INTERVIEW-Thai CP Foods slashes investment plans, less bullish on growth
BANGKOK, June 25 (Reuters) - Charoen Pokphand Foods Pcl , Thailand's largest agribusiness company, said it would slash its 5-year investment budget by a third to around $1.6 billion and pare back revenue targets as its foreign farms were performing below expectations.
The plans, which include a renewed focus on cutting debt, represent a less aggressive stance from CP Foods, one of several major Thai firms that has bought up overseas assets in the past few years, emboldened by record stock prices and armed with cheap loans.
"We probably invested too fast in the past," President and Chief Executive Adirek Sripratak told Reuters in an interview on Tuesday.
"Now, we have to scale down and do not need to be that aggressive."
CP Foods, which is controlled by billionaire Dhanin Chearavanont, will also cut its revenue growth target to an average of 10 percent over the next five years from its earlier goal of 10-15 percent.
The company, which is the world's biggest shrimp farmer and a top maker of animal feed, has expanded into China, Vietnam, India, the Philippines, Turkey and Russia. Its loss-making chicken operations in Turkey have underperformed expectations in particular.
"The performance of our foreign operations are not in line with what we had expected. We should have made higher profits, but an increase in raw materials prices and a downturn in the farm industry affected our operations," Adirek said.
Higher raw materials prices, lower meat prices and weakness in its foreign operations have resulted in slumping profits. CP Foods' shares have fallen 43 percent in the past 12 months, making them second worst performer among Thai big cap companies.
Recent acquisitions and other expansions in its business have pushed up its net debt to equity ratio to 1.2 times, and the company now plans to cut debt by selling off some non-core assets and unused plots of land, he said.
Of its 50 billion baht investment budget, 60 percent will be spent on foreign operations, which are expected to log average revenue growth of 10-15 percent over the next five years, compared to 5-10 percent for domestic markets.
Investments will include plans to build Asian food manufacturing plants in Europe and the United States to tap strong demand, Adirek said.
Last month, CP Foods said it also considered bidding for U.S. pork producer Smithfield Foods Inc. Chinese meat company Shuanghui International hopes to buy Smithfield for $4.7 billion in what would be the biggest takeover of a U.S. company by a Chinese firm but the deal has raised concerns from U.S. politicians.
CP Foods is the flagship firm in Dhanin's CP Group. CP Group last year agreed to buy Ping An Insurance from HSBC for $9.4 billion. ($1 = 31.05 Baht)
(Editing by Edwina Gibbs)