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Charoen Pokphand in Healthy Profit

by 5m Editor
18 September 2008, at 8:22a.m.

INDONESIA - Charoen Pokphand, Indonesia's largest animal feed and processed chicken manufacturer, forecasts net profits to more than double this year as the result of higher sales and strong selling prices.

Charoen Pokphand Indonesia (CPI) vice-president director, Thomas Effendy, said on 17 September that the company was upbeat that it would book 450 billion rupiahs (IDR; US$47.52 million) in net profits this year, up from IDR187 billion last year, reports The Jakarta Post.

"We are optimistic we will make this profit this year although our margin in the first semester was lower than in the same period last year," he said.

The Indonesian unit of Thailand giant Charoen Pokphand Foods may post a 38 per cent jump in sales this year to more than IDR12 trillion from IDR8.7 trillion last year.

Mr Effendy said the company had already secured IDR6.2 trillion in sales during the first half of the year. Its net profit soared to more than double to IDR209 billion from IDR95 billion in the corresponding period last year.

He added that another factor that would boost CPI net profits was the higher prices for animal feed and for day-old chicks this year, as well as cost efficiency.

He said the company sold animal feed for IDR2,900 per kilo last year and IDR3,900 per kilo as of June this year.

"A day-old chick now sells for over IDR3,000, compared to less than IDR3,000 last year," he said.

Despite lower margins in the first semester of this year, the company had seen absolute growth in the amount of products sold.

"We sold two million tons of animal feed last year. We are estimating 2.3 million to 2.4 million tons for this year as our new plant in Makassar just started operations on 8 August," he said.

The new plant is one of the two new plants CPI began to operate this year, besides the one in Lampung.

In total, the giant owns seven animal feed plants with a total production capacity of 4 million tons.

Besides those in Lampung and Makassar, the remaining plants are in Medan, Balaraja and Semarang with two in East Java.

With the two additional plants, CPI aims to increase day-old chick production by 20 per cent to 576 million chicks and processed chicken output by 50 per cent to 42,000 tons this year, according to Mr Effendy.

In 2007, the company bred 480 million chicks and produced 28,000 tons of processed chicken.

Mr Effendy also said the company's net profit could be boosted even further, given the fact that the country's per-capita consumption of chicken meat stood at only 5-6kg annually - much lower than the 30kg in neighbouring Malaysia and 8.5-9.0kg in the Philippines.

In response to a draft bill on animal husbandry and animal health that prohibits a company to monopolize the upstream and downstream farming industry, Mr Effendy believes there is currently no unfair competition in the sector.

He argued it would be more efficient for a company to set up an integrated poultry farming system, from upstream to downstream, as applied in developed countries.

5m Editor