CPF foresees 5-10% sales growth next year

       Charoen Pokphand Foods (CPF) forecasts its sales will grow by 5-10% next year with operating profits stabilising in light of a business restructuring to focus more on ready-to-eat food and animal feed.
       "We are still upbeat about maintaining the growth momentum next year, with sales growth of about 5-10%on par with this year's growth," said Adirek Sripratak, president and CEO of the SET-listed flagship of Charoen Pokphand Group (CP), the country's agribusiness conglomerate.
       "We also project more stabilised profit in the year to come, as we have restructured our business model from heavily depending on commodities, particularly meat for which prices are volatile, to [ready-to-eat] food and animal feeds and CP brand development."
       He said CPF expected a record profit this year as overseas sales and ready-to-eat food under the CP brand increase and raw material costs have been lower than last year.
       Performance has also been helped by aggressive distribution unit expansion, mainly through CP Fresh Mart and Five Star Chicken.
       Currently, there are more than 500 CP Fresh Mart outlets operating, with the figure expected to expand to at least 2,000 in the future.
       CPF's sales are projected to expand by 5% to 10% this year from 156.23 billion baht in 2008.
       According to Mr Adirek, the company expected profits in the third quarter would be higher than in previous quarters, with profit in the final quarter probably easing as production of aquatic business will by nature drop because of cold weather.
       CPF earned a record-high net profit in the second quarter of 3.19 billion baht, a year-on-year gain of 224% and up from 770.5 million in the first quarter.Sales for the second quarter increased nearly 4% to 40.6 billion baht. Six-month net profit rose to nearly 4 billion baht on sales of 75.4 billion.
       Mr Adirek said earlier that CPF was aiming for a net profit of about 8 billion baht this year, from 3.12 billion in 2008.
       His projection matched research by Kim Eng Securities which has recently revised up CPF's 2009 and 2010 earnings forecasts by 26% and 16% to 8.04 billion and 5.71 billion baht respectively, to reflect higher margins fuelled by low raw material costs and strong growth of the high-margin food business.
       The brokerage expects CPF's results in the third quarter should increase year-on-year and even better the second-quarter result, supported by lower costs of materials, favourable meat prices, the peak export season and the ongoing growth of overseas operations.
       Raw material prices, especially for corn in the harvest season, have slipped to around 6.30 baht a kilogramme from 10 baht in the third quarter in 2008.Domestic meat prices remain favourable at broilers and eggs remain at favourable levels of 56 baht a kilogramme for swine,41 baht/kg for broilers and 2.60 baht per egg.
       CPF shares closed down 10 satang yesterday on the Stock Exchange of Thailand at 8.70 baht, in trade worth 401.49 million baht.