May 7, 2013

 

CP Group accelerates foreign projects to tap strong Thai Baht

Cheap financing costs due to the strength of the Thai baht have driven big Thai companies, especially the CP Group, to accelerate its investment overseas and acquire businesses abroad.

 

Charoen Pokphand Foods Plc (CPF) has a series of new food projects overseas. A chicken-burger production unit in the United Kingdom and the launch of ready-meals production in Australia and the United States are expected to be completed this year.

 

"We are in talks with food packers in these two countries to process ready meals of popular Thai dishes such as Thai green curry and panang curry with rice," said Pisit Ohmpornnuwat, chief operating officer in charge of overseas trading.

 

CPF will use local meat as raw material in making lamb green curry in Australia; while it will work with leading pork producer in the US, Smithfield in developing its business in the United States. CPF has some stakes in Smithfield and sees the benefits of sharing food technologies.

 

When the talks are completed, the products will be branded Kitchen Joy, which received good feedback in Scandinavian countries, garnering revenue of THB500 million (US$16.90 million) in 2012.

 

In November 2011, CPF completed a THB66.3-billion (US$2.24-billion) deal to acquire 74.18% of CPP, which has two main businesses - animal feed production in China and integrated farm operations in Vietnam - through CP Vietnam Corporation (CPV).

 

CP All Plc, in which CPF holds 30%, last week struck a THB188.88-billion (US$6.38-billion) deal to buy Siam Makro Plc, the operator Makro, the country's only cash-and-carry wholesale business. Pisit said as Makro, already one of CPF's clients, aims to expand into neighbouring countries, the takeover will benefit CPF's food sales.

 

CPF projects THB40 billion (US$1.35 billion) in revenue from overseas markets this year, about 10% of total sales revenue. Major contributors to overseas sales are cooked and semi-cooked products under CP and Kitchen Joy brands and some for original equipment manufacturers (OEM).

 

CPF plans to sell 160,000 tonnes of processed and raw chicken meat this year, up from 100,000 tonnes in 2012. He attributed the increase to the European Union's lift of the import ban on raw chicken meat in mid-2012. Several buyers have followed the EU's move to resume the purchases of fresh chicken from Thailand after a long pause since 2004, when Thailand's poultry industry was hit by bird flu.

Europe is a major market where the company also planned investment for cold storage in the UK. After that, it plans to set up a chicken-burger plant at a cost of £2 million (US$3.11 million).

 

Asia's strong economy led the firm to form a business partnership with E-Mart, the largest discount store chain in South Korea, last year.

 

The company is one of the main suppliers of products to Costco in the US, Woolworths and Coles in Australia, Carrefour and Auchan in France and E-Mart and Key Account in South Korea. The company will set up food kiosks to promote brands and products, the first of which is in Takashimaya departmental store in Singapore and the model will be used in CPF's 36 markets.

 

In addition, two more offices are planned in potential markets such as China and Australia.