Charoen Pokphands Foods PCL is expecting a better financial performance in the second half of 2018 thanks to the improving performance of its aquaculture business, company co-president Sooksunt Jiumjaiswanglerg said.
Bangkok, Thailand-based CP Foods expects to hit its target of 5 to 8 percent growth this year thanks to an improved second-half performance, due in large part to a pick-up in its swine and aquaculture businesses, Sooksunt said in a CPF press release.
Sooksunt said he expects the company’s Thai shrimp business to regain momentum as a result of higher prices and by a new company focus on producing better-quality and larger-sized shrimp. And CP Foods will look toward building its overseas operations and sales to feed growing international demand – especially in the ASEAN market – to achieve growth in the future, Sooksunt said.
"CPF’s direction will focus on export sales expansion. The company’s foreign operations are going to shift from mainly domestic consumption to more exports. So far, its production already [reaches] more than 30 countries around the world, and [we will] expand the production to increase export sales,” Sooksunt said. “The company believe this strategic decision will help us to reach our target growth.”
The ratio of sales from CP Foods’ overseas operations will shift from 68:32 in 2018 to 70:30 in the next five years, the company said. The company is especially looking toward growth in Vietnam and India as it aims for this new goal, it said in the release.
Sujint Thammasart, the chief operating officer of CP Foods’ aquaculture division, said the company’s new “three-cleaning approach” has successfully curbed the spread of early mortality syndrome (EMS) at its shrimp farms. The new system can potentially double the company’s production of shrimp, Sujint said.
“EMS outbreaks [are] no longer a concern due to the successful breeding program and farming technique development,” he said in a press release.
CP Foods Senior Vice President Robins McIntosh said the company’s EMS failure rate has dropped from over 40 percent to 0.1 percent, primarily through imposition of the “three-cleaning approach,” which ensures the cleanliness of baby shrimp, the shrimp ponds, and the water used in farming.
In addition, the company has developed an advanced breeding program that selects the strongest and fastest-growing shrimp to improve its broodstocks.
“The company has made countless [efforts in its] breeding program to find strong and fast-growing shrimps,” McIntosh said.
In large part due to diseases such as EMS, but also due to recent low prices for shrimp, Thailand’s position in the global shrimp market has weakened in recent years. This year, that trend has continued. Thailand’s year-on-year export volume to the U.S. dropped by 42 percent in June, and its exports to the European Union market also has declined Thai shrimp was moved out of the E.U.’s Generalized System of Preferences in 2015.
With these changes both in the global market and in the company’s focus, the main challenge facing CP Foods now is to control the cost of its production, as Thailand is “losing key customers to major competitors like India and Vietnam because higher cost of operation,” Sujint said.
Echoing Sooksunt’s comments, Sujint said the company is repositioning itself so to concentrate its Thai production on higher quality, larger shrimp, while moving its foreign production into a focus on the mass market.
“[Our] Thai operation will be a base for premium shrimp while India and Vietnam’s operation will be the company base for mass shrimp products,” he said.
