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CPF Invests to Diversify Product Range

by 5m Editor
23 March 2010, at 11:46am

THAILAND - Charoen Pokphand Foods (CPF) Plc plans to invest two-billion-baht (THB) to build an integrated ready-meal production plant.

CPF, the listed flagship of the Charoen Pokphand Group, the country's largest agribusiness conglomerate, will construct the facility in Ayutthaya's Wang Noi district. Bangkok Post reports that it will produce a wide range of product lines including rice, spaghetti, egg noodles and sausages.

Adirek Sripratak, the company's president and chief executive officer, said the products would also be utilised in CP's Ezy Go-branded ready meals to supply its retail outlets such as 7-Eleven convenience stores and CP Fresh Mart.

The plant will also produce meals for restaurants and manufacturing plants as well as for export markets.

Mr Adirek said: "This new plant will be one of Asia's largest rice-cooking facilities with a capacity of 400 tonnes per month."

The investment is part of a six-billion-baht budget CPF has planned for 2010.

About half of the budget will be used to finance overseas projects, such as expanding swine production in Russia and poultry operations in Turkey and developing new businesses in the African countries of Kenya and Tanzania.

Mr Adirek said CPF's core business is currently focused on meat-based production, with no existing facilities to produce carbohydrate-based food. As a result, the new investment would help the company broaden its food production line.

The expansion would help CPF's sales revenue this year hit its growth target of 10 per cent year-on-year, he said.

The company reported record net profits of THB10.19 billion for 2009, an increase of 226 per cent from the previous year, with sales revenue increasing six per cent to THB165.06 billion.


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"About half of the budget will be used to finance overseas projects, such as expanding ... poultry operations in Turkey and developing new businesses in the African countries of Kenya and Tanzania."

According to Bangkok Post, CPF said its business restructuring to focus more on higher-margin ready-to-eat food has paid off both in the domestic and international markets. Overseas business, particularly in the emerging market of Turkey, had contributed to the higher earnings.

Mr Adirek said: "Instead of sticking to shipping out rice as a commodity, our ready-to-eat packs cover cooked rice with a lengthy shelf-life of six to eight months, which surely helps to raise value for our products."

The project requires the CPF board's approval and construction will take about one year.

Mr Adirek said the strong baht has minimal impact on the company's exports as CPF has gained mainly from branded products.

The company has already informed the Stock Exchange of Thailand to change its listing category to 'food' from 'agriculture' as most of its earnings are generated from its food operations. It also expects to raise its price-to-earnings ratio to 12 times instead of the current eight times, according to Bangkok Post.