while net profit dropped 60 per cent to THB7 billion, the lowest in 10 years of the company's operation. However, if combined with acquiring stakes in three companies abroad, the firm's accounting balance posed a net-profit drop of 30 per cent.

The serious spread of early mortality syndrome (EMS) had a big impact on shrimp production, while an oversupply of chicken and pork in Viet Nam, Turkey, India and Thailand, amid a sharp rise in the cost of raw materials, was also blamed for the drop in profit.

In general, CPF's business performance has posted annual growth of 10 to 15 per cent.

Last year, it acquired 60 per cent of CP-Meiji, 69.7 per cent of a pig farm in Russia (RPBI), and 80 per cent of Top Foods, a high-tech meat processor in Belgium.

Recently, the firm also announced an investment in BHJ, a leading international supplier in Sweden, by purchasing a 29-per-cent stake.

Mr Adirek said performance would be boosted this year by a drop in raw-material costs, rising prices of meat products, and an easing of the EMS problem. More important, Japan has cancelled a ban on fresh chicken meat from Thailand imposed years ago over fears of bird flu contamination.

The firm has not directly suffered any impact from the political chaos.

Mr Adirek said food was still a basic human necessity and people had to eat every day regardless of their politics. That stands in contrast to big-ticket products such as cars and houses, on which people may delay purchases. And in any case, domestic sales make up only 34 per cent of the total for CPF.

"In reality, although the economy has been on a rising trend, our food business has not shown a significant jump. The fact is people still eat only three meals [a day], not six or 10, along with economic prosperity," he said.

The company has focused on securing its sustainability for the long term, integrating its business from upstream to downstream and creating a strong value chain. Acquiring stakes in other companies would also help strengthen its related businesses.

Over the next five years, the firm will eye foreign markets to consolidate its performance. Sales overseas, which include exports from Thailand and its plants in other countries, are projected to increase to 75 per cent of the total, from 66 per cent at present.

Total sales over the next five years are projected to reach THB700 billion. CPF has an investment budget of THB50 billion for the period, more than half of which is to go into foreign markets.

The Nation's report adds that, to date, the firm has invested in 12 nations worldwide, covering three billion people. Its exports from Thailand are shipped to 40 nations, especially to Europe, North America and Japan.

TheMeatSite News Desk

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