CPF to acquire Russian pork plant

Thailand's Charoen Pokphand Foods (CPF) plans to purchase a pork processing plant in Russia - a deal should be concluded by the first quarter of 2010.

CPF president and CEO Adirek Sripatak expects Russia to post 50% sales growth in FY10. Expansion plans for the Philippines, Turkey and India are focused on feed meals and breedstock. Moreover, CPF will explore new investment opportunities in South Africa.

Adirek also expects FY09 sales to exceed THB160 billion (US$4.8 billion) and a net profit for the year of more than THB10 billion (US$300.2 million). The key growth driver is the food segment, which he expects to jump to 25% of total sales by year-end of 2010, up from 20% at year-end of 2009.

A 10% sales growth is anticipated for FY10 with chicken exports likely rise 10% and shrimp-based value-added products seen to rise 50% in FY10. Total FY10 CAPEX is forecast at THB5 billon (US$150 million), half of which will be invested domestically, the remainder overseas.

According to CPF, FY09 sales and net profit guidance are in tandem with FY09 projections, however, the firm's FY10 sales growth guidance of 10% is way more bullish than forecast of 6%.

The high FY09 profit base comparison will make for an FY10 earnings dip, but only a modest one-high-margin food product sales growth and improved overseas operations will mitigate that dip.

The company's Thai strategic shift from reliance on sales to farms to food sales is seen to boost GM over the next five years. Furthermore, the introduction of food products to countries where there is still substantial demand growth for meat products, like Russia and India, will bring growth opportunities.

The major improvements in Russia and Turkey and full-year recognition of Taiwan will turn around FY10 overseas operational numbers.