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December 21, 2008

Thai food giant sees weak 2009 sales on slowing demand
Charoen Pokphand Foods (CPF), Thailand's largest chicken exporter, said on Saturday its 2009 sales might grow merely 5.0 percent or just flat from a forecast 150 billion baht ($4.3 billion) for 2008, reported Reuters.

The firm aimed for a net profit growth next year because falling oil prices helped lower costs of raw materials and transportation, chief executive Adirek Sripratak said during a visit to its plants along Thailand's eastern seaboard.

"Sales for next year may be just flat from a 150 billion baht that we forecast for this year or a growth of just five percent. An ongoing economic crisis will continue to hurt purchasing power," Adirek told reporters.

"We should end this year with a good net profit growth and we are hopeful for further growth next year," he said.

Its recent upgrades on machinery would further cut production costs next year and net profit margin for the year was expected to be around 3 percent, which was close to this year's, he said.

Adirek gave no details on his earnings forecasts. Nine analysts polled by Reuters Estimates expect a 5.9 percent rise in 2009 sales to 161.5 billion baht and about 1 percent increase in 2009 net profit to 3.37 billion baht.

CPF reported a consolidated net profit of 2.82 billion baht in the first nine months of 2008. Domestic sales contribute 60-65 percent of its revenues, exports makes up 16-18 percent and revenues from overseas attribute 16-18 percent, Adirek said.

Domestic sales would weaken next year, exports would expand about 10 percent on growing markets such as Japan and earnings contributions from overseas businesses would be higher, he said.

CPF operates a chicken business in Turkey, aquaculture businesses in Malaysia and India and a feedstock business in Russia.

It planned to spend more than two billion baht each over the next two years on investment, about half of its normal annual spending of 5.0 billion baht, Adirek said.

It would focus on expanding its food processing business, increasing distribution channels, building product brands and investing in growing overseas markets such as Russia, he said.

It would fund its planned investment by cash and would delay a planned bond issue worth 3.0 billion baht to next year due to an unfavourable market condition, he said.

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