May 14, 2012

 

Charoen Pokphand Foods eyes to acquire more food operations abroad

 

 

Following last year's acquisitions resulted in record growth in its first quarter net profit, Charoen Pokphand Foods plans to acquire more food operations abroad, the Bangkok Post reports.

 

CPF, a leading feed and food producer and exporter, reported a healthy performance in the first three months this year, with net profit soaring 229% on-year to THB12.1 billion (US$387 million) on sales of THB73.5 billion (US$2.35 billion), up by 61%.

 

Adirek Sripratak, the president and chief executive, said the jump in net profit was due mainly to its acquisition of CP Pokphand Co (CPP), a listed company on the Hong Kong Stock Exchange.

 

CPF last month completed the deal to use about THB66 billion (US$2.1 billion) 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).

 

Adirek said the purchase of CPP coupled with the use of international financial reporting standards helped the company book a THB8.67 billion (US$278 million) gain on fair-value adjustment of its direct and indirect investment in CPV. CPF has a 29% stake in CPV, while the rest is held by CPP.

 

Adirek said CPF plans to buy more international food processors, as it views mergers and acquisitions as an effective tool to boost growth.

 

CPF is in talks with three companies, and he expects at least some deals will be concluded this year. The firm's foreign operations will therefore be a key growth driver, with revenue comprising 60% of the total from 50% now over the next 2-3 years.

 

Adirek said CPF invests in countries with high growth potential in agro-industrial and food businesses such as China, Vietnam, India, Russia and the Philippines. As for Thailand, food and shrimp exports are the main growth drivers.

 

Sales this year are estimated to reach THB300 billion (US$9.6 billion) thanks to strong meat prices and a resumption of fresh chicken exports to Europe in the second half.

 

The company expects to sell 20,000-30,000 tonnes of fresh chicken meat this year together with the exports of 120,000 tonnes of cooked meat, up from 100,000 tonnes last year.

 

Before the ban of raw meat from the EU in 2004 after the bird-flu outbreak, the company sold up to 60,000 tonnes of fresh chicken meat to the region annually.

 

Adirek said soaring feed prices and higher wages are negative factors, but he insists the company will not adjust up the retail prices of its processed products.