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CPF to cut back on farming in 5-year plan

Published on 11 November, 2009, Last updated at 23:01 GMT

Thailand - Charoen Pokphand Foods Plc (CPF), the SET-listed flagship of Charoen Pokphand Group, has mapped out a five-year business restructuring plan to reduce its dependence on farm business.

"The bird flu outbreaks in 2004 largely affected our poultry farms, forcing us to revise our business model," said Adirek Sripatak, CPF's president and chief executive officer.

Over the next five years, CPF's core businesses will engage in three main industries: feed, food, and farming. The company will equally weight the industries to avoid possible business risks, he said.

The restructure aims to increase revenue from the food sector to 30-33% of the total from 18% at present. Animal feed already generates 35% which would be maintained.

Farming revenue, particularly from chicken and duck farms, would be pared from 47% to one-third as well. Sales from this sector stood at 156.23 billion baht in 2008.

Mr Adirek said CPF would outsource products from certified contracted farms instead, which would also prevent risk from fluctuating world commodities prices.

Mr Adirek revealed last year he wanted to remodel CPF to emulate ConAgra, one the largest packaged-food companies in the US, and said its 8-billion-baht animal and farm complex in Nakhon Ratchasima would be its last production hub.

Revenue from the food sector has grown rapidly in recent years thanks to brand-building efforts and new products.Ready-to-eat items such as shrimp wonton soup have increased sales to 32 billion baht this year.

Mr Adirek said that next year CPF planned to invest 4 billion baht locally and overseas.

US$30 million is set for the pig business in Russia, and $65 million is to build shrimp- and aqua-feed manufacturing plants in the Philippines.

In Thailand, the investment will focus on the expansion of its distribution shop, CP Fresh Mart, which has over 500 outlets, as well as building more shrimp wonton production plants.

CPF projects the investment will drive its sales to 160 billion baht this year despite the strong baht, as the company leveraged imports and exports and hedged the exchange rate to prevent risk.

CPF reported third-quarter net profit of 4.116 billion baht, up 50.8% from 2.728 billion year-on-year. Its nine-month net profit was 8.08 billion baht.

CPF shares closed yesterday on the Stock Exchange of Thailand at 9.70 baht, down 10 satang, in trade worth 656.2 million baht.


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