Charoen Pokphand Foods PLC (CP Foods) targets at least 10% revenue growth in 2022 despite a perfect storm that severely hits the global economy.
Prasit Boondoungprasert, Chief Executive Officer of CP Foods, said that the growth would be fueled by food business expansion in response to growing global demand. CP Foods witnessed a 16% growth in the first quarter of this year, thanks to an increase in sale volume and prices following shortages.
The rosy outlook is painted despite economic hardship due to outbreaks and the Russo-Ukrainian War that leads to a jump in goods and energy prices. High inflation is severely battering the global economy and forces enterprises across the world to execute all available strategies.
In this situation, Prasit noted that CP Foods has closely followed global economic condition and the Russo-Ukrainian War, so that business policies and guidelines can be promptly adjusted, to prevent internal and external risks to the business.
He foresaw a brighter future in the second quarter of 2022 compared to the first quarter due to the weak baht which would boost exports as well as concerns about “the food shortage crisis” following the war. More than 30 countries have imposed a ban on food exports. Comparatively, in 2021 when the COVID-19 was a major concern, businesses faced high production costs, low prices and labor shortages.
Under the vision of “Kitchen of the World”, CP Foods food subsidiaries and joint ventures span through 17 countries. All ventures have been emphasizing efficiency enhancement, particularly when it concerns raw material procurement to lower production cost and expenses. Meanwhile, the financial teams closely monitor interest and exchange rates, for optimal financial management. These strategies will raise the value of exports destined to more than 30 countries and ensure continuous revenue growth.
“The economic crisis caused by this conflict will not affect CPF’s operations as all countries aim to safeguard their food security,” Prasit said.
He admitted that due to the crisis, the production cost and expenses have gone up following an increase in the prices of feed, energy and transportation as well as currency fluctuation. As all countries have suffered from the higher cost, an upward adjustment in goods prices is inevitable.
Meat prices have also advanced in the past few years due to the outbreak of diseases, while the world is grappling with the COVID-19 and the war. CP Foods has shaped the business systematically by the adoption of artificial intelligence (AI) and the Internet of Things (IoTs) in the supply chains of its feed mill, farming and processing businesses. The technology helps enhance the efficiency and precisely estimate raw material costs. CP Foods thus enjoys low fluctuation in production costs as well as low risks on investment and interest expenses.
“The globe is facing crisis upon crisis. From the COVID-19 and the war that has been going on for 5 months, it faces continuous impacts on the food supply chain. To businesses, what must be done now is to find ways to survive from these crises, which have been intensifying and getting more complex. Once they survive, they will prove to the world if they are here to stay,” Prasit said.