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International Growth & Strong Food Prices Drive CPF

by 5m Editor
5 May 2011, at 1:18am

THAILAND - Strong food prices and booming international operations will be the main drivers lifting sales of Charoen Pokphand Foods Plc (CPF) by at least 15 per cent from last year's 189 billion baht (THB).

The favourable outlook is projected amid a number of risk factors lying in wait including high fuel costs, climate change, the strong baht and domestic politics, according to Bangkok Post.

CPF, the SET-listed flagship of the agribusiness and food conglomerate the Charoen Pokphand Group, expects livestock prices will spike this year in line with oil prices and expensive ingredients such as maize and soybean meal. These crops are used in animal feed and have shot up by about 10 per cent in price so far.

Kim Eng Research reported the price of chickens rose by 30 per cent in the first quarter and that of pigs by 16 per cent.

"Escalating costs have prompted us to manage risk more efficiently such as by securing enough ingredients for several months' use," Adirek Sripratak, the president and chief executive, told CPF shareholders recently.

He said the company has stocked up on enough maize – the main source of protein in animal feed – for use until July. And the present global practice of using soybean waste in biodiesel may result in less waste left over this year.

CPF's production costs have been rising since last year, but the increase in sales of its ready-to-eat meals and strong international operations helped the company to enjoy 15 per cent growth in 2010, said Mr Adirek.

Foreign operations in 11 countries including Russia, Turkey and the Philippines contributed 26 per cent of total sales.

CPF plans to raise that proportion to 40 per cent in the next five years by increasing budgets and entering more markets, reports Bangkok Post.

"We're thinking of expanding into South Asia and Africa, where demand for meat runs high. Maybe within the next five to 10 years," Mr Adirek told the meeting.

He said CPF has budgeted THB8 billion for this year's operations, 75 per cent of which will be used abroad.

Also outlined were plans to beef up domestic sales, which amounted to THB139 billion last year.

The number of CP Fresh Marts, the company's own retail outlets, will rise to 3,000 by 2015 from 600 now, while that of Five Star kiosks will double to 8,000, said Mr Adirek.

"Although natural disasters can pose a threat, so far they've benefited our company such as through higher orders from Japan. As well, we believe the coming election will be a plus, as people will have more money to spend," he added.