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December 1, 2008

Thai feed maker cuts investment in Indonesia
With Indonesia likely to be hit hard by the impact of the global economic slowdown, PT Charoen Pokphand Indonesia, the nation's largest animal feed and processed chicken manufacturer, has decided to trim investment next year, reported the Jakarta Post.

The company has also forecast sales may decline by as much as 10 percent on lower demand and volatility in the local currency.

Newly appointed Charoen president director Thomas Effendy said Thursday the company had to shelve a plan to set up a new poultry feed plant which would have had a capacity of 30,000 tons.

The company will also slash allocations for capital expenditure next year to around 100 billion rupiah ($8.7 million) from the 274 billion rupiah allocated for this year, according to Thomas.

"The crisis has forced us to cancel our 127 billion-rupiah plant in Lampung next year. We are putting our expansion on hold because of possible low demand and fluctuations in the local currency," Thomas said.

He said the lower capital expenditure next year was driven by difficulty in obtaining loans from banks because of the tight liquidity in the banking sector.

Charoen, a local unit of Thai conglomerate Charoen Pokphand Foods, has estimated sales of 12 trillion rupiah ($1.04 billion) and net profit of 450 billion rupiah this year.

During the first nine months of this year, the company generated Rp 9.98 trillion in sales, up by 61 percent from the 6.2 trillion rupiah recorded during the same period last year.

The company managed to record a 129 percent jump in net profit from 175 billion rupiah to 401 billion rupiah.

"It's difficult, however, to see growth in sales next year, but if our sales decline it will not be by more than 10 percent," Charoen president commissioner Hadi Gunawan said after the firm's extraordinary shareholder meeting on Thursday.

Charoen produces 4 millions tons of poultry feed and 24,000 tons of processed chicken annually for the domestic market.

Because of the uncertainty in the financial sector, the company said it would look out for cheaper local products for its feedstock.

Currently, the company needs more than 1 million tons of corn and 400,000 tons of soybean every year to make its poultry feed products, which contribute 78 percent to the company's total sales.

More than 90 percent of the corn used by Charoen is grown locally, but the company still imports all its soybean from Brazil and Argentina.

"We hope we can have our entire corn supply coming from local farmers," Charoen operational director Jemmy Wijaya said.

Charoen is 55.45 percent owned by PT Central Agromina. The remaining 44.55 percent is held by the public.

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