CPF cashes in on swine fever, chickens
Lockdown measures helped performance
Charoen Pokphand Foods (CPF) expects its best performance ever this year, driven by a pork supply shortage and hardly any impact from the coronavirus pandemic, thanks to diversified overseas investments.
Prasit Boondoungprasert, chief executive of CPF, the SET-listed flagship of agribusiness and food conglomerate CP Group, said the company is upbeat that revenue will grow by more than 10% this year from 554 billion baht in 2019.
"This year's sales may be the company's best, driven by swine business because of the spread of African swine fever [ASF], which resulted in a significant decline in the number of swine in China, Vietnam, Cambodia and Laos," Mr Prasit said.
"Chicken demand in restaurants is also surging from the lockdown measures taken by several countries to curb the virus."
ASF is estimated to cause a decrease of about 200 million pigs in China and 20 million pigs in Vietnam as well as in nearby countries like Cambodia and Laos.
The company set a target to grow its business by an average of 8-10% during 2019-23, with revenue to reach 800 billion in 2023. Revenue from international operations is set to make up for 75% of the total by 2023 from 68% this year.
In the first quarter this year, the company posted a net profit of 6.11 billion baht, a rise of 43% from the same quarter last year. The increase was attributed to higher revenue from sales and a larger profit margin.
Revenue from sales in the first quarter totalled 138 billion baht, an increase of 10% year-on-year as a result of a 12% uptick in sales from international operations and 6% gain in Thai operations.
The improved performance was mainly attributed to the farm business, especially in Vietnam.
The company fetched 93.8 billion baht in sales revenue from international operations in the first quarter, up from 83.4 billion year-on-year.
Thai operations contributed 44.3 billion baht, up from 41.9 billion year-on-year, with domestic sales representing 37.5 billion, a gain of 8% year-on-year.
Export sales totalled 6.83 billion baht, down 2% from the first quarter of last year.
CPF operates in 17 countries and exports products to more than 30 countries in support of the "Kitchen of the World" vision.
Mr Prasit said CPF faced little impact from the viral outbreak, attributed to having a well-prepared food safety system and strong overseas business expansions.
Only its investment in India felt the pinch from the virus due to lockdown measures.
Nonetheless, in light of the pandemic, the company has capped investment this year at 20 billion baht, down from the usual 25 billion a year.
He said this year's investment will focus mainly on the improvement of digital systems and food delivery by motorcycles.
The company is keeping an eye on potential investments in Canada, where CPF has already formed a joint venture with Hylife, the second biggest pork operator in Canada and the US, as well as expanding existing businesses in Vietnam.
CPF shares closed yesterday on the Stock Exchange of Thailand at 28.75 baht, up 50 satang, in heavy trade worth 1.68 billion baht.