CPF scouting for more overseas M&As

CPF president and chief executive officer Adirek Sripratak said in an exclusive interview with The Nation that M&A offered a short-cut growth strategy.
“The global economic sluggishness has offered more opportunities for acquisitions,” he said.
In July, the CPF board approved the company’s wholly owned CPF Netherlands to acquire an integrated poultry business in Russia from Agro-Invest Brinky. CPF already has a livestock feed and swine-farming business in Russia.
The acquisition deal with Agro-Invest will be completed in two transactions. In the first transaction, CPF Netherlands will acquire all of the shares of a new Russian company to be set up by Agro by August 31, 2018.
Before the completion of the first acquisition, the Russian company will acquire 80 per cent of the shares of CJSC Poultry Parent Stock Production Woyskovitsy and of CJSC Poultry Production Severnaya. Woyskovitsy and Severnaya run an integrated poultry business in Russia.
The first acquisition is expected to be completed before the end of this year.
In the second transaction, CPF Netherlands will acquire the remaining 20 per cent of Woyskovitsy and Severnaya. The second acquisition is expected to be completed on August 31, 2018.
Adirek declined to comment on a rumour that CPF is in a deal to take over another Russian company.
CPF has been Thailand’s leading integrated agro-industrial and food company for years.
Adirek said that the other two growth strategies lay with value-added products in the supply chain and geographical business expansion.
He believed that throughout the feed to food supply chain, the value of all products could be enhanced.
Overseas expansion helped the company gain more footprints in countries, including Asean countries, Turkey and Tanzania.
“It is the geographical growth that has been strengthening it [the company] for over 30 years,” he said.
“In the current economic condi-tion, all the three growth strategies |are working satisfactorily. The food business will thrive as we all have to eat.”
CPF has long focused on investing and selling most products in markets where it has a presence because it is not hit with non-tariff export barriers.
“Our strategy is to focus on producing domestically and selling domestically. But we also export if we have a chance,” Adirek said.
Of the US$2 billion (Bt71.4 billion) annual revenue generated by its operations in Vietnam, 95 per cent was reaped from domestic sales.
CPF has expanded its empire into several countries in Asean, with its global footprint found in 14 countries that are home to 3 billion people.
Its overseas expansion has led to growth in its total revenue but a decline in revenue share from its business in Thailand.
In the third quarter, of the company’s total Bt111.9 billion revenue, 67 per cent was derived from international operations and exports from Thailand while only 33 per cent was reaped from domestic sales.
In 2014, revenue from international operations was 59 per cent.
The total sales revenue generated from the Thailand operations for 2014 totalled Bt175.3 billion, a 7-per-cent increase over the previous year. Sales revenue from international operations for 2014 totalled Bt250.8 billion, a 111-per-cent increase year on year.
Adirek is confident that CPF can maintain its revenue growth at an average of 10 per cent annual-|ly over the next 3-5 years by capitalising on its three growth strategies |and solid operations in overseas countries.
CPF’s revenue has grown by no less than 10 per cent annually over the past 20 years.
In 2014, revenue and earnings rose 9 per cent and 49 per cent respectively year on year.
In the first nine months of this year, CPF generated Bt325.8 billion in revenue against full-year revenue of Bt438.4 billion in 2014. Its nine-month earnings totalled Bt9.5 billion, against a full-year amount of Bt10.56 billion in 2014.