CPF Boosts 2011 International Investment Budget

The SET-listed flagship of the agribusiness and food conglomerate, CP Group, has set its 2011 investment budget at six billion baht (THB), of which THB4 billion would finance its farms and farm-related businesses in several developing markets, especially India, Russia and Turkey, where demand for meat remains strong and market potential is high.

Bangkok Post reports that the budget represents a 20 per cent increase from the THB5 billion earmarked for 2010, of which domestic and overseas operations shared an equal amount.

"Every country that CPF has invested in still has much room for growth for the animal farming business due to their large populations and low per-capita meat consumption," said CPF president and chief executive, Adirek Sripratak.

"The offshore investments have contributed substantial revenue to the company this year and it would continue to play a significant role in our next year's performance."

CPF said its total sales in the first nine months of the year were THB141.76 billion, an increase of 19 per cent from a year earlier. Net profit rose 42 per cent year-on-year to THB11.51 billion. Sales from overseas operations increased to 27 per cent of total sales, while revenue from exports accounted for 13 per cent. The remaining 60 per cent came from domestic sales.

Mr Adirek expects sales revenue will be THB185 billion to THB190 billion by the end of this year, up from THB165 billion in 2009, thanks to not only strong results of its overseas operations but also high meat prices, especially of shrimp products.

Shrimp prices have increased 30 per cent this year and are expected to remain high over the last quarter due to falling supply from Indonesia, Mexico and Brazil following a viral outbreak. Natural disasters in Viet Nam and China should also lift the demand and prices of shrimp by 10 to 15 per cent in the first quarter of next year, said Pisit Ohmpornnuwat, executive vice-president.

CPF has benefited from these circumstances as shrimp exports this year are expected to reach 52,000 tonnes, up from 34,000 tonnes last year. Its main markets are the European Union (35 per cent), Japan (30 per cent) and the United States (15 to 20 per cent), with the rest in Asia, according to Bangkok Post.

The company's flagship shrimp-based product, shrimp wonton soup, has reported strong sales and would help raise the total shipments next year to reach 75,000 tonnes when the menu is sold at 500 outlets of Wal-Mart in the US.

The 2011 investments should help push up sales by five to 10 per cent next year despite risks from the strong baht and high commodity prices.

However, the company has hedged its currency exchange at THB30 to THB31 for two months and placed advance orders for maize and soybean meal in quantities that would last it to mid-2011.