August 12, 2010

CPF boosts foreign investment

Charoen Pokphand Foods Plc (CPF) is moving ahead with its overseas investment worth at least THB30 billion (US$953 million) over the next five years as part of its ambitious plan to raise foreign revenue contributions to 40% by 2015.

CPF president Adirek Sripratak said the company will invest THB6 billion (US$190 million) a year over the next five years to expand production of animal feed and livestock at home and overseas. Over 60% of that amount will go overseas, largely to expand existing operations in Russia, India, Turkey, the Philippines, Malaysia and some African countries.

Overseas operations played a vital role in the company's sales growth for the first six months of the year, with that sector surging 91%. Thai operations grew at the relatively slow pace of 7%.

For the first half of the year, the company reported total sales of THB91.47 billion, an increase of 21% from the same period last year. Net profit for the period rose 82% to THB7.22 billion (US$229.3 million) and was partially supported by income distribution from affiliates such as CP All Plc, the operator of 7-Eleven convenience stores, in which CPF holds 27%.

For the second quarter, the company posted a net profit of THB4 billion (US$127 million), a rise of 25.3% over the same quarter last year on total revenues of THB48.49 billion (US$1.5 billion), an increase of 18.47%.

Adirek said the surge in sales revenue could be attributed to higher food product sales and rising overseas income. The shrimp business benefited from a global decline in production caused by erratic weather conditions and the oil spill in the Gulf of Mexico.

As of the second quarter, overseas operations made up 27% of the company's sales, with exports accounting for 13% and domestic sales 60%.

According to the company's five-year plan, CPF aims to raise the revenue contribution from overseas operations to 40% with exports making up 20% and domestic sales 40%.

In addition, Adirek said the company expects to post a record profit of more than THB12 billion this year. CPF reported a record net profit of THB10.19 billion (US$323 million) for 2009, up by 226% from the previous year, with sales revenue up by 6% to THB165.06 billion (US$5.2 billion). Revenue will be close to THB180 billion (US$5.71 billion) in 2010, and CPF expects it will rise by an average of 10% over the next five years.

He added that prospects also look promising for the second half, noting a profit growth target of 20% this year will be achievable.

CPF shares closed yesterday on the SET at THB24.70 (US$0.78), down 20 satang (cents), in trade worth THB2.07 billion (US$65.7 million).