PT Charoen Pokphand Indonesia (CPIN), a publicly listed animal feed and processed chicken manufacturer, will spend Rp 350 billion (US$37.5 million) in the remainder of this year to expand sales in east Indonesia.
Vice president Thomas Effendy said Tuesday the firm planned to build a new feed mill in Lampung, South Sumatra, to compliment another under construction in Makassar, South Sulawesi.
"The feed mill in Makassar will cost Rp 54 billion and the one in Lampung, Rp 30 billion. Both will have a capacity of 300,000 tons per year," Thomas said after a shareholders meeting.
Thomas said 60 percent of the funds would come from its own cash flow and the remainder from loans.
The company has already received a chunk of a total US$125 million in syndicated loans led by Citibank, Thomas said.
"We aim to increase our DOCs (day-old chicks) production by 20 percent to 576 million chicks, and our processed chicken output by 50 percent to 42,000 tons," Thomas said.
In 2007, the company bred 480 million chicks and produced 28,000 tons of processed chicken.
"We also want to increase our feed production capacity to 2.3 million tons this year from 2 million tons last year," he said.
The investments will support the company's effort to expand sales in east Indonesia to offset an expected reduction in revenue from Java due to the recent fuel price increases, Thomas said.
"The recent fuel price increases may have affected the public purchasing power in Java, but that's not the case outside of Java, where high commodity prices have bolstered the purchasing power of those living near mining and agro business areas," he added.
CPIN president Charoen Franciscus Affandy said increasing prices was one option for the company to cope with rising production costs.
"Prices of raw materials went up 60 percent recently, so we will make adjustments to our pricing too," Charoen said, adding that the company had also increased its average price of processed chicken to Rp 3,000 per kilogram in March this year from Rp 2,780 last year.
The company aims to increase its revenue by nearly 40 percent to Rp 12 trillion this year, from Rp 8.7 trillion last year.
It booked a net profit of Rp 185 billion last year, up from Rp 157.1 billion in 2006.
As of March, the company had a 50 percent market share for chicken feed, 44 percent for DOCs and 72 percent for processed chicken. (anw)
