CPF Looks Overseas As Thai Production Drops To 80%

THAILAND - Charoen Pokphand Foods (CPF), the SET-listed flagship of the CP Group, forecasts its sales will drop throughout the first half of this year mainly due to diminishing domestic demand for meat due to ongoing economic worries.
calendar icon 24 April 2007
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"It was clear that our sales in the first quarter would be slow, and we could not see any positive signs for the next quarter. But we still hope that circumstances would improve after the second half," said Teerasak Urunanon, CPF's executive vice-president.

The company said it might revise down its sales target for this year to between 130 billion and 140 billion baht from the previous target of 150 billion baht due to the sluggish economy.

Chicken, pork and egg prices have declined since the end of last year because of an oversupply in domestic market, Mr Teerasak said.

"Domestic demand for some products such as chicken meat is dropping faster than the industry's capacity utilisation is slowing down," he said. "Therefore, the situation is worse than it should be."

In addition, energy costs, the company's main expense, have climbed steadily, resulting in poor margins. This is despite the fact that its eight-billion-baht integrated poultry complex in Nakhon Ratchasima is among the world's most efficient.

Overall poultry production is slated to drop by 50% this year due to the weak economy, but domestic production is now running at 80% of total capacity.

Source: Bangkokpost
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