April 22, 2004

CP Foods Revises Targets In Bird Flu Aftermath
 
CHAROEN Pokphand Foods Plc (CPF) said a decrease in this year's first quarter revenue will cause the firm not to meet its full-year revenue growth target of 20 percent, and that growth is expected to be only 5 percent higher than last year's 80 billion baht. The decline is attributed to the impact of the bird flu.
 
CPF's managing director Adirek Sripratak, said the bird flu crisis is expected to have a severe negative impact on CPF's first quarter results. However, CPF has yet to come up with a definite figure on how much of a fall the first quarter revenue will have, said Adirek. But CPF remains optimistic that as compared to the same period last year, the bird flu related impact to CPF's revenue target in this year's first quarter is likely to be smaller. That was when CPF had a loss due to a sharp fall in the price of meat products, said Adirek. 
 
"The bird flu impact on CPF's chicken exports in the first quarter of this year is unlikely to be that severe, as CPF has raised its export ratio for heat-treated chickens and frozen chickens to 60:40 from the previous 20:80. Thus, CPF's total revenue from chicken exports this year is expected to be worth 12 billion baht," said Adirek.
 
Moreover, CPF expects to be able to bring in about five billion baht in shrimp exports revenue this year, said Adirek.
 
Adirek said CPF has projected a shrimp export revenue of only five billion baht, which is similar to what it recorded last year. This is because the US is conducting a hearing on charges that Thailand and five other countries had sold shrimp products in the US at below market price, and thereby might face a penalty of hefty tariff charges. He said it would be clearer in the second half of this year with regards to how this issue would be settled by the US.
 
After the end of bird flu crisis, the prices of pork, chicken and eggs have gone up significantly, thus benefitting CPF's business, said Adirek. As a result, CPF's revenue for the second quarter of this year onwards is likely to be on the rise, he said.
 
In a meeting yesterday, CPF's shareholders agreed to use last year's net profit as a reserve to make it possible for CPF to raise its total reserves up to 67.88 billion baht as required by the law, said Adirek. He said shareholders also agreed to plans which proposed paying shareholders an interim dividend of 0.04 baht per share for CPF's operations in the fourth quarter of last year, added Adirek.
 
According to Adirek, CPF has set aside 229 million in funds to cope with the interim dividend payment, scheduled on May 7, 2004. As such, the total dividend payable to CPF's shareholders for the whole of operations last year amounts to 1.31 billion baht, he said. As part of its efforts to minimise issues related to trade barriers as well as to accommodate market demand efficiently, CPF, Asia's major producer and exporter of chicken, wants to expand its shrimp and chicken farming areas overseas further.
 
The planned investment by CPF on expanding shrimp and chicken farming areas overseas would take place over the next three years, said Adirek.
 
Currently, CPF has sent a team to survey potential shrimp farming areas in Mada Kaskar since this country waives tariff charges for frozen and processed shrimps earmarked for shipment to the Europe Union (EU). Normally, the EU charges tariffs of 12 percent for frozen shrimp shipped from Thailand and tariffs of 20 percent for processed shrimp, said Adirek.
 
CPF has also sent a team to survey potential chicken farming areas in Russia, the Ukraine and Romania as demand for chickens in these countries is very strong and they have an ample supply of raw chicken feeding stocks, he elaborated.
 
Late last year, CPF acquired a chicken producing enterprise in Turkey, which is in the process of applying for a membership with the EU, said Adirek. Consequently Turkey has a strong potential to become a base for shipping goods to the EU, Russia, the Ukraine, and eastern Europe in future.
 
Currently, CPF is Thailand's largest agribusiness conglomerate and one of Asia's major chicken exporters. Their major export markets comprise of Japan and the EU. This year, CPF plans to spend 5.4 billion baht on investment projects, said Adirek.