March 1, 2007

CPF sales expected to be up 5-10 percent this year

Charoen Pokphand Foods Plc (CPF), the flagship of the agribusiness giant CP Group, expects sales growth of 5 to 10 percent this year, due in part to strong growth of its aquaculture projects in India and Malaysia, and new projects in Laos and Russia.

Although last year, the company reported sales growth of 10 percent to 125 billion baht (US$3.72 billion), net profit fell 63 percent to 2.51 billion baht (US$74.5 million).

The fall was mainly due to a drop in gross profit margins for both the company's Thai and overseas operations, which fell from 17 percent in 2005 to 13 percent in 2006.

One of the main reasons cited was bird flu, which caused domestic prices of poultry meat to plummet 30 percent on average from the year before.

Adirek Sripratak, the company's president and chief executive officer, said growth prospects for 2007 remained strong even though consumers are now tightening their purse strings.

Continued bird flu outbreaks in other countries and the danger of it happening domestically are putting pressure on margins, as are higher raw-material costs, he said.

However, the situation is expected to improve in the second quarter, with the baht unlikely to strengthen further.

Adirek said CPF was committed this year to increasing production efficiency, branding, and expanding distribution channels both for domestic and international markets.