March 19, 2015 / 9:21 AM / 5 years ago

UPDATE 1-Thailand CP Foods to invest up to $763 mln in 2015 as it expands abroad

* Aims to spend up to 25 bln baht a year over next five years

* To spin off non core assets of Hong Kong-listed unit

* Sales from overseas markets to rise 15 pct, higher than domestic

* Expects shrimp and farm business to recover in Q2 (Adds comments on overseas, chicken, shrimp businesses)

By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK, March 19 (Reuters) - Charoen Pokphand Foods PCL , Thailand’s largest meat and animal feed producer, plans to spend 20-25 billion baht ($611-763 million) this year, mostly on overseas expansion and acquisitions.

CP Foods will keep its annual investment budget at that level over the next five years, Chief Executive Adirek Sripratak said in an interview on Thursday.

The company has set an annual sales growth target of 10 percent. Two-third of its revenue comes from overseas markets, where CP Foods is aiming for revenue growth of 15 percent. The company has focused on high-growth markets in Japan, Russia, South Korea and the Philippines, Adirek said.

The flagship unit of Charoen Pokphand Group, controlled by Thailand’s richest man Dhanin Chearavanont, is one of a handful of Thai conglomerates that have grown more aggressive in overseas expansion after months of political unrest last year led to softer domestic demand.

Adirek warned that domestic consumption remains weak as high household debt means consumers are more cautious about spending. But he is more concerned about the general state of the Thai economy.

“What I’m worried most is the country’s economy. The impact from demand/supply is short term,” he said.

CP Foods is also dropping non-core operations to bolster its balance sheet. The company plans to spin off the non-core assets of its Hong Kong-listed C.P. Pokphand Co, and put the new entity on the Hong Kong stock exchange sometime in the middle of the year, Adirek said.

C.P. Pokphand has animal feed and farm businesses in China and Vietnam.

CP Foods, the world’s biggest shrimp farmer, expects its shrimp business to recover in the second quarter of this year after being hit by the Early Mortality Syndrome (EMS) disease for more than two years.

“The situation of the EMS disease should recover during summer in the second quarter. As the weather is hotter, the rate of survival for baby shrimp will be higher,” Adirek said.

The shrimp business has also been dented by higher European Union tariffs on Thai frozen shrimp. CP Foods will shift its focus to customers in China and Australia, while its unit in Vietnam will export to Europe, Adirek said.

CP Foods’ farm business has also been affected by price volatility. At home, meat prices have fallen since the fourth quarter due to excess in supply as its rivals ramp up chicken production, he said.

The farm business, which accounts for 35 percent of sales, should recover in the second quarter, he said. ($1 = 32.75 Baht) (Editing by Ryan Woo)

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