Exports and offshore investment boosts CPF turnover

Charoen Pokphand Foods (Plc) projects net profit of over 12 billion baht on turnover of 180 billion baht this year while sustaining growth at 10% over the next five years, according to Adirek Sripratak, president and CEO.

Growth in the domestic market is only 7% whereas revenue from offshore investments has grown 91% y-o-y.
CPF has investments in 10 countries. By 2015, offshore revenues will contribute 40%, exports 20%, and domestic sales 40% of CPF annual turnover, said Mr Adirek.

Sales in the first half of 2010 was 91 billion baht, up 21% y-o-y, and net profit 7.27 billion baht, up 82% y-o-y. The growth in net profit was partially contributed by income distribution from affiliates such as CP Vietnam, and CP All Plc, the operator of 7-Eleven convenience stores. Profits from affiliated companies amounted to 1.265 billion baht, up almost 100% y-o-y.

Operating performance in the first half of 2010 was better than expectations. This was attributed to higher food product sales and surging offshore income. Overseas investment and exports now account for 27% of its total revenues. Sales in India grew 65% y-o-y, Malaysia 27%, and Turkey 22%.

It is penetrating further into the local market with Five-Star chicken outlets, and chicken rice kiosks which in 2010 now number over 4,000 units countrywide. It is set to add some 600 CP Freshmart outlets to distribute products direct to customers. Its livestock and feed business has grown 7% and aquaculture is up 10% y-o-y. It has maintained gross margin of 18.9%, up from 17.2% in 2008.

CPF will export around 90,000 tonnes of cooked poultry meat, up 10% y-o-y. Exports to Japan are increasing while exports to Europe have been lackluster so far due to the quota system where Thai exports are capped at 160,033 tonnes and taxed at 8%. Exports above the quota are subject to a tariff of 1,024 euros/tonne.

According to an industry source, the average price of cooked poultry meat from Thailand is US$4,000/tonne and the quota is trading at US$200-400/tonne.