Thailand-based poultry company PT Charoen Pokphand Indonesia ( CPIN ) plans to build more factories despite recording a loss in the first quarter this year following increased prices of raw materials in the period.
CPIN director Ong Mei Sian said on Wednesday that she was sure the company's business would rebound in the coming quarters because prices of raw materials were stabilizing.
She said the company would invest Rp 2 trillion ( US$205.16 million ) this year to increase its production capacity with 50 percent going on chicken farms, 25 percent on the development of poultry feed factories and the remaining 25 percent on food processing.
'The new investment will come from our internal cash as we pocketed Rp 2.7 trillion in net profits last year and are yet to use the $200 million we have in loans,' she said.
According to Ong, the company would add two more poultry feed factories in Bandung, West Java, and Mojokerto, East Java; a new poultry slaughterhouse in Makassar, South Sulawesi, and three new food processing factories and chick farms across Indonesia.
It now has poultry feed factories in Lampung; Medan, North Sumatra; Balaraja Banten; and Semarang, Central Java; as well as food processing units in Medan, Central Java's Salatiga and East Java's Surabaya.
Another CPIN director, Ferdiansyah Gunawan, said the company expected to increase its total production capacity by around 33 percent, with production capacity of each product increasing by no less than 10 percent.
The company, which claims to dominate market share, produced 800 million day-old chicks ( DOCs ) and 72,000 tons of food products last year, and aims to increase its production to 900 million DOCs and 96,000 tons of food products this year. It also aims to increase production of its poultry feed products by 10 percent this year compared to last year.
Ong said CPIN booked higher sales in the first quarter this year at Rp 5.65 trillion, compared to Rp 4.89 trillion in the same period last year, but failed to gain higher net profits.
CPIN's net profits dropped 10 percent to Rp 927.15 billion in the first quarter this year from Rp 1.04 trillion in the same period last year, she said, mainly because of a 20 percent rise in the price of raw materials, especially corn and soybean dregs, in the third and fourth quarters last year. Unstable supplies of raw materials, she said, were to blame for the rising raw material prices.
In response to the higher raw material prices, the company raised the prices of its products by up to 10 percent, while waiting for raw material prices to ease.
'We can increase our sales volume by 10 percent this year [from last year's level], and raise the prices of our products by 5 percent [from the current ones] considering the inflation rate. From that, we aim to earn 15 percent more in revenue this year,' Ong said, without revealing the specific net profits targeted this year.
Shares in CPIN remained unchanged at Rp 4,850 at the close of trading on Thursday. ( koi )