Thailand’s largest meat and animal feed business, Charoen Pokphand Foods Plc plans to invest between $611 and $763 million in 2015 on foreign expansion and acquisitions. Two thirds of the company’s revenue currently comes from foreign markets, and the group aims to increase these revenues by 15% with focus on the high-growth markets of Russia, South Korea, Japan, and the Philippines.
After long periods of political unrest in Thailand last year, household debt is high, leading consumers to be more cautious. As a result, CP Foods is one of a group of Thai conglomerates looking to foreign markets for growth and expansion as demand softens domestically.
CP Foods is also planning to divest its non-core operations, and will spin off its non-core asset of CP Pokphand Co., listing the new entity on the Hong Kong exchange in mid-2015.
Both CP’s food and farming businesses have been hit by volatility. The group, the world’s biggest shrimp farmer, expects its shrimp business to recover in the second quarter of 2015 after dealing with the effects of Early Mortality Syndrome (EMS) for the past two years, and an increase in EU tariffs on frozen Thai shrimp. The group plans to shift its focus to the Chinese and Australian markets, while its unit in Vietnam meets European demand.
CP’s farming unit, which accounts for 35% of sales has also been hit by volatility as domestic meat prices have been falling since the fourth quarter because of oversupply. The group forecasts its farming unit sales recovering during the second quarter of this year.
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