Charoen Pokphand Foods (CPF) generated 6.111 billion baht (approximately US $190 million) in net profit during the first quarter of 2020, a 43% increase from the January-March period in 2019. The Bangkok, Thailand-headquartered company reported the jump was due chiefly to the spread of African Swine Fever (ASF) in Asia, which caused a significant shortage in pork supplies and the near doubling of prices in Vietnam and elsewhere.
“This could be our best year,” said CEO Prasit Boondoungprasert. “Pork prices are very good and chicken prices are recovering, and an easing of lockdown measures [imposed by governments to suppress novel coronavirus infections] will allow restaurants to open.”
The agro-industrial and food conglomerate, which operates in 17 countries and exports products to more than 30 countries around the world, rang up Bt 138,135 million in sales during Q1, up by 10% from the corresponding period last year. Receipts realized in foreign markets, which contributed 68% of total revenue, increased by 12%, while sales in Thailand advanced 6%.
The ASF outbreak last year led to a significant decline in Vietnam’s domesticated pig population, which pushed up average pork prices there as well as in Cambodia. Meanwhile, as expansion targets were met in other countries, CPF began to benefit from a revenue stream contributed by Hylife Co., Ltd, a pork business operator in Canada acquired last year.
The company aims to invest approximately 20 billion baht this year to expand its pork business in Canada and the USA, with the idea of boosting pork exports from North America to China, which has been forced to cull millions of hogs over the past two years due to African swine fever.
Mild Impact on Business from Covid-19
Prasit said that while the Covid-19 pandemic led to the economic slowdowns and lower purchasing power, CPF’s businesses witnessed only a mild impact as its products are essential for everyday consumption. The company has succeeded in upholding its mission in delivering quality and safe products while ensuring no stoppage in production and work process that may cause food shortages.
Maximum safety measures have been enacted to cope with the novel coronavirus outbreak, while employees are assured of timely health care. CPF also initiated a social program by supplying food to 200 public hospitals under the Public Health Ministry, the families of 20,000 medical personnel, and 20,000 people returning from overseas to self-quarantine. In addition, it recently distributed more than a million CP Freshmart special discount coupons to medical care volunteers actively combating the pandemic, while delivering 25 batches of food to slums in the Greater Bangkok area and provinces in cooperation with the Agriculture Ministry.
CPF has continually emphasized safe production practices to ensure quality products for consumers, and adjusted marketing channels accordingly to changing behaviors. As its business plan has been reviewed in response to the Covid-19 outbreak, operating results for 2020 are forecast to exceed figures posted in 2019 as gross margins are expected to be about 18%.
Prasit says the company is on track to maintain its 2023 revenue target of 800 billion baht, growing up to 10% each year with operations outside of Thailand contributing 75% of receipts from current levels of roughly 68%.
