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CPF continues to invest in the foreign lands. The latest move is the investment on feed mill and launch of integrated swine business in the Russian Federation. With great potential for growth, the production is aimed to satisfy the huge local demand and future export.Mr. Adirek Sripratak, President and CEO, Charoen Pokphand Foods PLC or CPF, disclosed that the company’s feed mill and integrated swine business run by the Charoen Pokphand Foods (Overseas) Co., Ltd., in Lukhovitsy County, Moscow, Russian Federation, with a registered capital of 900 million ruble (1 ruble = 1.1 baht), was officially launched at the end of last month under the grand opening ceremony. Mr. Dhanin Chearavanont, Chairman and CEO of Charoen Pokphand (CP) Group, together with honorable guests, including H/E Mr. Tigran Karahanov, Minister of Foreign Economic Relations of the Moscow Region, H/E Mr. Yevgeny V. Afanasiev, Russian Ambassador to Thailand and H/E Mr. Suphot Dhirakaosal, Thai Ambassador to the Russian Federation, attended the opening ceremony.
“The foreign investment under this project is crucial to CPF. Russia is the country of modern technology, with the ideal location and capable population, particularly with good support from the government. CPF pioneers Thai investment in agro-industry and food in Russia, with the investment of 3,500 million baht (US$ 100 million). New feed mill in Russia is one of the most advanced among feed mills of CPF and the biggest in Russia. The company’s feed mill mainly produce feed for swine, chicken and cow at the capacity of approximately 240,000 tons per annum. Also, food safety standard and quality is at the international level and traceability system is applied on every step of production.” Mr. Adirek said.
Swine Farm to Satisfy Consumption Demand
Apart from the feed mill, the company has planned that within five years, it can produce one million pigs per year. Under the first phase of the plan, two swine farms are under construction. The first farm is GGP (Great Grand Parents) and GP (Grand Parents) farm with the production capacity of 2,400 sows. The second farm is the pig farms with the capacity of 18,000 pigs.
“Russians are keen on meat consumption. The demand for pork is currently 2.75 million tons per year while the local annual production capacity is only 2 million tons. Therefore the country needs to import 750,000 tons of pork per annum. The investment of CPF on the feed mill and integrated swine business establishment offers good opportunity for the company to produce the products at the lower cost to substitute the import. Also, the company is able to expand the investment into other meat processing business. After the success in Russia, the next target is Ukraine and Eastern European region.”
The investment in Russia is the important step for CPF. According to Mr. Dhanin Chearavanont, the company has continuously applied the principle of “Three Benefits” to every countries CP invests - namely benefit to the nation, the people and to the company.
More Profit and Dividend Anticipated
Regarding CPF performance this year, Mr. Adirek Sripratak said that food industry still has opportunity despite the economic crisis. Better performance for 2009 against last year is anticipated as the management is confident that the company is on the right direction and strategy. The projected increase of sale volume had been revised to 10 % for this year based on the company’s strong fundamentals, investment on marketing and CP branding, foreign investment expansion and the smooth flow of shrimp and chicken export. The management is confident that shareholders will be entitled to the greater dividend compare to 2008.
“The company has policy to adjust business model towards food business. During the last 4 years, the business structure has been extended from the animal feed and animal farming into ready-to-eat food products under CP brand with the commitment on food safety, hygienic production process and good taste. So far, CPF has exported food products under CP brand to more than 20 countries worldwide, of which has been well recognized by the consumers under CP brand. This can be reflected by the dynamic growth of export. The export growth rate of shrimp dumpling last year, for example, is 100% and the 100% growth this year is also anticipated,” Mr. Adirek said.
In addition to domestic market share maintenance, CPF is looking forward to the increase of export for both the existing and new markets. At present, the company exports processed chicken, shrimp, and food products to more than 40 countries worldwide with ample room for expansion in each country.
Priority on Effective Management, and Cost Control on every step
On the production expansion, CPF has invested on the factories, animal farms or processing plants in 8 countries including Turkey, Malaysia, Laos, the Philippines, UK, China, India and the latest —Russia. All the investment projects were carefully studied and executed. Further expansion is possible only after the success from the earlier project, in which India and Russia have great potential for future expansion.
Bright Future for CPF
The cost of production in 2009, especially on the raw materials i.e. maize, soybean meal, is expected to be 10-15 % lower than the 2008 on average for the whole year. The price may fluctuate as per season but the fluctuation should not be as severe like last year, where the price was much higher than the normal level in relevant to the world oil price level. The price of meat is also expected to return to the normal level. The export price meanwhile remains at the good level especially ready-to-eat food products under CP brand. Therefore, the profitability of the company should return to normal condition.
In the future, CPF is looking forward to emphasizing on quality, effectiveness, cost, and food safety to increase the competitive edge for the world market. Due to the fact that there being several uncontrollable outside factors, the company has committed to the continuous development of management effectiveness so that we have strong fundamental, effective working system, up-to-date monitoring system, and most importantly, expert and decent staff members for the organization.
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