November 8, 2012

Charoen Pokphand Foods revises investment budget upward by 50%


The five-year investment budget ending 2016 of Charoen Pokphand Foods (CPF) has been revised up by 50% to THB75 billion (US$2.4 billion).

President and CEO Adirek Sripratak said the budget was raised after the company saw more potential acquisition targets in Asia.


Last year, CPF agreed to pay THB2.1 billion (US$68 million) for a 74.2% stake in Hong Kong-listed C.P. Pokphand Co Ltd, which has two main businesses, animal feed in China and integrated-farm operations in Vietnam, through CP Vietnam Corporation.


The deal will help bring CPF's 2012 revenue to THB300-350 billion (US$9.8-11.4 billion), up from THB210 billion (US$6.8 billion) last year. According to Adirek, under the revised five-year plan starting this year, the company will spend THB15 billion (US$488 million) on average to expand its business each year, compared to THB10 billion (US$325 million) before the revision.


While declining to reveal the details of future acquisitions, Adirek said by 2016 CPF's sales would exceed THB700 billion (US$22.7 billion), compared to THB650 billion (US$21 billion) projected earlier. Of total sales, 8-9% will come from exports although he conceded shipments might grow more slowly due to the sluggish economy of Europe, where CPF supplies chicken and shrimp products.


To offset the declining sales in this channel, Adirek said CPF would emphasise the food business in both local and international markets, especially in Asia. The move aims to increase the sales proportion of its food products to THB200 billion (US$6.5 billion), or one-third of the company's total sales by 2016.


The figure is up from a range of 15-20% or THB60 billion (US$2 billion) currently. The balance will come from animal feed and farm products. To beef up the food business, CPF on Monday (Nov 5) signed a contract with The Shell Company of Thailand Limited to open CP Food Market, a super-convenient store at some Shell petrol stations.


The first CP Food Market under the partnership is scheduled to open late this year at Shell's station in Wang Noi, Ayutthaya province. Each store will need an investment of THB10-15 million (US$325,000-488,000).


Shell and CP Food Market plans to open two more outlets early next year, most likely on busy highways linking the capital to Northern and North-eastern provinces. CPF shares closed on the Stock Exchange of Thailand at THB35.50 (US$1.16), down THB0.25 (US$0.01), in trade worth THB1.16 billion (US$38 million).