For Thailand-based Charoen Pokphand Foods (CP Foods), improvements in financial performance over the past quarter represent a recovery in the multinational agri-food group’s businesses.
For CP Foods, 2023 was a challenging year for the business, according to CEO Prasit Boondoungprasert. However, he said, the results for the second quarter of 2024 and for the half-year demonstrate that the company’s business has returned to normal, and performance surpassed expectations.
While costs of production and meat output soared last year, he said that the company had been able to control costs in recent months, and to make affordable foods available on the market. These goals have been achieved as a result of careful monitoring of the market and consumer behavior, and efficiency gains across the business.
Second-quarter results surpass expectations
For the three months, CP Foods reports net profit of almost 6.93 billion Thai baht (THB; US$202.7 million). This was attributed particularly to the group’s international businesses, and resulted in a near 10-fold increase for this metric compared with the same period of 2023, when a net loss of THB793 million was reported.
Of the total sales revenue for the latest quarter of just under THB150 billion, 64% derived from the group’s overseas businesses, and 36% from its Thai operations (comprising 30% domestic sales, and 6% exports).
Gross profit margin reported for the period of around 15% was driven mainly by lower animal production costs — particularly for raw materials — according to the company. Also supporting the trend were improvements in cost management and production efficiency, and higher prices for pig meat. The latter development applied especially in Cambodia and Vietnam, and resulted from a new balance in pork markets, as well as to the African swine fever epidemic.
From CP Foods’ associate enterprises and joint ventures, profit for the period was up by more than a factor of four from the comparable quarter at THB3.35 billion. Underlying this improvement were positive developments in the company’s pig and animal feed businesses — including higher pork prices year-on-year — in the People’s Republic of China, according to the company.
Half-year results: sales dip but profits higher in 2024
Among the headline figures in the results for the half-year (to June 30, 2024) was a 2% year-on-year drop in sales revenue to THB289.5 billion. This was attributed by CP Foods to the restructuring of its business in Poland, and the divestment of integrated broiler farms in China.
However, the group reports significant improvements for the six months in terms of profitability. From 10.2% for the first half of 2023, gross profit margin increased to 13.8% so far this year. For CP Foods, this was attributable to a combination of higher pork prices in Vietnam and Cambodia, and a widespread reduction in farm production costs.
At almost THB8.08 billion for the first half of 2024, net profit had improved from a negative figure of THB3.52 billion at the same point last year.
For all four of the company’s main business sectors, gross profit margin was reported higher for the first half of 2024 than in 2023.
Contributing the most to total revenue for the half-year (THB289.5 billion) was the “Overseas-Livestock” business. It achieved 3% year-on-year increase in sales to THB159.8 billion. Sales for “Thailand-Livestock” were reported at THB94.0 billion, “Overseas-Aqua” at THB22.9 billion, and “Thai-Aqua” at almost THB12.9 billion. These figures represented year-on-year reductions of 4%, 11%, and 12%, respectively.
By product category, “Farm” generated almost THB160.1 billion in CP Foods’ sales revenue for the half-year, “Feed” THB66.47 billion, and “Food” THB63.0 billion. While the figures for “Farm” and “Food” were hardly changed from the same period in 2023, feed sales were down 8%, likely as a result of lower feed ingredient prices.
More of CP Foods
Annual slaughtering of around 685 million birds puts CP Group well within the top 20 largest poultry companies in the world, according to WATTPoultry.com’s Top Poultry Companies survey. Producing ducks, table eggs (from 22 million hens), and egg products as well as chickens, the Thailand-based company is the third largest poultry meat company in Asia.
For the latest full financial year (2023), CP Foods reported net sales of THB585.8 billion, which was 5% lower than for the previous 12 months. At around THB47.6 billion, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for 2023 was down 28% year-on-year, and EBITDA margin dropped 2.7 percentage points to 8.1%. Since the lows recorded in the fourth quarter of 2023, quarterly profit margins have improved significantly for the company’s livestock and aquaculture businesses, both in Thailand and for its international interests.
Earlier this year, CP Foods welcomed the Thai government’s announcement of measures to ease imports of soy into Thailand.
To support the Bangkok city authority’s strategy on environmental improvement, CPF was reported to be transforming vacant plots in the capital city into green spaces for recreation and learning.
In May this year, CP Foods secured five prestigious regional honors at the 2024 Asian Excellence Awards.
