April 1, 2009

Charoen Pokphand Foods (CPF) is expecting to escape relatively unscathed from the global recession and falling exports as many exporters are feeling distraught over slumping prospects, according to the Bangkok Post.

 

CPF president and chief executive officer Adirek Sripratak said the food business by nature is hit marginally whenever the country is in an economic crisis, which leads consumers to dine in and rely on finished food or ready-to-eat products.

 

Adirek predicted food exports would make up 18 percent of the company's sales revenue this year, a rise from 16 percent last year, with revenue from its foreign operations in 10 countries rising to 17 percent to 18 percent, up from 16 percent last year.

 

Given the poor economic outlook and lower consumption, domestic sales are expected to drop to 64 percent of CPF's total from 68 percent in 2008.

 

Adirek also said that the company is concerned that Thai people will consume less, leading to a fall in manufacturing in the industrial sector and tighter lending by commercial banks, particularly to small and medium-sized industries, which will eventually affect the overall food sector and related industries.

 

However, he admitted the company could not ignore the economic crisis that has delivered a heavy blow to Thai exports. As a result, the firm has taken a conservative line on its business targets, with sales revenue this year to stay flat from THB156.23 billion last year.

 

However, he predicted a better bottom line this year given ongoing cost efficiency, lower production costs and easing oil prices. CPF will also pay special attention to having adequate cashflow.

 

CPF this year has cut its investment budget by 50 percent to about THB2.5 billion, in which the funds would go largely to brand development, value addition to food products and high-value meals and ready-to-eat meal development, human resources and marketing development, and distribution channel expansion in the domestic market.

 

Half of the existing budget would go to expanding production capacity of high-potential projects in other countries, especially Russia, Malaysia and India.

 

The company is also looking at investment potential in the Philippines and Eastern Europe including the Commonwealth of Independent States (CIS) countries.

 

CPF currently operates a shrimp and fish demonstration farm and fish hatchery in the Philippines apart from distributing feed meal for fish and shrimp.

 

According to CFP executives, the company is expecting to be able to set up a fish and shrimp feed manufacturing plant with an investment of THB400-500 million baht in the Philippines next year, should Philippine politics remain stable.

                

US$1 = THB35.58 (Apr 1)