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CPF Plans Large Overseas Investments

by 5m Editor
15 June 2009, at 7:20am

GLOBAL - The good performance of the overseas businesses of Thailand's Charoen Pokphand Foods Plc (CPF) have helped to offset a local slump. The company plans to invest about THB 2.5 billion this year to expand its operations in Russia, India, Turkey, Malaysia, the Philippines and Laos.

Bangkok Post reports that, encouraged by healthy business growth in the first quarter, Charoen Pokphand Foods Plc (CPF) is investing a total of 4.5 billion baht (THB) this year, including THB 2.5 billion in overseas expansion.

The spending figure is in line with the company's original plan, which had been under threat. CPF executives had cautioned earlier that it may have to cut back on investments because of a weak outlook.

Expansion of foreign operations would lift sales overseas at a time when the economy is poor at home, said Adirek Sripratak, the president and CEO of the country's largest listed food processor.

CPF plans to invest about THB 2.5 billion this year to expand its overseas operations in Russia, India, Turkey, Malaysia, the Philippines and Laos.

Of the total foreign investment, about THB 500 million would go to a chicken processing factory in Turkey, THB 500 million to a livestock feedmill factory and hatchery farm in Tamil Nadu and Pune in India, one billion baht in Russia and the remainder in Malaysia, the Philippines and Laos.

At the end of last month, CPF officially launched its feed mill and integrated pig business in Lukhovitsy county in Moscow, run by Charoen Pokphand Foods (Overseas) Co, with registered capital of 900 million roubles.

The company's feed mill mainly produce feed for pigs, chicken and cattle with a capacity of 240,000 tonnes a year.

According to Mr Adirek, apart from the feed mill, the company plans to invest US$100 million over the next five years in animal feed and farming businesses in Russia.

CPF plans to produce one million pigs per year by 2014.

Under the first phase of the plan, two farms are now under construction, the first being a breeder operation with capacity of 2,400 sows, and the second a pig farms with a capacity of 18,000 pigs.

Russian demand for pork is currently 2.75 million tonnes per year while local animal production capacity is only two million tonnes. Therefore CPF has an opportunity to develop a business that will substitute for imports and create demand for its feed products as well.

Mr Adirek said that after Russia, the company would look to invest in Ukraine and Eastern Europe.

On the local front, he told Bangkok Post that the company planned to invest about two billion baht this year, mainly to improve efficiency and lower production costs of existing plants.

In March, Mr Adirek had said that CPF this year would cut its investment budget by 50 per cent to about THB 2.5 billion, as sales revenue was expected to stay flat from THB 156.23 billion last year.

However, encouraged by strong operating results in the first three months of this year and recovering purchasing orders, CPF has resumed its investment mode and is upbeat that sales will increase by as much as 10 per cent with profit exceeding the THB 3.1 billion it earned last year, on a larger contribution from its overseas units.

CPF reported a net profit of THB 770.5 million in the first three months of this year, an increase of 70.8 per cent from THB 451.24 million the year before, on sales of THB 34.77 billion, up from THB 33.86 billion, concludes the Bangkok Post report.