November 15, 2019

CP Foods sees 23% increase in third-quarter net profit

Thailand's Charoen Pokphand Foods has reported a 23% rise in third-quarter net profit despite lower sales revenue, thanks to a recovery in pork prices and improved overseas aquaculture business.

Net profit was six billion baht (US$199 million) in the three months to September, up from 4.9 billion baht (US$162.3 million) logged in the same period last year.

Pork prices in Vietnam stand at 57,000-60,000 dong (US$2.46-2.59) per kilogramme, above the third-quarter average price of 38,422 dong (US$1.66) per kg, said CP Foods chief executive Prasit Boondoungprasert.

Farm pigs are fetching about 28-38 yuan (US$3.99-5.42) per kg in China, above the third-quarter average of 22 yuan (US$3.14), Mr Prasit said.

The African swine fever (ASF) outbreak in several countries has led to an expected decrease in global pork output and pork prices have shot up, according to CP Foods.

Such conditions may last for several years because farmers may not be able to resume operations immediately, Boondoungprasert said.

Farmers will have to invest more in an effective biosafety management system to prevent another ASF outbreak, he said.

The company's sales revenue fell by 6% year-on-year in the third quarter to 133 billion baht (US$4.4 billion) as a result of the baht's appreciation and an adjustment of financial reporting standards.

Overseas business contributed to 67% of total sales revenue, while domestic operations and exports from Thailand made up 27% and 6%, respectively.

"CPF maintains a strategy to further expand businesses in potential markets and aims to raise overseas sales as well as exports to 80% of total sales revenue in the next five years," Boondoungprasert said. "CPF will meet financial targets in 2019, as earnings in the fourth quarter are expected to improve in line with an increase in pork prices.

"Annualised earnings in 2020 are also expected to further increase as a result of the strategy to add value to existing businesses as well as improve economic conditions."

CP Foods shares closed on November 14 on the Stock Exchange of Thailand at 26 baht, unchanged, in trade worth 498.2 million baht (US$16.5 billion).

- Bangkok Post