CPF seeks more foreign M&As

However, Adirek Sripratak, president and chief executive officer, did not provide details on where it would make its new investments. He said the company’s business expansion was based on three key principles: focusing feed and agricultural products on developing countries, focusing food-processing plants on regions with economic growth, and M&As.
Adirek said CPF’s growth driver would mainly come from overseas operations in the future. It has invested in countries with high growth potential in agricultural-industry and food businesses, especially China, Vietnam, India, Russia and the Philippines. In Thailand, shrimp and other food export businesses are the main growth drivers. However, CPF’s expansion plan also includes M&As, and the company is looking at many investment opportunities.
A CPF executive who recently visited the United States for a market survey hinted that there were big business opportunities there, particularly in retail. However, the company has not made any decision on what kind of investment it should make there.
These business strategies were unveiled yesterday after the company reported that its net profit had skyrocketed by 229 per cent to Bt12.11 billion in the first quarter of this year over the same period in 2011. This significant growth coincided with its acquisition of CPP, a listed company on the Hong Kong stock exchange, the deal on which was closed in the first quarter. CPF management believes that the government understands the problem of Thai commodity prices and that farm-product prices have hit rock-bottom.
The CPP takeover resulted in an Bt8.67-million gain in fair value of investment in CP Vietnam Corporation, of which CPF held 29 per cent before its acquisition of CPP, which held the remaining 71 per cent.
As for the consolidated sales of CPF and its subsidiaries, the company reported first-quarter consolidated sales of Bt73.48 billion, an increase of 61 per cent from last year. Sales growth for Thailand operations was 11 per cent and overseas sales growth 205 per cent.
The acquisition of CPP also changed the consolidated sales structure of CPF by reducing the sales proportion of Thailand operations from 74 per cent to 51 per cent while increasing the overseas contribution from 26 per cent to 49 per cent.
CPF held about 74 per cent of CPP after the transaction was completed. CPP operates agricultural and agricultural-industry businesses in China and Vietnam, where CPF foresees high growth opportunities in agribusiness.
CPP reported net profit of US$49 million (Bt1.52 billion) in the first quarter, an increase of 58 per cent year on year.