Charoen Pokphand Foods (CPF) reported earnings of THB6.06 billion (US$200 million) in the third quarter, an increase by 23% from the same period last year.
The earnings increased despite lower sales revenue. In the quarter, sales revenue totaled THB132.6 billion (US$4.39 billion), declining 6% on quarter. Excluding impacts from the strengthening of the Thai baht as well as the adjustment of financial reporting standards (TFRS), sale revenue would have increased by 8% on year.
Prasit Boondoungprasert, CEO of CPF, attributed a drop in sales revenue to the stronger baht as well as changes in TFRS. In the quarter, overseas businesses contributed 67% of total sale revenue. The rest was contributed by the operations in Thailand, 27%; and exports from Thailand, 6%. CPF maintains the strategy to further expand businesses in potential markets and targets to raise overseas sales as well as exports to 80% of total sale revenue in the next 5 years.
In the third quarter, the net profit surged 23% on year, thanks mainly to a recovery in the swine industry following a glut that pressured down pork prices, the company stated in a press release. The net profit was also driven by the better financial results of overseas aquaculture business as well as investment divestiture.
Impact of African swine fever
The African swine fever (ASF) outbreak in several countries leads to an expected decrease in global pork output and pork prices have consequently moved up. Such conditions may last years, CPF believes, as affected farmers may not be able to replenish their herds in a short period.
Furthermore, CPF expects such farmers to invest more money effective biosafety management systems to prevent another outbreak.
According to CPF, pork prices in Vietnam have hit 57,000-60,000 dong per kilogram, or about THB75-78, above the third-quarter average price of VND38,422 or THB50 per kilogram. Farm pigs now fetch about CNY28-38 per kilogram in China or approximately THB121-164, above the third-quarter average of CNY22 or about THB95.
Prasit is confident that CPF will meet financial targets in 2019, as earnings in the fourth quarter is expected to improve in line with an increase in pig prices. The annualized earnings in 2020 are also expected to further increase as a result of the strategy to add value of existing businesses as well as an improvement in economic conditions.
