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REUTERS SUMMIT-Thailand's CP Foods aims for foreign ops to make up 75 pct of revenue

Source: Reuters - Fri, 28 Mar 2014 09:17 GMT
Author: Reuters
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(For other news from Reuters ASEAN Summit, click on http://www.reuters.com/summit/ASEAN14)

By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK, March 28 (Reuters) - Charoen Pokphand Foods PCL (CPF), Thailand's largest meat and animal-feed producer, aims to have foreign operations contribute three-quarters of revenue within five years, to meet demand in quick-growing emerging markets and offset a slowdown at home.

The Bangkok-based company is banking on rising incomes in Southeast Asia and beyond to push up demand for meat, while at home, economic growth is under threat from months of anti-government protesters alleging corruption.

CPF, the flagship unit of Charoen Pokphand Group owned by Thailand's richest man Dhanin Chearavanont, plans to expand its feed and farm businesses in regional neighbours Vietnam and the Philippines as well as in China, India and Russia.

The company wants overseas revenue to make up 75 percent of the total by 2018 from 65 percent now, Chief Executive Adirek Sripratak said at the Reuters ASEAN Summit on Friday. The company targets average overall growth at 10-15 percent annually.

"In the next five years, Asian demand for protein-rich food will increase as the emerging economies are growing, raising people's income," Adirek said at the Summit.

"Growth in emerging countries will surpass that of the domestic market. We have seen strong growth potential and that's why we have been aggressive in foreign investments in recent decades."

CPF, which aspires to be the kitchen of the world, has been present in Vietnam, the Philippines and Malaysia for more than 20 years, as well as in China, India, Russia and Turkey.

In Thailand, political unrest has dragged down consumption and slowed growth, but any impact on CPF's growth will be cushioned by foreign operations, Adirek said.

Domestic sales growth is likely to average 7 to 8 percent over the next five years compared with 15 percent abroad, he said.

CPF, which is also the world's biggest shrimp farmer, plans to raise capacity at its feed, farm and food businesses over the next four years by investing at least 50 billion baht ($1.6 billion), more than 60 percent of which will go into its foreign business.

That budget excludes funds for acquisitions though the company is looking for overseas buying opportunities, Adirek said. CPF considered bidding for the U.S.'s Smithfield Foods Inc , sold last year to a Chinese company for $4.7 billion.

Acquisitions and other forms of expansion have increased debt, which the company intends to pay off by selling non-core assets, Adirek said.

CPF could reduce its 74 percent stake in Hong Kong-listed C.P. Pokphand Co to as far as 51 percent, to cut its net debt-to-equity ratio to below 1 over the next three years from 1.26 at the end of last year, Adirek said.

The ratio measures liabilities against the value of outstanding shares.

Net profit hit a decade low of 7 billion baht last year due to increased costs, weakened meat prices and the impact of a shrimp disease on its farm business.

Operations will turn around this year as prices for swine and broiler have risen and prices of corn feed have fallen, while the supply of shrimp will approach pre-disease levels around the second half of the year, the company said.

Shares of CPF, valued at $6.7 billion, have fallen 13 percent in the past three months, compared with a 4 percent rise in the broader market.

Follow Reuters Summits on Twitter @Reuters_Summits ($1 = 32.5700 Thai Baht) (Editing by Christopher Cushing)

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