November 28, 2013

 

CPF expects better sales after EMS problems are solved

 

 

With the resolution of most problems caused by early mortality syndrome (EMS), Charoen Pokphand Foods Plc (CPF)  expects its sales to recover to 15% growth next year.

 

This is according to a Bangkok Post report, which pointed out that EMS started damaging local shrimp production late last year.

 

Prices for animal feed ingredients such as corn and soy are also expected to stabilise, according to Adirek Sripratak, president and chief executive of the SET-listed food flagship of Charoen Pokphand Group.

 

However, he admits this year's sales will fall far short of the 15% growth target on the back of the sharp drop in shrimp production.

 

The company expects only 10% revenue growth this year from THB357 billion (US$11 billion) last year.

 

Exports account for 7-8% of CPF revenue, domestic sales 30% and international operations the rest.

 

In the first nine months of this year, CPF achieved revenue growth of 9% on-year to THB286 billion (US$8.9 billion).

 

But net profit for the nine-month period plunged more than 71% on-year to THB5.31 billion (US$165 million).

 

The Fisheries Department predicts a decline in overall Thai shrimp production this year to 300,000 tonnes, down by 40% from last year's level due to EMS.

 

Adirek said his company has earmarked spending of THB50 billion (US$1.55 billion) from 2014-16 - 60% on existing operations in 12 international markets and 40% domestically, all of it mainly on ready-to-eat products.

 

The planned investment will be funded by company cash flow and revenue.

 

"Over the next three years, we've set an annual sales growth target of 15% fuelled mainly by international operations that CPF has expanded geographically in recent years," said Adirek.

 

"Countries such as China, Vietnam, India, Russia and the Philippines have tremendous growth potential despite an economic slowdown and political problems in some of them," he said.

 

"We're also committed to developing our ready-to-eat products under the CP brand in international markets such as France, Belgium, the Netherlands, South Korea, Hong Kong and Singapore."

 

Shares of CPF closed yesterday (Nov 26) on the Stock Exchange of Thailand at 27 baht, up one baht, in trade worth THB992 million (US$30.8 million).