May 13, 2011
CPF reports favourable overseas development
Charoen Pokphand Foods (CPF) has stated that its operating outcome for the first quarter of 2011 surged by 70% in contrast to the fourth quarter in the previous year.
The media reported that the company expects revenue to grow by between 10% and 15% this year, as targeted, due to accelerated expansion of overseas food businesses and a food shortage on the world market, especially in Japan, which was hit by a tsunami in March.
Adirek Sripratak, CPF president and chief executive officer, said the company posted THB3.4 billion (US$112 million) in net profits for the first quarter this year, up 70% quarter on quarter and up 8% on the same quarter last year.
He continued, "We achieved THB45.7 billion (US$1.5 million) in total sales for the first quarter this year. Our sales from Thailand operations increased 4% and from overseas operations 7% in the quarter. Sales from Thailand operations accounted for 74% of total sales, with 26% from the overseas operations."
Adirek added that the 70% jump in net profit from the fourth quarter last year was a result of an increase in gross profit margins from 13% to 16%.
He said the company also anticipated stronger growth in the second quarter, expected to be up 20% quarter-on-quarter, and 20% higher than the same quarter last year.
Adirek said the growth of its operating results was in line with CPF's strategy to become a major food producer to both domestic and overseas markets. The company exports its foods to about 40 countries around the world.
He said "Overseas operations were as expected, especially operations in India and Malaysia, which showed significant growth, by 40% and 5%, respectively, in the first quarter.
"With the latest investment in Cambodia on April 1, CPF now has operations in 11 countries outside Thailand. Revenue from Cambodia's operations will be recognised in the second quarter. CPF emphasises overseas business expansion and has been continually studying opportunities for investment in new countries."
He added that Turkey and Taiwan were the two biggest export markets in the first quarter with THB18 billion (US$593.1 million) in compared sales. The company also achieved THB1.9 billion (US$62.6 million) in export sales to India and about THB1.1 billion (US$32.6 million) in export sales to Malaysia in the quarter.
Even with the difficult business environment due to higher production costs, CPF believes its strategy to focus on the food business, expand distribution channels and expand overseas will result in sales and net profit rising from 10% to 15% over last year, Adirek said.
Adirek said CPF plans to increase its CP Fresh Mart network from 620 stores to about 1,000 by the end of this year, with anticipated same-store growth of 8%.
The company will also increase the number of refrigerators carrying its frozen food products to penetrate community markets such as villages, condominiums and office buildings, from more than 2,000 units to 10,000 by the end of this year.
Adirek commented, "Both CP Fresh Mart and refrigerators will be our strategic channels to deliver our CPF frozen products to reach individual consumers at the community level."
He added that for the food business, CPF would emphasise market expansion, both in Thailand and overseas, for its ready-to-eat products. The company expects the sales contribution from overseas markets to rise significantly from 26% to more than 30% in the next three years.
CPF has set aside THB40 billion (US$1.32 million) in investment budget for the next five years, according to the media. Half of the budget will be allocated to the domestic investment. The other half will go on overseas investment, particularly in high-potential countries such as India, Russia and the Philippines.
