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African Countries Top CP's Investment Plan

by 5m Editor
31 December 2009, at 10:43am

GLOBAL - Thailand's Charoen Pokphand Foods Plc (CPF) has announced it is to set up chicken production (with feed milling) in Kenya and Tanzania. CPF's sales in 2010 are forecast to rise by 10 per cent to THB170 billion.

CPF, the SET-listed flagship of the Charoen Pokphand Group, has added African countries to its investment plan next year as part of its aggressive expansion abroad, reports Bangkok Post.

It will start with feed and chicken farm operations in Kenya and Tanzania, where each operation is expected to cost US$3 million initially, said Adirek Sripratak, president and chief executive officer of CPF.

CPF teams including Mr Adirek have visited the two countries several times over the past few years, and found strong business potential in supplying meat for their combined population of 82 million.

He said that CPF had been well received by local people in the two countries, encouraging the company to consider further operations in Africa. Nigeria would be next in line.

The fresh investment is part of the five billion baht (THB) CPF earmarked locally and abroad in 2010, with 50 per cent going to the Thai market.

While farm expansion overseas is being accelerated, CPF plans to trim investment in farm businesses in Thailand but put more money into cooked and ready-to-eat meals, which have contributed healthy profits to the company, estimated at more than THB10 billion this year.

Mr Adirek said: "From now on, investment in farms such as in chicken, swine and marine products would be very little. We've tried to lower our role in commodity trade."

He told Bangkok Post that the healthy profit from value-added products has proven that the company had chosen the right direction to become a food provider rather than a commodity trader.

The attempt also reflects a desire to create an equal balance in the company's revenue structure from farms (currently 45 per cent), feed (35 per cent) and food (20 per cent) under a five-year plan. CPF's sale revenue is estimated at THB160 billion this year.

Reducing its role in the primary farm sector would not only reduce business risks from epidemics or price fluctuations but would help the company promote sustainable profits.

Mr Adirek said the rising contribution from food products had lifted net profits in the first nine months to THB8.07 billion, up from THB2.82 billion in the same period last year.

CPF's sales in 2010 are forecast to rise by 10 per cent to THB170 billion on strong domestic sales and exports. For the domestic market, it plans to increase the number of retail distribution outlets, CP Freshmart to 2,000 stores, and 5-Star Chicken kiosks to 3,000 units over the next few years.

Significant revenues from offshore investments, notably in Russia and Turkey, are also expected next year, he said.

According to Bangkok Post, CPF aims to export about 100,000 tonnes of chicken meat and 50,000 tonnes of shrimp products in 2010, up from about 95,000 and 35,000 tonnes this year.

Mr Adirek said: "All products are sold under the CP brand and this would lift sales from food to nearly 25 per cent next year.

"When the figure reaches 35 per cent, it could allow us to strengthen and promote the brand in international markets more widely, and featuring it in the English Premier League is in the plan."